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By Rajiv Shah
Given India’s low per capita consumption base, food and beverages continue to account for a large part of any households’ final consumption expenditure. If economists are to be believed, the distribution of consumption expenditure between food and non-food items reflects the actual economic well-being of the population. In general, poor households are expected to spend substantially more on food items as against non-food items. Indeed, the share of expenditure on food items is expected to decline with development and economic prosperity. The latest monthly per capita expenditure (MPCE) figures, released by the National Sample Survey (NSS) in its report “Key Indicators of Household Consumer Expenditure in India”, released in June 2013, suggests this trend.
Whether it is India or its states, the percentage spending on food items has gone down across the board, which signifies overall prosperity of the population, and the ability of people to spend more on non-food items. NSS identifies non-food to include transport, tobacco/cigarettes and ‘pan’, fuel, light, clothing, bedding, footwear, education, medical bills, entertainment and durable goods. In India, on an average, the rural households, on an average, spent 52.9 per cent on food items in 2011-12, for which the new figures were been released by the NSS. This is against 57 per cent spending on food items in 2009-10, suggesting that within just about two years’ time, the rural people began spending 4.1 per cent more on non-food items. In urban areas, the average spending on food items was 44.4 per cent in 2009-10, which came down to 42.6 per cent in 2011-12, suggesting that 1.8 per cent more was spent on non-food items.
Gujarat scenario: However, a closer inter-state comparison of the spending capacity of India’s households suggests that the average monthly per capita expenditure in Gujarat on non-food items failed to rise as fast as the country as a whole. The figures show that whether it is the rural areas or the urban areas, Gujarat’s households spent more on food items than the all-India average in 2011-12. Thus, as against 52.9 per cent spending on food items in rural India, Gujarat households’ spending on was 54.9 per cent, suggesting a clear gap of three percentage points. Similarly, as against urban India’s average per capita spending of 42.6 per cent on food items, Gujarat’s households on an average spent a higher proportion on food items, 45.2 per cent.
What is even more significant is the fact that, whether it is rural Gujarat or urban Gujarat, the per capita spending on food items out of the total kitty has on higher side compared to several states – Andhra Pradesh (51.4 per cent rural, and 42.3 per cent urban), Chhattisgarh (52.7 per cent rural and 40.2 per cent urban), Haryana (52.1 per cent urban and 39.2 per cent rural), Himachal Pradesh (47.3 per cent rural and 42.4 per cent urban), Karnataka (51.4 per cent rural and 40.1 per cent rural), Kerala (43.0 per cent rural and 37.0 per cent urban), Madhya Pradesh (52.9 per cent rural and 42.2 per cent urban), Maharashtra (52.4 per cent rural and 41.6 per cent urban), Punjab (44.1 per cent rural and 41.0 per cent urban), Rajasthan (50.5 per cent rural and 44.8 per cent urban), Tamil Nadu (51.5 per cent rural and 42.7 per cent urban), and Uttar Pradesh (53.0 per cent rural and 44.0 per cent urban).
Only give states whose population spent more than Gujarat’s on food items were Bihar, Assam, Odisha, Jammu & Kashmir and Jharkhand. While the rural population of two states – West Bengal and Uttaranchal – spent less on food and more on non-food items than their Gujarat counterparts, the urban households spent a little higher on food items than that of Gujarat.
Here, it is significant to note that Gujarat’s households’ fall in spending on the food bill, and the subsequent rise in the non-food bill, has been much slower than the country as a whole. Thus, in Gujarat, the spending on the food items went down in the rural areas from 57.7 per cent in 2009-10 to 54.9 per cent in 2011-12, a fall of 2.8 per cent, as against the all-India average of 4.1 per cent. As for the urban areas, it down from 46.2 per cent in 2009-10 to 45.2 per cent in 2011-12, a fall of exactly one per cent, as against the all-India average of 1.8 per cent.
The average MPCE of rural Gujarat was found to be Rs 1,535.66, as against the all-India rural average of Rs 1429.96, which is because in several backward, the capacity to spend is quite low. Yet, the fact is, the rural population of several states has a higher spending capacity than Gujarat’s – and this includes Andhra Pradesh (Rs 1753.96), Chhattisgarh (Rs 2,762.11), Haryana (Rs 2,176.04), Himachal Pradesh (Rs 2,034.15), Himachal Pradesh (Rs 1742.64), Jharkhand (Rs 1,561.28), Karnataka (Rs 2,668.73), Maharashtra (Rs 1619.22), Punjab (Rs 2344.66), Rajasthan (Rs 1,597.50), Tamil Nadu (Rs 1,692.93), and Uttarakhand (Rs 1725.77). The poorer states’ rural population has a considerably less spending power, starting with just about Rs 1,002.61 of Odisha and Chhattisgarh’s Rs 1,026.73.
