Spending pattern points to India's rich-poor divide

The gap in consumption spending between poor and rich is more in urban areas than rural. Apart from much inequality in consumption between urban and rural areas.

Consumption per capita was 5.6 times less in a month for the bottom ten per cent of the population than the top 10 per cent in rural areas during 2009-10. The disparity increases to 9.8 times between the two classes in urban parts, according to recent data released by the National Sample Survey Organisation (see chart).

The difference in what was spent on consumption by the bottom 10 per cent between rural and urban parts was Rs 46. Or, that the poorest 10 per cent spent 32.3 per cent less in rural parts than their counterparts in urban areas. This inequality rose to Rs 3,347 when one compares the top 10 per cent in the two parts. Or, that the wealthiest 10 per cent of the urban population spent 133 per cent more on consumption per capita in a month than its equivalent class in rural areas.

The top 10 per cent in rural India spent 71 per cent more than those in the next 10 per cent, while in urban India this difference was 92 per cent.

Overall income inequality may be wider, since one spends a lesser proportion of income on consumption as income grows. “Income inequalities are greater in property and industry than in agriculture,” explained former Planning Commission member Y K Alagh.

The results are based on a new NSSO methodology. The comparative figure for the previous survey in 2004-05 was not given.

Average per capita expenditure by households was Rs 1,053.6 in a month in rural areas and Rs 1,984.5 in urban parts. State-wise, Bihar has the lowest average per capita monthly household consumption expenditure, both rural and urban. It was Rs 780 in rural Bihar and Rs 1,238 in urban parts. Kerala households had the highest expenditure on consumption (Rs 1,835). Maharashtra topped the list in urban areas (Rs 2,437).