Gujarat model? Half of Indian states' households have higher purchasing power

By Rajiv Shah

In what many may consider as another “expose” of the Gujarat development model sought to be sold across the country during the Lok Sabha elections, the latest National Sample Survey Organisation (NSSO) report, “Level and Pattern of Consumer Expenditure, 2011-12”, released in February 2014, has revealed that the average spending capacity of Gujarat households, as reflected in monthly per capita expenditure (MPCE), is lower than 11 out of 20 major states in the rural areas and nine out of 20 major states in the urban areas. 

The figures suggest that at the MPCE of Rs 1,536, spending capacity of Gujarat’s rural households is lower than Andhra Pradesh (Rs 1,754), Haryana (Rs 2,176), Himachal Pradesh (Rs 2,034), Jammu & Kashmir (Rs 1,743), Karnataka (Rs 1,561), Kerala (2,669), Maharashtra (Rs 1,619), Punjab (Rs 2,345), Rajasthan (Rs 1,598), Tamil Nadu (Rs 1,693), and Uttarakhand (Rs 1,726). The all-India average for the rural areas, on account of even lower spending capacity in poorer states, is lower than Gujarat’s – Rs 1,430.
As for the urban areas, things are not quite different, with Gujarat ranking at No 10th with the households’ average spending capacity, reflected in MPCE, being Rs 2581. This is less than that of Andhra Pradesh (Rs 2,685), Haryana (3,817), Himachal Pradesh (Rs 3,259), Karnataka (Rs 3,026), Kerala (Rs 3,408), Maharashtra (Rs 3,189), Punjab (Rs 2,794), Tamil Nadu (Rs 2,622) and West Bengal (Rs 2,591). As for the all-India average, despite lower purchasing power in the poorer states, the urban MPCE higher than Gujarat’s -- Rs 2,630.

What is particularly appalling is that, with lower purchasing power, Gujarat’s households are forced to spend a higher percentage of their earnings on foodgrains. Thus, the figures show that, in rural Gujarat, on an average, 55 per cent of the spending go into foodgrains consumption, which means that they are forced to spend considerably less on non-foodgrains, including education, health, consumer durables, and entertainment.
The states whose households spend higher percentage than Gujarat in the rural areas on foodgrains, significantly, are mainly five poorer states -- Assam (61 per cent), Bihar (59 per cent), Jharkhand (58 per cent), Odisha (57 per cent), and West Bengal (58 per cent). The all-India average percentage of spending on foodgrains is 53 per cent – lower than Gujarat’s.
Things are, in fact, worse in urban areas, whose Gujarat households on an average spend 45 per cent of their spending on foodgrains. The states whose urban area households spend more than Gujarat are just three -- Assam (48 per cent), Bihar (51 per cent), and Jharkhand (47 per cent), with Rajasthan and Odisha equaling Gujarat (45 per cent). The all-India average on this score is 43 per cent, less than that of Gujarat.
Coming to the cereals – which are the main source of nutrition in the absence of non-vegetarian food – the data show that Gujarat’s just eight per cent of the rural spending go into expenditure on cereals, as against the all-India average of 11 per cent. The situation is not very different for the urban areas, where just six per cent of the spending goes in for cereals, as against the all-India average of seven per cent.

In the absence of non-vegetarian food, on which Gujarat’s households just spend about Rs 24 per capita in rural areas and Rs 30 in urban areas (as against the all-India average of Rs 68 and 96 respectively), they are forced to spend a higher sum on milk and milk products – Rs 196 in rural areas (all-India average Rs 115) and Rs 267 in urban areas (all-India average Rs 184). As for fruits and vegetables, the spending is nearer to the all-India average.
Even more interesting is the fact that, NSSO data suggest, Gujarat’s rural as well as urban population is forced to spend a higher amount on cheaper cereals. To quote from the report, in the country as a whole, “rice and wheat together accounted for as much as 97 per cent of all cereal consumption in urban areas, and for 94 per cent in rural areas.”
To quote, “In rural India, the share of cereals other than rice and wheat was 3 per cent or less in all major States except Gujarat (32 per cent), Karnataka (27 per cent), Maharashtra (20 per cent), Rajasthan (19 per cent), and Madhya Pradesh (6 per cent). In urban India cereals other than rice and wheat accounted for 3 per cent or less of total cereal consumption in all but 3 major States – Karnataka (18 per cent), Gujarat (9 per cent) and Maharashtra (8 per cent).”