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Household expenditure on services & durable Goods: Travel & communication biggest burden across India

An NSSO report shows that expenditure on travel & communication take away most of India’s household budget.

Written by Aanchal Magazine , Sandeep Singh | New Delhi |
Updated: July 8, 2016 3:44:21 am
Communication services, Household Expenditure, Durable Good, urban population spending, rural population spending, per capita expenditure, india economy, India GDP, business news Gold ornaments accounted for fifth highest share of expenditure for a rural household at 14.2 per cent or monthly expenditure of Rs 926.62 per household. (Illustrataion: CR Sasikumar)

Communication services are the biggest unifying factor between the urban and rural population in India, with both sides of the divide having the highest monthly per capita expenditure on communication among the miscellaneous consumer services.

During July 2014 to June 2015, the highest monthly per capita expenditure of rural households amounted to Rs 36.35 for communication services, while for urban households it was Rs 102.46. The monthly per capita expenditure on communication has seen a significant rise over last five years, with the expenditure in rural areas having increased by over 71 per cent from Rs 21.18 in 2009-10 and for urban areas by 48.7 per cent from Rs 68.91.

The miscellaneous group included 14 broad services, namely, domestic services, barber and beauty shops, TV and radio services, laundry, dry cleaning, repair and maintenance, communication, religious services, recreational and cultural services, funeral/cremation-related services, business services, services incidental to transport, other services, tailoring services and sewage disposal and sanitation.

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The findings are part of the report: Key indicators of household expenditure on services and durable goods by National Sample Survey Office (NSSO) collected during July 2014 to June 2015 for the 72nd round of the National Sample Survey. The findings of the survey cover four categories: Transport services, miscellaneous consumer services, other services and durable goods. The survey covered 7,969 villages and 6,048 urban blocks and 47,535 rural and 36,065 urban households.

exFor overall expenditure on consumer services, transport accounted for 19.29 per cent of the budget of rural households with per capita expenditure of Rs 64.01 a month, while urban households spent 20.01 per cent of their budget with each person spending about Rs 163.94 a month in 2014-15.

In both rural and urban areas, expenditure on bus/tram, auto rickshaw, taxi and train accounted for more than 90 per cent of the travel expenditure in 2014-15. The share of railways was much higher in urban areas at 12.54 per cent than rural areas at 4.41 per cent in 2014-15. Monthly per capita expenditure on air transport was negligible in rural areas but air transport accounted for 2.53 per cent of all transport expenditures in urban areas, amounting to monthly per capita expenditure of Rs 4.14.

Among the miscellaneous consumer services in rural areas, barber and beauty shops had the second highest share of the monthly expenditure, with monthly per capita expenditure of Rs 15.89 in 2014-15, sharply up from Rs 5.61 in 2009-10. In urban areas, however, TV and radio services and recreational and cultural services took the lead with monthly per capita expenditure of Rs 39.78 and Rs 38.71, respectively. Spending on barber and beauty shops followed with the fourth highest share for monthly per capita expenditure at Rs 34.86 in urban areas in 2014-15.

Of the total budget share for various miscellaneous consumer services, religious services accounted for 8.94 per cent of the total budget of rural households with a person spending about Rs 12.83 a month on these services in 2014-15. In urban areas, religious services accounted for 5.69 per cent share of the total budget for households with per capita spending of Rs 22.15 a month.

The consumption pattern for durable goods, including, among other things, vehicles, furniture, computers, cell phones, crockery, equipment for recreation, showed highest spending on transport equipment in rural areas accounting for 83 per cent of the total budget of the household, mainly for enterprise purpose. For domestic use, the highest share of expenditure was for transport services at about 45 per cent and monthly per capita expenditure of Rs 656.68, followed by about 23 per cent budget share for jewellery and ornaments. A person in a rural household spent about Rs 339.05 a month on jewellery and ornaments in 2014-15.

Both heating, cooling and electricity generation devices and IT & communication devices accounted for about 7 per cent of the total budget share, while for furniture and fixtures it was about 5.6 per cent. The rural monthly per capita expenditure on heating, cooling and electricity generation devices was Rs 98.08, while for furnitures and fixtures, it was about Rs 81.72.

In urban areas, a similar pattern was seen for enterprise purpose, with highest share of spending on transport equipment, followed by heating, cooling and electricity generation devices and IT and communication devices. For domestic use, urban households’ highest per capita spending was on transport equipment at Rs 1,189.32, followed by 18 per cent budget share on jewellery and ornaments, amounting to monthly per capita spending of Rs 469.22 in 2014-15. IT and communication devices and heating, cooling and electricity generation devices followed at spending of Rs 257.78 and Rs 209.67, respectively.

In 2009-10, repair cost of residential building used to account for the highest share of expenditure on durable goods in rural areas at 29.9 per cent of the total expenditure or monthly expenditure of Rs 126.97 per household. Other durables at 23 per cent share of the expenditure came in second, followed by motorcycles and scooters at 11.7 per cent of the total expenditure by a rural household. Gold ornaments accounted for fifth highest share of expenditure for a rural household at 14.2 per cent or monthly expenditure of Rs 926.62 per household.

The writer is CEO, BankBazaar.com

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