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Gujarat has higher percentage of households without any assets than national average: Crisil report

By Rajiv Shah
Amidst considerable hallabaloo around top rating agency Crisil’s rating of Gujarat as No 3 – next only to Punjab and Kerala – both in prosperity index and in equity index (click HERE), what appears to have been missed is an important observation in its new Insight report, brought out in November 2013. The report says that, in Gujarat, 18.7 per cent of the households do not have “any assets”, which is less than the national average of 17.8 per cent. For the sake of analysis, Crisil – which bases its data on household survey of the Census of India 2011 – has divided households into two categories, those who have “all the assets” and those who do not have “any assets.”
Those who have “all the assets” must have television, computer or laptop, telephone or mobile phone and two-wheeler or car or jeep; and those who do not have “any assets” neither radio nor bicycle in addition to the above four assets. Also significant is that, Gujarat’s 6.3 per cent of the households are found to have “all the assets”, which is lower than Punjab (10 per cent), Kerala (8.6 per cent), Haryana (7.0 per cent) and Haryana (7.2 per cent). Tamil Nadu equals Gujarat with 6.3 per cent of the population with “all the assets.” Crisis has selected a group of 16 states for the sake of its analysis.
City is capital city (Ahmedabad for Gujarat, Gurgaon for Haryana)
A further analysis by the top rating agency suggests that that, leaving aside the “capital city” of Gujarat (Crisil considers Ahmedabad and not Gandhinagar as the capital city), in rest of the state, 20.2 per cent of the households do not have “any assets”. This is higher than several states’ comparable figures – Punjab (4.5 per cent), Kerala (4.6 per cent), Karnataka (16.8 per cent), Tamil Nadu (19.4 per cent), Maharasthra (19.4 per cent), and Andhra Pradesh (20.1 per cent). Even in the case of capital city (Ahmedabad), if Crisil has to be believed, the capital cities of seven out of 16 major states have lower number of households without “any assets”.
Similarly, as for the households which have “all the assets” in “rest of the state” (minus the capital city, Ahmedabad), Gujarat’s percentage comes to a mere five, as against the respective figures Punjab 9.4, Kerala 8.3, Haryana 7.5, Maharashtra 7.0 and Tamil Nadu 5.2. Further, Ahmedabad has 15.3 per cent of the households with “all the assets” as against the capital cities of at least five other states having a higher number of households under this category – Haryana 27.1, Tamil Nadu 23.9, Karnataka 23.6, Andhra Pradesh 22.7 and Maharashtra 15.7.
Despite such variations, the Crisil Insight report points out, “In our analysis, Gujarat emerges as a prosperous state with high ownership of durables. But the difference between Ahmedabad and the rest of the state is borderline between high and low equality. It will be interesting to repeat this study after a few years to see whether or not Gujarat evolves to achieve equitable growth.” The statement has not been elaborated any further. Like for Gujarat, for Haryana, the Crisis report has taken Gurgaon as “proxy for capital city”, instead of Chandigarh!
Interestingly, Crisil while working out its prosperity Index and the equality Index – which measure and compare living standards between and within India’s large states – uses census data only partially. For some strange reason, while looking into the “ownership pattern of consumer durables such as television, mobile phone, bicycles, computer/laptop and automobiles”, it gives a “quick caveat” – that it has not factored “financial assets, housing, education and health parameters, which are also used to measure standard of living”! National Sample Survey data suggest that Gujarat’s households spend lesser proportion of income on health, education and entertainment than on food.

Yet, the report claims, “Crisil’s indices help assess standard of living across states in a more meaningful way compared with the traditional yardstick of average income per person.” It explains, “That’s because average income can hide gaping differences in living standards because of unequal distribution across the populace. For example, Maharashtra has 30 per cent more real income per person, but Punjab has more widespread ownership of consumer durables, and hence is more prosperous.”
Further, Crisil has “excluded” special category states such as Jammu & Kashmir, Uttarakhand and other North Eastern states where Central transfers could allegedly “influence incomes and high asset ownership, therefore, may not reflect underlying economic development”. Further, it says, “Delhi was excluded because it’s a city-state.” It has also excluded Goa as “there’s no detailed data on the state.”
Crisil says, “Maharashtra has the highest level of real income per person (per-person state gross domestic product at 2004-05 prices) among major Indian states. But the penetration of household ownership of durable assets in the state is lower than six others, including Punjab and Gujarat.” It further says, “Punjab ranks 7th in per-person real income, but has the highest asset ownership levels, closely followed by Kerala. Punjab has the highest proportion of households with all durables including a computer (10 in every 100) and the lowest proportion of households with no durable asset, not even a mobile or a bicycle (just over 4 in every 100).”
Crisil comments, “This widespread ownership makes Punjab the most prosperous state. Punjab and Kerala also have the least disparity in asset ownership between their capital cities and the rest of the state.” At the same time, it says, “There is significant disparity in living standards within Maharashtra, Andhra Pradesh and Karnataka. For example, only one in every 33 households in Hyderabad doesn’t own a durable, but as high as one in five outside Hyderabad does not have an asset”, adding, “Growth in these states has been driven by financial or IT/ITES services that have selectively benefited the skilled workforce in the capital city, resulting in high disparity in living standards.”
State-wise comparison
The Crisil study has found Madhya Pradesh as “the least prosperous state”. It adds, “Moreover, there is large disparity in living standards among households in Bhopal, as well as between Bhopal and the rest of the state. For example, 15 per cent of households in the capital have all assets, which is comparable to Mumbai. However, over 12 per cent of households in Bhopal have no durables assets compared with a 2.2 per cent in Mumbai.”
The study says, “Among major capital cities, more than 1 in 5 households in Gurgaon (a proxy for capital city for Haryana), Chennai, Hyderabad and Bangalore own all major durables including a laptop or a computer. At the other extreme, less than 1 in 20 households in Raipur – the capital of Chhattisgarh – own all the durables. Patna and Raipur, the capital cities of Bihar and Chhattisgarh, respectively, are the worst in terms of asset ownership. These cities have the highest proportion of households with none of the assets (around 1 in 4 households) as well as the lowest proportion of households with all the assets (less than 1 in 16 households).”

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