India growth story marred by disturbing inequity
68th Round of National Sample Survey makes it amply clear that the wave of economic growth has not percolated down from the 0.003 per cent of population of ruling elite (as per Income Tax records, only 42,800 persons have taxable Income more than Rs 1 crore in India). 99.996 per cent population is spending between just Rs 25.90 and Rs 37.36 per capita per day (average MPCE) in rural and urban areas respectively
India's much-vaunted economic growth story is a little hard to digest if one were to closely scrutinise the results emanating from the 68th round survey of the National Sample Survey Office. The survey carried out during July 2011-June 2012 reveals some alarming facts about how little money people have to spend on food, nutrition and health. If our society is truly growing economically, as claimed, and the state is withdrawing from its role in very basic social and essential sectors like education, health, transportation and nutrition, one would assume that expenditure on these services would have increased. But data shows expenditure on food has decreased proportionately over a period of time; at the same time overall expenditure is also not showing any impact of economic growth. This report gives a statistical base to the assumption that economic growth has maintained huge inequality in per capita expenditure on very essential needs such as food, health and education. The level of inequity is very-very high on in the context of per capita expenditure on education and health.
On education, the bottom 5 per cent population in rural India is spending just Rs 7.54 per month whereas top 5 per cent in urban India is spending a 120 times higher amount of Rs 908.12 per month. This disparity is one of the reasons why the largest section of the society, the poor, is denied Right to Education with quality. The spending difference on medical expenditure in these two categories is 40 times. Just to inform you on expenditure levels for availing conveyance services, the top 5 per cent population in urban India spends 116 times more than the bottom 5 per cent rural population. Even today, the average Indian is struggling hard to get right to quality education and basic health services and because of uneven growth they not able to spend on it. It also indicates that withdrawal of the state from essential sectors is really causing distress in almost every segment of society.
Emerging pointers
- The per capita per day expenditure in rural India on cereals is a meagre Rs 5 and in urban areas it is Rs 5.80. Persons living in rural areas spend just Rs 1.31 on pulses and pulse products and for those in urban areas, this expenditure goes up to Rs 1.70 per day. Would it indicate a telling effect on the nutritional intake of the rural population? The apprehensions could be valid and alarming, particularly if these expenditures were traced to the lowest 5 per cent population of the country.
- Why are the poor sections of the society still struggling with their basic needs? Why are they bound to spend the biggest part of their income on food and health services and even then must they live with hunger as their income does not allow them to feed their stomach to the full?
- From the average monthly per capita expenditure (MPCE) of Rs 1,278.94 (rural), people spend Rs 776.49 on food alone. The lowest 5 per cent population spends Rs 10.53 per day on food; the second lowest 5 per cent spends Rs 13.35 per day. In contrast, the top 5 per cent population spends Rs 59.01 per day on food. Fractile population (90-95 per cent, the second top 5 per cent population) spends Rs 40.55 per day in rural India. Rural Indians ensure their food security by an average spending of Rs 25.90 per day.
- The average MPCE in urban India is Rs 2,399.24, out of which Rs 1,120.88 is spent on food. In urban India, the lowest 5 per cent population spends Rs 13.82 per day on food, whereas second lowest 5 per cent spends Rs 17.75 on food. The highest spending fractile (top 5 per cent population) spends Rs 95.30 per day and the second top fractile (90-95 per cent) spends Rs 64.86 per day. All urban Indians spend an average amount of Rs 37.36 per day on food.
- On an average, the top 5 per cent population in rural India spends Rs 212.97 (Rs 7.09 per day) in a month on cereals and Rs 71.56 (Rs 2.39 a day) on pulses and pulse products. Lowest (assuming poorest) fractile of 5 per cent population spends Rs 102.96 (Rs 3.43 per day) on cereals and Rs 21.62 (Rs 0.72 per day) on pulses and pulse products.
- In urban areas, lowest 5 per cent population spends Rs 118.42 per month (Rs 13.82 per day) and the second lowest fractile spends Rs 128.32 in a month (Rs 17.75 per day) on cereals. The top two fractiles (90-95 per cent and 95 per cent plus) spend Rs 220.71 and Rs 224.51 on cereals respectively. With regard to expenditure on pulses and pulse products, lowest five per cent in urban India spends Rs 28.29 in a month (94 paisa per day); top two fractiles (top 10 per cent) urban population spend Rs 71 in month (Rs 2.37 per day) on pulses.
- Edible oil is one of the most important needs of people to fight malnutrition in India. However, the report shows that expenditure on edible oil is very limited. The lowest 5 per cent population spends only Rs 0.88 per day, whereas the top fractile (95 per cent plus) spends Rs 3.42 per capita per day. The average expenditure for having edible oil in rural areas is Rs. 1.78 and in urban areas Rs 2.33 per capita per day.
- There is 18 times difference in the expenditure on milk and milk products between the top 5 per cent and lowest 5 per cent population in rural areas. The lowest 5 per cent spends Rs. 0.59 per day on it, whereas the top 5 per cent spends 11.05 per day. In urban areas, the lowest 5 per cent spends Rs 1.26 per day. On the contrary, the top 5 per cent population spends Rs 14.02 per day on these products.
