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According to most economists, NSSO underestimates the consumption expenditure of Indians, especially of high income groups. Photo: Mint
According to most economists, NSSO underestimates the consumption expenditure of Indians, especially of high income groups. Photo: Mint

Where do the richest 10% Indians live?

The richest Indians live in states that have fewer poor people on average

Mumbai: The richest 10% Indians are more dispersed across India than the poorest 10%, who are largely concentrated in a few states.

The cut-off that separates the richest 10% from other Indians works out to be 2,055 per capita per month in rural India and 4,280 in urban India.

The figures are likely an under-estimation of the true consumption expenditure (which is considered a proxy for income owing to the lack of reliable income data) of the richest 10%.

According to most economists, NSSO underestimates the consumption expenditure of Indians, especially of high income groups. Nonetheless, as long as the extent of under-estimation does not vary sharply across states, there is value in looking at the inter-state distribution of the richest.

For our analysis, we ignore state-wise price differences and use the national level cut-offs as a rough guide to identify the regions where the richest live.

While the richest are more evenly spread compared with the poorest Indians, the urban rich are even less densely concentrated compared with the rural rich.

Some of the states which have an above-average proportion of the extremely rich, such as Karnataka and Maharashtra, have high differentials in rural-urban consumption patterns.

The list of top states also includes Haryana, a state that has seen a record rise in the rural-urban differential over the past few years.

Still, it will be a mistake to conclude that the presence of a high proportion of the urban rich indicates growing inequality.

Among the top places where the richest urbanites live, we also have more egalitarian states such as Himachal Pradesh and Kerala. One common element that ties many, but not all, of these states is their high level of urbanization. Most states with a very low proportion of the richest are predominantly rural.

The richest among rural India are not surprisingly present in large numbers in the more advanced agrarian belt of Punjab and Haryana. But, surprisingly, Delhi and Goa top the list with roughly half of their rural population falling in the top consumption bracket. However, the size of the rural sample for the two states in the NSSO surveys is very small, so we need to take these estimates for these states with a pinch of salt.

The states that have the highest concentration of the poorest Indians, such as Chhattisgarh and Odisha, are also those with the lowest numbers of richest Indians.

The richest Indians live in states that have fewer poor people on average. This suggests that on balance, the growth process in India seems to have lifted all boats, cutting across class divides.

The economically dynamic states have seen people grow rich faster but this has not been at the expense of the poorest, the data seem to suggest.

This is the fifth in a several-part series Mint will run over the next few weeks examining the key changes in consumption patterns across India over the past few years, based on the official statistics published by NSSO. For the earlier stories, go to www.livemint.com/ruralconsumption

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