Significantly, the urban households’ spending capacity, as reflected in MPCE, in Gujarat was found to be worse than the all-India – it was Rs 2,581.28 in the state as against Rs 2,629.65 of the country as a whole. Only so-called Bimaru states had a worse urban MPCE than Gujarat’s – it was Rs 2,189.15 in Assam, Rs 1,506.58 in Bihar, Rs 1,867.86 in Chhattisharh, Rs 2,485.34 in Jammu & Kashmir, Rs 2,018.29 in Jharkhand, Rs 2,058.02 in Madhya Pradesh, Rs 1,940.61 in Odisha, Rs 2,442.40 in Rajasthan, and Rs 2,051.22 in Uttar Pradesh. All other major states had a higher urban MPCE than Gujarat’s, starting with Rs 3,408.45 in Kerala and Rs 3,258.54 in Himachal Pradesh.
Limitations of MPCE: No doubt, the average MPCE would not reflect the real picture, as the poorer sections’ capacity to spend would be much lower than that of the higher income groups. Indeed, the NSS has not released state-wise figures on which class of population spends how much. Yet, the NSS report admits, the all-India trend suggests, the share of non-food overtakes the share of food with the higher income group of population. It says, for the urban population, the 40 per cent of the households having lowest MPCE “spent more on food than on non-food according”.
As a senior expert noted, “The rise in MPCE indicates a fall in poverty levels. Last year, the preliminary data showed MPCE at Rs 2,401.68 for urban areas and Rs 1,281.45 for rural areas which translates into poverty levels of 26.3 per cent, a sharp decline from over 30 per cent until 2009-10. The data showed urban households spend 42.6 per cent on food, 6.9 per cent on education, 6.7 per cent on fuel and light, 6.2 per cent on rent and 6.4 per cent on clothing. In case of rural households, the spending on food is 52.9 per cent while it is 8 per cent for fuel, 7 per cent on clothing and 6.7 per cent on medical costs.”
Back in 1993-94, significantly, Indian families’ non-food bill was almost 37 per cent in rural areas and about 45 per cent in urban areas. Officials of the National Sample Survey Organization (NSSO) explained that although the percentage of food to non-food expense, as part of the overall household bill, had tilted over the decade, people’s absolute consumption of food had increased over the years; however, the consumption pattern of food sub-groups such as cereals had somewhat changed.”
Given India’s low per capita consumption base, food and beverages continue to account for a large part of any households’ final consumption expenditure. If economists are to be believed, the distribution of consumption expenditure between food and non-food items reflects the actual economic well-being of the population. In general, poor households are expected to spend substantially more on food items as against non-food items. Indeed, the share of expenditure on food items is expected to decline with development and economic prosperity. The latest monthly per capita expenditure (MPCE) figures, released by the National Sample Survey (NSS) in its report “Key Indicators of Household Consumer Expenditure in India”, released in June 2013, suggests this trend.
Whether it is India or its states, the percentage spending on food items has gone down across the board, which signifies overall prosperity of the population, and the ability of people to spend more on non-food items. NSS identifies non-food to include transport, tobacco/cigarettes and ‘pan’, fuel, light, clothing, bedding, footwear, education, medical bills, entertainment and durable goods. In India, on an average, the rural households, on an average, spent 52.9 per cent on food items in 2011-12, for which the new figures were been released by the NSS. This is against 57 per cent spending on food items in 2009-10, suggesting that within just about two years’ time, the rural people began spending 4.1 per cent more on non-food items. In urban areas, the average spending on food items was 44.4 per cent in 2009-10, which came down to 42.6 per cent in 2011-12, suggesting that 1.8 per cent more was spent on non-food items.
Gujarat scenario: However, a closer inter-state comparison of the spending capacity of India’s households suggests that the average monthly per capita expenditure in Gujarat on non-food items failed to rise as fast as the country as a whole. The figures show that whether it is the rural areas or the urban areas, Gujarat’s households spent more on food items than the all-India average in 2011-12. Thus, as against 52.9 per cent spending on food items in rural India, Gujarat households’ spending on was 54.9 per cent, suggesting a clear gap of three percentage points. Similarly, as against urban India’s average per capita spending of 42.6 per cent on food items, Gujarat’s households on an average spent a higher proportion on food items, 45.2 per cent.