- Huge inequality can be perceived in spending on consumer services. In rural India, the bottom 5 per cent population spends Rs 7.54 per month on education, whereas the top fractile (top 5 per cent in MPCE) spends Rs 277.50 per month. This amount is almost 37 times higher than the bottom class. Inequality does not end here. The expenditure on medical care for bottom 5 per cent population was Rs 16.12 per month whilst being at Rs 494.82 (31 times higher than the poorest people) among the top 5 per cent fractile. We cannot miss to have an analysis for urban India—the bottom 5 per cent population was spending Rs 16.32 on education which was 56 times higher (Rs. 908.12) for the top 5 per cent.
- Expenditure on conveyance is also an important area which has been covered under MPCE. It is an established fact that this is unavoidable expenditure in both urban and rural areas. The results indicate that the bottom 5 per cent of MPCE population was spending merely Rs. 8.01 a month on conveyance, whereas this amount was Rs. 290.82 for the top 5 per cent. Likewise, in urban areas, where distances in every part of life have become a reality, the bottom 5 per cent population was spending Rs 11.07 whilst those in the 5 five per cent spent Rs 931.06 per month (as much as 84 times more).
The Household Consumer Expenditure Surveys of the National Sample Survey (NSS) are the primary source of data on various indicators of level of living, pattern of consumption and well being of households at the national and state levels. These indicators feed planning, policy formulation and decision support and are used in analytical studies by government, research agencies and the academia. These surveys with a large sample of households have been conducted quinquennially from the 27th round (October 1972-September 1973) onwards. This article draws upon the results emanating from the NSS 68th round survey carried out during July 2011-June 2012, which was the ninth quinquennial survey in the series.
The survey aims at generating estimates of household monthly per capita expenditure and its distribution, separately for the rural and urban sectors of the country, for states and Union Territories and for the different socio-economic groups. According to the statement of Union Ministry of Statistics and Programme Implementation, “The estimates of average MPCE and its break-up over consumption items—14 food groups and 16 non-food groups—are provided separately for rural and urban sectors at the State/UT level as well as across all India fractile classes of MPCE. The fractile classes are mostly decile classes. Thus, the first decile class comprises the bottom 10 per cent of the population in terms of MPCE and the top (10th) decile class comprises the top 10 per cent of population. However, the first and 10th decile classes have each been further split into two equal-sized fractile classes.
Rural-urban differential in MPCE
The report on “Key Indicators of Household Consumer Expenditure in India – 68th Round of National Sample Survey reveals that the estimate of average MPCE was Rs 1,430 for rural India and Rs 2,630 for urban India. Thus, average urban MPCE was 84 per cent higher than the rural MPCE for the country as a whole.
For rural India, the fifth percentile of MPCE was estimated at Rs 616 and the 10th percentile as Rs 710. About half of the rural population had MPCE below Rs 1,198. Only about 10 per cent of the rural population reported household MPCE above Rs 2,296 and only 5 per cent reported MPCE above Rs 2,886!
For urban India, the fifth percentile of the MPCE was about Rs 827 and the 10th percentile, Rs 983. The median urban MPCE was Rs 2,019. Only about 10 per cent of the urban population reported household MPCE above Rs 4,610 and only 5 per cent reported MPCE above Rs 6,383.
In terms of Mixed Reference Period (MRP) estimates, MPCE in rural India has grown from Rs 162.56 in 1993-94 to Rs 221.93 in 2011-12 – that is by 36.5 per cent in 18 years. Urban MPCE has grown from Rs 268.38 to Rs 413.53—a growth of 54 per cent over the corresponding time period, thereby depicting that the pace in growth in MPCE in urban India has been faster by about 48 per cent over that in rural India.
Notwithstanding the percentage differences being subject to greater errors of estimation and the fact that urban price levels are generally higher than the rural price levels, it is rather clear that states vary widely in the degree of the rural-urban gap. Notably, urban MPCE is double the rural MPCE in West Bengal and Jharkhand, and 93-97 per cent higher than rural MPCE in Maharashtra, Karnataka and Odisha. The gap is relatively narrow in Rajasthan, Andhra Pradesh and Tamil Nadu (about 53-55 per cent), Bihar (34 per cent) and Kerala (28 per cent) and lowest in Punjab (19 per cent).
Share of food and cereals in consumer expenditure
In the rural sector, average share of food in expenditure at state level was 57 per cent or more (against the all-India average of 53 per cent) in five major states: Assam (61 per cent), Bihar (59 per cent), Jharkhand and West Bengal (58 per cent) and Odisha (57 per cent). Kerala (43 per cent) and Punjab (44 per cent) were the major states with the lowest food shares for the rural sector.
In the urban sector, the state-level food share exceeded the all-India estimate of 42.6 per cent by as much as eight percentage points for Bihar, five for Assam, four for Jharkhand and three for Odisha. Kerala, again, had the lowest food share among the major states (37 per cent) followed by Haryana (39 per cent) and Karnataka (40 per cent).
