Spending on food items drops, discretionary buys rise: NSSO

Written by ENS Economic Bureau | New Delhi | Updated: Jun 21 2013, 19:29pm hrs
Expenditure across the country rose by a third between 2011-12 and 2009-10 but the growth in rural spending outpaced that in urban areas. The consumption basket of households across the country also saw a sharp change during the period.

These are some of the key findings of the NSSOs 68th round of survey on household consumption expenditure that was carried out during July 2011 and June 2012 and covered 7,469 villages in rural areas and 5,268 urban blocks.

So even as food prices rose between 2009-10 and 2011-12, the average monthly spending on food dipped in cities and villages though it made up for nearly half the monthly spending. Cereal and pulses no longer seem to dominate the grocery bills of most households, with spending on proteins like meat, fish and egg as well as dairy products on the rise.

Further, discretionary spending seems to be on the rise with households spending more on durable goods, clothing and footwear, as well as education and medical facilities.

Expenses on fuel and light remained the second largest contributor, amounting to 8 per cent of the total budget in villages and 6.7 per cent in cities. Medical bills in villages (6.7 per cent as against 5.5 per cent in cities) and education in cities (6.9 per cent versus 3.5 per cent in villages) are the third largest spending items. Meanwhile, durables took up about 4.5 and 5.3 per cent of the total spending in villages and cities, respectively.

The data reveals that the rural-urban divide has narrowed down with city dwellers spend a whopping 84 per cent more on consumption activities than those residing in villages. While the average monthly per capita expenditure (MPCE) rose by 37.5 per cent in rural areas to Rs 1429.96 in 2011-12 from Rs 1053.04 in 2009-10, the average urban MPCE jumped up 32.5 per cent to Rs 2629.65 in 2011-12 as against Rs 1984.46 in 2009-10. In 2009-10, urban areas on an average spent 88 per cent more per month on consumption that rural areas.

Analysts believe that development schemes have had an impact on rural incomes. The data shows that programmes for rural areas are working and the benefits of rural intervention schemes are reaching the targeted population, said DK Pant, chief economist, India Ratings.

The higher growth in average rural monthly expenditure can be attributed to government schemes like MNREGA and higher minimum support price of crops that have helped increase rural incomes. This in turn has translated to an increased pace of consumption in rural areas, said Sunil Sinha, a Delhi based economist.

The survey has revealed that nearly 10 per cent of rural and urban households live below the poverty lines. The poorest 5 per cent in rural areas subsist on a mere Rs 521.44 per month, while in urban areas, the monthly spending by the poorest 5 per cent is on an average Rs 700.50. This in effect means that the poorest of poor subsist on just Rs 17.38 per day in villages and a mere Rs 23.35 a day in cities.