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Business News/ Economy / Food now takes up less in spending bills

Food now takes up less in spending bills

The share of food in per capita spending in rural areas fell to 46% in the latest survey from 53% in 2011-12

In urban areas, the share of food declined to 39% from 43% earlier. (Photo: Mint)Premium
In urban areas, the share of food declined to 39% from 43% earlier. (Photo: Mint)

New Delhi: Spending on discretionary items—such as durable goods and consumer services—has risen sharply over the past decade or so, even as the share of food in rural Indians’ household budgets slid below the 50% mark for the first time in 2022-23, the results of a long-awaited household consumption survey revealed on Saturday.

The survey, conducted by the statistics ministry’s National Sample Survey Office, lays out India’s spending patterns for the first time since 2011-12.

A survey took place in 2017-18 as well, but the government had junked its results, citing data quality issues, while many experts, citing a leaked version of its findings, attributed the decision to unfavourable results.

Also Read: How India’s spending patterns stack up, in charts

The average per capita consumer spending in urban areas increased to an estimated 6,459 in 2022-23, from 2,630 in 2011-12, the survey said. In rural India, this rose to an estimated 3,773 from 1,430 during the same period. In real (inflation-adjusted) terms, the growth was 40% in rural parts and 33.5% in urban parts.

The survey’s findings are not strictly comparable due to methodology changes. The latest edition of the survey, conducted between August 2022 and July 2023, assessed spending on more items than before, used computer-assisted interviews unlike the pen-and-paper format used earlier, and comprised multiple visits to the 261,746 surveyed households, unlike a single visit earlier.

The share of food in per capita spending in rural areas fell to 46% in the latest survey from 53% in 2011-12—the sharp decline not being surprising given the increase in disposable incomes in this period. In urban areas, the share of food declined to 39% from 43% earlier.

These numbers do not take into account the impact of subsidies and free goods and services received from the government.

The consumption of non-essential items such as durable goods comprised about 7% of per capita spending in 2022-23 across both rural and urban regions, up from around 5% in 2011-12. The spending on conveyance rose to about 8-9% in 2022-23 across urban and rural areas, up from 4-7% in 2011-12.

The survey data is essential to review the basket of goods that help compute India’s retail inflation. However, experts said that 2022-23 was an unusual year, as the economy saw pent-up demand following periods of lockdowns in the previous year and, thus, shouldn’t be used as a basis for reviewing the consumer price index.

“The year 2022-23 saw huge pent-up demand, which along with festival demand, led to good results for corporates, especially in the manufacturing sector. This was evident in their financial results during the fiscal. However, the pent-up demand eased during the next fiscal (2023-24)," said Madan Sabnavis, chief economist at the Bank of Baroda.

“The amount of personal loans given out during 2022-23 was also much higher than the previous years, which showed that people were borrowing more to buy non-food items. However, at present the circumstances have changed with the pent-up demand, and consumption of non-food items," Sabnavis added.

The top 5% spenders in the urban population spent an average of about 20,824 per capita per month in 2022-23, according to the survey, which is about 10 times the spending by the bottom 5%. In rural areas, the spending by the top 5% stood at an average of 10,501, nearly eight times that of the bottom 5%.

Sikkim, Chandigarh, and Andaman and Nicobar Islands were among the states and Union territories with the highest monthly per capita consumption expenditure among both rural and urban areas, while Chhattisgarh and Jharkhand featured at the bottom among rural regions, and Chhattisgarh and Bihar among urban regions.Alsoo 

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Rhik Kundu
Rhik writes about the Indian economy and its crucial indicators. He is constantly navigating corporates, decoding policies, and dabbling with everything in between.
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Published: 26 Feb 2024, 06:05 AM IST
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