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Friday, 04 May 2007 05:30
Every five years the NSSO conducts the best sampled survey on expenditure and employment in the public domain. However, it releases the results with considerable delay and therefore reduces its own potential to determine the path of policy. Be that as it may, the latest results are out on employment and expenditure. While others debate on employment and poverty figures extracted Thankfully politicians and bureaucrats were kept out of NSSO, and as a consequence Mahalanobis’s dream of an independent data collection entity within the government has been met. Of course, the energy that had characterised it may have waned, but it has been replaced by a highly structured process. Every five years the NSSO conducts the best sampled survey on expenditure and employment in the public domain. However, it releases the results with considerable delay and therefore reduces its own potential to determine the path of policy. Be that as it may, the latest results are out on employment and expenditure. While others debate on employment and poverty figures extracted from this database, let me look at something less contentious but perhaps as fascinating. First, the percentage improvement in real per capita consumption between 1972-73 and 2004-05 has been the same in rural and urban areas. Second, the percentage growth in per capita monthly expenditures has been higher in rural areas than in urban areas. This is also reflected to some extent in the more rapid growth in durables consumption in rural areas than in urban ones. What is more, in 2004-05 prices, the monthly per capita consumption expenditure has increased by about Rs 20, whereas that for urban areas has been stagnant. But that is all in the aggregate. Two thoughts come to mind. Neither can be proved or disproved by the data, but the NSSO might just be revealing what we have been hoping for so many years. That is, is the impact of reforms finally trickling down to rural areas? This possibility needs to be investigated much more before definite conclusions can be drawn. But what is perhaps even more interesting is this. Per capita expenditure has grown more among the poorest and richest sections than the middle segments when we compare data for 2004-05 with 1999-2000. Is this part of an overall pattern? Rural areas do better than urban areas and the poorest do better than the middle classes? Is this why the BJP could not get the middle class and urban residents’ backing in the last elections? Many are worried about the standard measures of inequality, and whether inequality is increasing or reducing. The answer is not straightforward. If one puts significant weight on the top 5 or 10 per cent and looks at the difference between their lifestyles and those of the lowest 5 to 10 per cent then, yes, inequality in consumption expenditures is increasing. But if we look at it in some other way, and just compare the top half with the bottom half, then the answer will be reduced inequality. Here the debate between the left and right is likely to be long and quite pointless. Many are worried about the standard measures of inequality, and whether inequality is increasing or reducing. The answer is not straightforward. If one puts significant weight on the top 5 or 10 per cent and looks at the difference between their lifestyles and those of the lowest 5 to 10 per cent then, yes, inequality in consumption expenditures is increasing. But if we look at it in some other way, and just compare the top half with the bottom half, then the answer will be reduced inequality. Here the debate between the left and right is likely to be long and quite pointless. But a fascinating story is emerging in the consumption space. Food items used to account for about three-fourths and two-thirds of the household expenditure budget in rural and urban areas, respectively, in 1972-73. That has since fallen dramatically by 18 and 12 percentage points to 55 per cent and 53 per cent in urban and rural areas, respectively. This extra amount is now going to feed the other desires of households — manufactured items as well as services. Yes India is changing, the desires of Indian households are progressively moving up from pure survival related consumption to the next level. Take cereals for example. Indians in both rural and urban areas are en masse consuming less and less of cereals despite increases in income and spending ability. Cereals are the primary sources of calories and it is likely that the foods substituting cereals — fresh fruits and vegetables — have lower calories per unit weight consumed. However, with a changing society, lower demographic profile, greater use of mechanised transport as well as automated means of production, the calorific requirements are also reducing. And therefore reduced cereal consumption may not be as bad an outcome as some claim. The NSSO report also provides an interesting table on how rural and urban households are likely to purchase different kinds of items. Almost 60 per cent of Indian households consumed eggs, meat or fish a month prior to the survey. And this was true for both urban and rural areas. Rural and urban households tend to have similar tastes and preferences on many items — cereals (greater than 90 per cent of households), meat products (about 60 per cent), clothing (about 39 per cent), footwear (about 19 per cent), durables (about 25 per cent), and health expenses (about 63 per cent). But there are some segments where out of the ordinary but as yet unexplained rural-urban differences are revealed. Take, for instance, those items that urban households are much more likely to consume — fresh and dry fruits, vegetables, education (and also transport and rented accommodation). But what are rural households much more likely to spend on relative to their urban counterparts? Paan, tobacco, and liquor. The writer heads Indicus Analytics Source: http://www.indianexpress.com/story/29969.html
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