Rural spending in Narendra Modi's Gujarat above national average, but urban below

ENS Economic Bureau Posted online: Thursday, Mar 20, 2014 at 0000 hrs
New Delhi : In what is likely to provide fresh ammunition to the ongoing debate over models of development, Gujarat’s average rural spending is above the national average. But surprisingly, the state has a less-than-national-average score for its urban areas.

The highest score for rural areas in India is from Kerala where monthly per capita consumer expenditure is almost a third more than the national average. Haryana tops the league for urban average spend across the country.

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In the latest ranking released by the National Sample Survey Organisation, nine out of India’s 17 large states do better than the national average for rural areas. Among the northern states, other than Gujarat, the three states doing better than the national average are Haryana, Punjab and Rajasthan. The 68th round survey on level and pattern of consumption expenditure was conducted between July 2011 and June 2012. The data is used by the government for targeting its various policies and constructing inflation indices as well as by companies to market their products based on the consumer preferences.

Expenditure survey

Among urban areas, Bihar shows the lowest monthly per capita consumption expenditure, while the dubious distinction for rural areas goes to Orissa. Two years back Bihar was the wooden spooner in both categories. Gujarat, with an average monthly per capita consumption expenditure of Rs 2,581 in urban areas, was below the national average of Rs 2,630. Monthly spending in urban Tamil Nadu (Rs 2,622) and Rajasthan (Rs 2,442), too, fell below the national average while urban MPCE in Bihar was the lowest at Rs 1,507. In Haryana, the average monthly per capita consumption expenditure was Rs 3,817, followed by Kerala with an average monthly spend of Rs 3,408.

“The median level of monthly per capita consumption expenditure was about Rs 1,200 in rural India and about Rs 2,020 in urban India,” said the NSS survey that covered 7,469 villages and 5,268 urban blocks across the country. Significantly, the report comes just before the General Elections when political parties have been touting achievements of states governed by them.

There has also been intense debate between economists over the optimum model of development that would lead to high growth. While Nobel Laureate Amartya Sen has pitched for high public spending akin to the Kerala government to spur growth, Columbia University professor Jagdish Bhagwati has backed the Gujarat model of development.

Economists, however, point out that the lower consumption expenditure is based on historical and cultural reasons. In Gujarat’s case, it could be because of high savings and investments rate. “The data has to be seen in context of the previous surveys,” said NR Bhanumurthy, economist at NIPFP. In the previous NSS survey in FY10, Kerala remained amongst top spending states with average urban monthly per capita expenditure of Rs 2,413 and rural spending of Rs 1,835; Gujarat’s urban spending at Rs 1,909 remained below national average.

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