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Reinforcing predictable trends

The latest survey on consumption expenditure by Indian households conducted by the National Sample Survey Organisation (NSSO), covering the first half of 2004, confirms the broad trends captured by previous ones. During the period, the monthly per capita consumption expenditure (MPCE) by urban households was Rs.1060 while that of rural households at Rs.565 was a little over 53 per cent of the urban level. Interestingly, the difference between urban and rural households has remained pronounced and practically unchanged in recent times. An earlier survey had put the average MPCE for urban and rural households during 2001-02 at Rs.933 and Rs.498 respectively. However, as price levels are higher in urban areas, the difference would be narrower in real terms. A second finding reinforces earlier trends: the share of food expenses in the average consumption basket of both urban and rural households has continued to decline even while the average consumption expenditure by both categories has increased. However, urban households spend less on food in proportionate terms. For rural households food expenditure at Rs.305 was around 54 per cent of the average MPCE of Rs.565. For urban households, on the other hand, non-food expenditure was considerably more, at nearly 58 per cent of the average MPCE. Urban India spent more on items such as fuel and lighting, clothing and footwear.

Again, entirely in keeping with past trends and consumption patterns elsewhere in the developing world, the share of cereals in the food basket has been coming down while incomes keep rising. Cereals accounted for 18 per cent of consumption expenditure in rural India during January-June 2004, sharply lower than the 26 per cent during 1987-88. In urban India it was 10 per cent, down from 15 per cent during 1987-88. Here again there is a dichotomy between rural and urban India with the former consuming more of cereals in proportionate terms, although less in absolute terms compared with the previous years. This development has implications for policy makers in areas such as cropping patterns, food subsidy and even water utilisation. The survey reveals the glaring inequalities in incomes and consumption patterns. In rural India approximately 50 per cent of the population has MPCE below Rs.470, about 20 per cent below Rs.340. Among the urban population, 82 per cent had MPCE above Rs.500 and about 18 per cent above Rs.1500. The survey records inequality among States: Kerala had the highest MPCE for both urban and rural areas, while several others, including Madhya Pradesh and Bihar, fared poorly in both the segments. The survey also captures some well recognisable trends in the fuel consumption patterns of households. In both, there has been a shift to LPG as a cooking fuel, away from kerosene. However for lighting purposes, kerosene is still the primary source in rural areas. Both these fuels are subsidised and obviously consumption patterns will aid policy makers in deciding on the future course.

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