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LATEST NEWS UPDATES | India trades up, finds census by Asit Ranjan Mishra & Shuchi Bansal

India trades up, finds census by Asit Ranjan Mishra & Shuchi Bansal

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published Published on Mar 14, 2012   modified Modified on Mar 14, 2012

The latest round of data on the 2011 Census shows that the country is exhibiting distinct signs of trading up as material living conditions improve for large sections of the population.

Although this aggregate picture is not uniform across the country, analysts believe that the upward material mobility in society is creating the basis of a new consumer boom in the economy—serving up a perfect backdrop ahead of the presentation of the Union budget on 16 March.

Saroj Kumar Mohanta, partner at MART, a rural marketing firm, said he is not surprised by the new census data as the agency’s own findings reflect an improvement in rural income, quality of housing and other lifestyle parameters that could create a base for higher consumption.

According to the Housing Census data for 2011 released by the Registrar General of India on Tuesday, people in rural India saw significant improvement in the quality of houses they live in, as they did in terms of access to water. They also saw similar improvement in access to banking facilities with over one in two households having access to a bank as compared with a little less than one in three in the 2001 Census.

Some consumer durables have seen a dramatic increase in terms of penetration (or the proportion of households they reach)—nearly one in two rural households now owns a mobile phone compared with two out of three in urban households. The data also shows that one in three rural households now owns a television set compared with almost one in five a decade ago. In comparison, 76.7% urban households now have television sets against 64.3% in 2001.

Consumption of liquified petroleum gas for cooking purposes picked up in the last decade with 11.4% rural households using it compared with 5.7% in 2001. However, firewood remains a major source of cooking in rural India with 64.1% households still using it as a primary source of energy.

The number of census houses jumped from 250 million to 330 million with rural India comprising 67% of the total households. The trend of urbanization is evident in the numbers: while the number of census houses grew by 24.3% in the decade since 2001, the number of census houses in urban India grew 53.8% during the same period.

And, contrary to popular perception, on the surface at least, more Indians would appear to have a roof over their heads.

“Though figures of houseless population and infirm structures would be required for making accurate estimation of housing shortage, the trend (of people without a house) seems to be a reducing one,” said C. Chandramouli, registrar general and census commissioner of India.

Part of the reason for this, said analysts, is because of the big spending under the various social spending programmes of the government.

“The growth in housing may be a little tentative, but there has been a change. Bharat Nirman spends Rs.6,000 crore to Rs.7,000 crore a year on rural housing. If it spends Rs.45,000 on a house, a rural consumer adds another Rs.15,000 from his pocket for better quality. Housing has improved in Andhra Pradesh and Karnataka as self-help groups help in terms of financing. Sanitation has also improved under the Indira Awas Yojna. So houses can be brick and cement with tiles or corrugated sheet roofs plus a toilet,” Mohanta said.

Wells are fast losing their relevance as a source of drinking water in India. While only 13.3% households now depend on wells compared with 22.2% in 2001, 30.8% households now have drinking water on tap.

While states such as Tamil Nadu, Sikkim and Goa have achieved more than 75% coverage of drinking water through taps, others such as Punjab, Haryana, Andhra Pradesh and Mizoram have achieved 50-75% coverage. The laggards remain poorer states such as Orissa, Bihar, Jharkhand and Assam with less than 15% coverage.

The proportion of thatched houses in rural India has declined substantially from 27.7% to 20%, while that of houses with concrete roofs has gone up to 18.3% in 2011 compared with 11% in 2001. Similarly, cement flooring has caught on even in rural areas.

All of this creates an environment conducive to consumption, said an expert.

Debashish Mukherjee, partner at AT Kearney Ltd, however, said people in villages in India will not spend more just because more products are on offer. Instead, their tendency to consume is a result of circumstances created by the synergy of trends such as improved quality of housing, sanitation or better banking penetration, which eventually forces a change in mindset and, therefore, consumer behaviour.

“Any improvement in infrastructure changes their mindset about how they live. For instance, the presence of a bathroom/toilet will make women conscious of personal hygiene and, therefore, encourage usage of soaps and shampoo. Infrastructure changes consumer behaviour,” he added.

Mukherjee said banks bring organized finance into the market. “It may not be a huge driver for spends, but it may affect how they look at money,” he said, referring to people in rural areas.

“There are many reasons for this increase in banking coverage in rural areas. First is that the number of branches in rural areas has increased. Now almost 55% of bank branches are in rural areas. This has also resulted in a 22-24% increase in agricultural credit,” said M. Narendra, chairman and managing director of Indian Overseas Bank. “The second reason is the financial inclusion drive by banks. Banks have opened no-frill accounts through branches and with the help of business correspondents.”

Banks hope to provide banking facilities to 73,000 of India’s 600,000 villages that have a population in excess of 2,000, by the end of this fiscal year. From the next fiscal year, they will shift focus to villages with population less than 2,000.

“Banks have also been helped by the rise in rural incomes courtesy MGNREGA (the government’s flagship job guarantee scheme) and the improvement in infrastructure like better road connectivity,” Narendra added.

Not everyone is bullish about what the numbers mean.

Rama Baru, professor at Jawaharlal Nehru University, is circumspect about drawing any optimistic conclusions from the data. “The socio-economic paradigm must be factored in as well. It will be erroneous to conclude anything from this data unless it is disaggregated and a situational analysis is done in programme-specific areas,” she said.

According to the provisional census data released earlier, of India’s 1.21 billion population, 833 million people live in rural India, while the remaining 377 million reside in urban India.

Some basic amenities such as access to electricity and toilets reflect varying trends. While 55.3% of houses in rural area have electricity, 92.7% of urban households have power.

Here too the regional disparity is apparent. Less than one-third of the houses in Bihar have electricity, while all southern states have achieved more than 90% coverage. States such as Orissa, Jharkhand and Assam have made modest progress with 30-50% coverage.

The proportion of households that have toilets in rural India increased to 30.7% in 2011 from 21.9% in 2001. This is against 81.4% coverage in urban India in the latest census compared with 73.7% in 2001.

Live Mint, 14 March, 2012, http://www.livemint.com/2012/03/13222837/India-trades-up-finds-census.html?atype=tp


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