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LATEST NEWS UPDATES | Indians spend 25% of income on food, 1.5% on health, 1.4% on EMIs

Indians spend 25% of income on food, 1.5% on health, 1.4% on EMIs

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published Published on Jan 4, 2010   modified Modified on Jan 4, 2010

Of Indian households’ total annual income, 0.22 per cent is spent on buying newspapers — that is, if total national household annual income was Rs 100, 22 paise would be set aside for newspapers. Paying off bank loans (expenditure under equated monthly instalments) takes up 1.4 per cent of total household annual income. The share of health expenditure is 1.5 per cent, and that of education expenditure, 3.21 per cent.

Indian households devote roughly the same proportion of their annual income on recreation and alcohol (0.64 per cent and 0.6 per cent, respectively) and somewhat more on eating out (1.02 per cent of annual income). Expenditure on employing domestic help? 0.57 per cent of total annual household income.

Food expenditure (this category excludes money spent on eating out) commands just over 25 per cent of household annual income, while power and fuel account for 7.6 per cent, and transport expenses eat up 1.74 per cent.

These are among the many interesting findings on household income, expenditure, savings, asset-holding and debt status that are part of the Centre for Monitoring Indian Economy’s (CMIE’s) Consumer Pyramids, a survey of Indian households. The data, the first-ever direct income estimate, has been reviewed by the Planning Commission.

CMIE’s data for 2008-09 says household income the last financial year was Rs 28 billion. This is smaller than the official estimate (for 2007-08) of personal disposable income, which is put at Rs 36 billion. However, official estimates by the Central Statistical Organization measures income of what are called non-profit institutions serving households: basically, temples, churches, mosques, gurdwaras and various trusts. The god element probably explains the difference.

CMIE’s data, which estimates household income directly and by including incomes of all household members and not just the head of household’s, finds the average per household income in India in 2008-09 was Rs 1,40,000.

Income is distributed unequally for sure, but the inequality is not as sharp as many think. The richest 5 per cent of households account for 23.1 per cent of the total income, and 50 per cent of households from the bottom account for 18.7 per cent of the total income. But 58.2 per cent of the total income is earned by a significantly large bulge in the middle — 45 per cent of households.

CMIE’s Consumer Pyramids also indirectly estimates households’ savings rate. The national household savings rate is a very healthy 40.41%. There are interesting variations among states. Delhi and Maharashtra are high savings states (47.72 per cent and 49.72 per cent savings rates, respectively, higher than the national average), while Bengal and Andhra Pradesh (27.45 % and 22.03%) are significantly low savings states.

Nearly 59 per cent of households in India are investing households, according to CMIE data.

Households classified by ownership of consumer durables also reveal interesting data. Home theatres are a real luxury — only 0.02 per cent households own this entertainment-related asset. Kitchen appliances are somewhat more democratic — nearly 43 per cent of Indian households own one or more of appliances that range from refrigerators to toasters. Flat-screen television is a class differentiator: while 64.55 per cent of households own a TV, only 3.17 per cent own a LCD or plasma TV.

One bit of data shows how far India has to travel to become a modern economy: while over 26 per cent of households described themselves as borrower households, of these over 70 per cent borrowed from friends/relatives/moneylenders and just over 25 per cent from banks.

This is terrible news for the world’s second fastest growing major economy.


The Indian Express, 4 January, 2010, http://www.indianexpress.com/news/indians-spend-25-of-income-on-food-1.5-on-health-1.4-on-emis/563062/
 

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