The great Indian consumption divide continues as per NSSO Survey 66th Round

Somatish Banerji | August 4th, 2011, 10:31 am

On 8th July 2011, the National Sample Survey Office (NSSO), Ministry of Statistics and Programme Implementation released the key indicators of household consumer expenditure in India based on data collected in its 66th round survey during July 2009 – June 2010. NSS surveys on consumer expenditure are conducted quinquennially (every 5th year) with the last quinquennial survey conducted in NSS 61st round (July 2004 – June 2005). The NSS 66th round was the eighth quinquennial round covering 59,097 samples in 7,428 villages and 41,697 samples in 5,263 urban blocks.

The survey assumes heightened significance as India relies on it to measure income growth across the country, in the absence of an official income survey. The survey brings to light, the prevalence of the deep urban-rural divide in terms of consumption spending (and hence, income). Per capita spending of urban India was almost double that of rural India. This disparity is further accentuated by the stark inequalities that exist amongst states, as evidenced by the survey. To cite an example, the rural average monthly per capita expenditure (MPCE ) in Kerala was INR1835/USD41.28 while that in Bihar was only INR780/USD17.55. The key proximate factors contributing to widening of such disparities are the poor state of the agricultural sector in the country and the ineffectiveness of the government’s social safety net programs.

The situation is however, not completely grim as the survey results do also indicate certain fundamental positives. The 65% rise in rural consumption spending over the past 5 years is one of the clearest indications of India’s growth story having touched rural lives. The survey also tracks the composition of the consumption expenditure basket and here also certain encouraging signs are noticeable in this regard. Share of food in both the rural and the urban consumption baskets has declined significantly over the past two decades while spend on non-food items like durables have risen, a phenomenon associated with rising levels of prosperity.

“The road is long” and much remains to be done to ensure faster and more fluid percolation of economic benefits to all states and to rural India as a whole. The government needs to adopt fresh strategies such as engaging with the private sector to create innovative and customised business models to make India’s growth story more inclusive.

Our analysis of NSSO 66th round Survey can be downloaded here