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Narendra Modi’s Gujarat not a role model in urban spending

-The Economic Times


NEW DELHI: Narendra Modi-led Gujarat may be high on economic growth, but it is not a state companies would rush to for selling their goods. Per capita monthly spending in urban Gujarat is below the national average and rural Gujarat does not figure among the top spenders, according to a National Sample Survey Office (NSSO) report based on household consumer expenditure survey of 2011-12.

NSS

Haryana and Kerala headed the spending charts, the survey showed.

Gujarat's urban households spent an average of Rs 2,581 per capita in a month in 2011-12, lower than the all-India average of Rs 2,630. In rural Gujarat, though the monthly spend was higher than the all-India figure at Rs 1,536 versus Rs 1,430, the figure was lower than neighbouring Rajasthan and Maharashtra, said the report titled 'Level and Pattern of Consumer Expenditure'.

The report is based on information collected during July 2011-June 2012 from 7,469 villages and 5,268 urban blocks spread over the entire country.

The poorest 5% of rural India survived on just Rs 521 average monthly per capita consumer expenditure (MCE) in 2011-12 while in the case of urban India, it was Rs 700 a month. The top 5% of the rural population spent on an average Rs 4,481 a month while the corresponding figure for urban India was Rs 10,282 a month.

In urban areas, Haryana topped the list with the monthly per capita spend of Rs 3,817 in the urban sector, followed by Kerala at Rs 3,408 and Maharashtra at Rs 3,189. Kerala had the highest rural monthly per capita expenditure (MPCE) at Rs 2,669, followed by Punjab at Rs 2,345 and Haryana at Rs 2,176.

In all other major states, average rural MPCE was between Rs 1,000 and Rs 1,760. The average urban monthly spend was nearly double than the rural spend in states like West Bengal, Jharkhand and Maharasthra, whereas the gap between the rural and urban spend was the lowest in Punjab at 19%, followed by Kerala and Bihar.Kerala had the highest inequality in expenditure.

One reason for Gujarat's poor performance could be its high savings rate. Some studies have suggested the state has savings rate on the scale of that in China and South Korea. After all, its economy expanded 7.96% in FY13, higher than India's GDP growth of 4.5% in the same year.