What is even more significant is the fact that, whether it is rural Gujarat or urban Gujarat, the per capita spending on food items out of the total kitty has on higher side compared to several states – Andhra Pradesh (51.4 per cent rural, and 42.3 per cent urban), Chhattisgarh (52.7 per cent rural and 40.2 per cent urban), Haryana (52.1 per cent urban and 39.2 per cent rural), Himachal Pradesh (47.3 per cent rural and 42.4 per cent urban), Karnataka (51.4 per cent rural and 40.1 per cent rural), Kerala (43.0 per cent rural and 37.0 per cent urban), Madhya Pradesh (52.9 per cent rural and 42.2 per cent urban), Maharashtra (52.4 per cent rural and 41.6 per cent urban), Punjab (44.1 per cent rural and 41.0 per cent urban), Rajasthan (50.5 per cent rural and 44.8 per cent urban), Tamil Nadu (51.5 per cent rural and 42.7 per cent urban), and Uttar Pradesh (53.0 per cent rural and 44.0 per cent urban).
Only give states whose population spent more than Gujarat’s on food items were Bihar, Assam, Odisha, Jammu & Kashmir and Jharkhand. While the rural population of two states – West Bengal and Uttaranchal – spent less on food and more on non-food items than their Gujarat counterparts, the urban households spent a little higher on food items than that of Gujarat.
Here, it is significant to note that Gujarat’s households’ fall in spending on the food bill, and the subsequent rise in the non-food bill, has been much slower than the country as a whole. Thus, in Gujarat, the spending on the food items went down in the rural areas from 57.7 per cent in 2009-10 to 54.9 per cent in 2011-12, a fall of 2.8 per cent, as against the all-India average of 4.1 per cent. As for the urban areas, it down from 46.2 per cent in 2009-10 to 45.2 per cent in 2011-12, a fall of exactly one per cent, as against the all-India average of 1.8 per cent.
The average MPCE of rural Gujarat was found to be Rs 1,535.66, as against the all-India rural average of Rs 1429.96, which is because in several backward, the capacity to spend is quite low. Yet, the fact is, the rural population of several states has a higher spending capacity than Gujarat’s – and this includes Andhra Pradesh (Rs 1753.96), Chhattisgarh (Rs 2,762.11), Haryana (Rs 2,176.04), Himachal Pradesh (Rs 2,034.15), Himachal Pradesh (Rs 1742.64), Jharkhand (Rs 1,561.28), Karnataka (Rs 2,668.73), Maharashtra (Rs 1619.22), Punjab (Rs 2344.66), Rajasthan (Rs 1,597.50), Tamil Nadu (Rs 1,692.93), and Uttarakhand (Rs 1725.77). The poorer states’ rural population has a considerably less spending power, starting with just about Rs 1,002.61 of Odisha and Chhattisgarh’s Rs 1,026.73.
Significantly, the urban households’ spending capacity, as reflected in MPCE, in Gujarat was found to be worse than the all-India – it was Rs 2,581.28 in the state as against Rs 2,629.65 of the country as a whole. Only so-called Bimaru states had a worse urban MPCE than Gujarat’s – it was Rs 2,189.15 in Assam, Rs 1,506.58 in Bihar, Rs 1,867.86 in Chhattisharh, Rs 2,485.34 in Jammu & Kashmir, Rs 2,018.29 in Jharkhand, Rs 2,058.02 in Madhya Pradesh, Rs 1,940.61 in Odisha, Rs 2,442.40 in Rajasthan, and Rs 2,051.22 in Uttar Pradesh. All other major states had a higher urban MPCE than Gujarat’s, starting with Rs 3,408.45 in Kerala and Rs 3,258.54 in Himachal Pradesh.
Limitations of MPCE: No doubt, the average MPCE would not reflect the real picture, as the poorer sections’ capacity to spend would be much lower than that of the higher income groups. Indeed, the NSS has not released state-wise figures on which class of population spends how much. Yet, the NSS report admits, the all-India trend suggests, the share of non-food overtakes the share of food with the higher income group of population. It says, for the urban population, the 40 per cent of the households having lowest MPCE “spent more on food than on non-food according”.
As a senior expert noted, “The rise in MPCE indicates a fall in poverty levels. Last year, the preliminary data showed MPCE at Rs 2,401.68 for urban areas and Rs 1,281.45 for rural areas which translates into poverty levels of 26.3 per cent, a sharp decline from over 30 per cent until 2009-10. The data showed urban households spend 42.6 per cent on food, 6.9 per cent on education, 6.7 per cent on fuel and light, 6.2 per cent on rent and 6.4 per cent on clothing. In case of rural households, the spending on food is 52.9 per cent while it is 8 per cent for fuel, 7 per cent on clothing and 6.7 per cent on medical costs.”
Back in 1993-94, significantly, Indian families’ non-food bill was almost 37 per cent in rural areas and about 45 per cent in urban areas. Officials of the National Sample Survey Organization (NSSO) explained that although the percentage of food to non-food expense, as part of the overall household bill, had tilted over the decade, people’s absolute consumption of food had increased over the years; however, the consumption pattern of food sub-groups such as cereals had somewhat changed.”
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