State-level averages of share of cereals in consumer expenditure varied from 5 per cent to 20 per cent in rural India and from 4 per cent to 18 per cent in urban India. In the rural sector, the share of cereals in consumer expenditure was 15 per cent or more in five major states—Jharkhand, and Odisha (17 per cent), West Bengal and Assam (16 per cent), and Bihar (15 per cent). Among the major States, it was lowest in Punjab, Kerala and Haryana (5 to 5.5 per cent).
In the urban sector, the major states with the highest share of expenditure on cereals were Bihar (over 12 per cent) and Odisha, and Jharkhand and Assam (10 to 10.5 per cent) against the all-India average of 6.6 per cent. Haryana had a share of 3.7 per cent and Kerala, 4.6 per cent.
Share of different food and non-food groups in consumption
Food accounted for about 53 per cent of the value of the average rural Indian’s household’s consumption during 2011-12. This included 11 per cent for cereals and cereal substitutes, 8 per cent for milk and milk products, another 8 per cent on beverages and processed food, and 6.6 per cent on vegetables. Among the non-food item categories, fuel for cooking and lighting accounted for about 8 per cent, clothing and footwear for 7 per cent, medical expenses for 6.7 per cent, education for 3.5 per cent, conveyance for 4.2 per cent, other consumer services for 4 per cent and consumer durables for 4.5 per cent.
For the average urban Indian, 42.6 per cent of the value of household consumption was accounted for by food, including 9 per cent by beverages and processed food, 7 per cent by milk and its products, and less than 7 per cent by cereals. Education accounted for nearly 7 per cent, while fuel, clothing (including footwear) and conveyance each accounted for about 6.5 per cent. Medical expenses accounted for 5.5 per cent of expenditure.
Notably, paan, tobacco and intoxicants accounted for 1.6 per cent expenditure in urban areas whereas the same were at 3.2 per cent for the rural sector. The other most noticeable rural-urban differences were in case of cereals (urban share: 6.7 per cent, rural share: 10.8 per cent), rent (urban: 6.2 per cent, rural: 0.5 per cent), education (urban: 7 per cent, rural: 3.5 per cent).
Trends in pattern of consumption
With reference to MPCE based on uniform reference period (URP) estimation method, the trends indicate that share of food is seen to have declined by nearly 15 percentage points to 48.6 per cent in the rural sector and by about 16 percentage points to 38.5 per cent in the urban sector. Notably, in the two years prior to 2011-12, the share of food has fallen by 5 percentage points in rural India and about 2 percentage points in urban India.
Over the 18-year period ending 2011-12, cereals have registered the largest decline in share among all the item groups—from 24 per cent to 12 per cent in rural India and from 14 per cent to 7 per cent in urban India.
Over the same period, the share of durables has increased from about 3 per cent to 6 per cent of MPCE in both rural and urban sectors, and the share of fuel and light shows a rise of about 2 percentage points in the rural sector and 1 percentage point in the urban. The “miscellaneous goods and services” category (including education and medical care) is, of course, the group which has grown the most—from 17 per cent of total expenditure in 1993-94 to 26 per cent in 2011-12 in rural India and from 27.5 per cent to nearly 40 per cent in urban India.
Growth: for whom?
For the past two decades, our government has been obsessed with singing just one tune—8 per cent, 9 per cent and 10 per cent growth in Gross Domestic Product (GDP). It has been mighty pleased with a self-fulfilling prophecy pertaining achievement in growth rate! However, it is the process of its translation in terms of real value that accrues to the households at the societal-level which counts. And, by all accounts, it is no mean task.
Apparently, the easy exercise for the government has been to perceive the transactions of sales and purchases in monetised form when it comes to interpreting GDP. Any attribute that doesn’t carry a money value is of little relevance to the concept of GDP!
Accordingly, in one way of looking at things, the economic growth could be described to be highly impressive. However, a deeper and more sensitive insight in to the data would show that the growth has rather been garnered by a “very special class” of 100 families in this country who have net worth of Rs 70,50,000 crore GDP for 2012. In the second rung of this ladder, India has 42,800 persons having taxable income of more than Rs 1 crore who were also levied a surcharge of 10 per cent. Next to this, we witness a sharp decline of rich people. In a sense, India has only 42,900 (including 100 top shots) rich people or rulers of new India to be more precise! The wave of economic growth has actually not percolated down from the 0.003 percent of population. It is this yawning chasm which has created new levels of inequality, where 99.996 per cent population is spending between just Rs 25.90 and Rs. 37.36 per day across the rural and urban spectra respectively. Is it not a bemoaning situation for a nation?
Regrettably, the so called economic growth has in effect cast a gloom of economic insecurity and it has rendered the large population of the country incapable of spending enough even to meet its most basic and essential needs. It results in shameful indicators of social development, whether they pertain to lowering of unacceptably high Infant and maternal mortality or completion and scholastic achievement in education. The rising class conflicts and widening gender disparities ring the alarm for securing real inclusion of the people before it gets to too late. The call to action for preserving comprehensive human development resting on the principles of equality is here and now.