//Kerala rank higher in rural consumer spending

Kerala rank higher in rural consumer spending

By Indo Asian News Service

New Delhi, April 26 (IANS) Delhi, Maharashtra and Mizoram top in average monthly per capita expenditure in the urban sector, while Himachal Pradesh, Punjab and Kerala lead in the rural sector, says a study on consumer spending patterns.

‘On the whole, the average monthly per capita expenditure was 87 percent higher in urban areas as compared to rural,’ said a new Market Information Survey of Households (MISH) report released by the National Council of Applied Economic Research (NCAER) here Wednesday.

Based on its own and consumer expenditure surveys of the National Sample Survey (NSS), the leading think-tank said, ‘Jammu and Kashmir, Himachal Pradesh, Punjab and Kerala ranked higher than others (states) in terms of spending in the rural sector while Delhi, Maharashtra and Mizoram topped the list in the urban sector.’

India’s per capita income growth in recent years has outperformed other major Asian economies but the gains of prosperity have been distributed unevenly, the study said. For instance, the per capita income in the richest state of the country is about five times that of the poorest.

India’s economic diversity matches its social diversity and this engenders a wide spectrum of consumers on income levels and spending, the report added.

In terms of rural and urban divide, the average monthly per capita expenditure (MPCE) in rural India during 2001-02 amounted to Rs.498 and the corresponding figure was Rs.933 for an average person in urban India.

‘Over the years, there has been a steady fall in the proportion of food expenditure in total MPCE and a rise in the proportion of non-food expenditure across both rural and urban areas. This trend is, however, more pronounced for urban India.’

The analysis also revealed that on an average the urban resident’s monthly expenditure on food items during 1987-88 was higher than that on non-food items. But beginning 1999-00 the picture reversed, with the average non-food expenditure exceeding that of food.

Household consumption expenditure over time has been moving in a direction dictated by forces of economic growth and expansion.

Economic reform implies higher income growth leading to dramatic changes in market demographics, refinement in lifestyles, including changing perceptions of the new age consumer, and hence higher, superior and more diversified consumption levels.

The trend has continued ever since. On the other hand, no such progress or diversification of the commodity basket has been observed in rural India.

As the ‘MISH, 2001-02’ indicated, rapid infrastructure penetration – particularly, availability of electricity – is the panacea for most urban problems.

‘Availability and access to infrastructure of all types – power, roads and transport, telecom, and water and sanitation – is a major factor leading to a huge gap between urban and rural penetration of consumer durables and non-durables,’ the report highlighted.

Then there are marked differences in lifestyle between urban and rural areas. Over the last decade, there has been a steady increase in urban disposable income and many middle-class households are moving up the income ladder.

A stark difference between the top 10 percent of the rich and the bottom 10 percent of the poor is that the latter spends a rupee on food against Rs.4 by the former.

Marked differences were also observed in luxury items like jewellery and big appliances like refrigerators and washing machines – with the poor spending Re.1 to Rs.188 by the rich.

The share of essential items like food, clothing, footwear, electricity and fuel in total average annual per capita consumption expenditure has reduced whereas the share of expenditure on durable goods has increased, reflecting the changing preferences of consumers.

High on the availability of lucrative financing schemes and all-round social and economic development, consumer tastes and perceptions are evolving swiftly.

This reflects a perceptible shift in consumer spending from primary products to higher value-added manufactured goods and services, the report revealed.

Copyright Indo-Asian News Service