A glass half full

The National Sample Survey Organisation's (NSSO's) Consumer Expenditure Survey is conducted roughly once every five years on a large, nationwide sample. Detailed results from the latest round, which was carried out in 2005, were released by the organisation earlier this week. They will undoubtedly be subject to much analysis and commentary over the coming weeks and months. But, even in the early days of understanding the full implications of the numbers, some patterns stand out. Like many aspects of the Indian growth and development story, these also reflect a "good news-bad news" dichotomy, suggesting that even as consumption opportunities and convenience increase significantly, the number of households that is still to climb on the bandwagon of rapid growth remains very large.

With regard to consumer durables, the survey shows a significant increase in aggregate rural household expenditure compared with a decade ago. This is reflected in higher penetration levels in rural households of almost all major items. Motorcycles are now owned by close to 8 per cent of rural households, compared with about 2 per cent 10 years ago. Over 25 per cent of them have TV sets, again about four times as many as a decade ago. Four per cent of them currently have refrigerators, while about 38 per cent have ceiling fans. These penetration levels too are several multiples of their magnitudes of a few years ago. There is, therefore, little question that rural households have begun to gain ground as far as the quality of life attributes goes. But, by any absolute standard, all these numbers underscore the huge distance that needs to be covered before even a simple majority of rural households possesses what are now considered necessities in an urban environment. This is, of course, great news for producers of these goods, who can interpret the data as an indication of huge potential demand for their goods. They do, however, have to stop and think about whether their current menu of products will be able to penetrate this market effectively. If incomes are not growing rapidly enough and other barriers to purchase loom large, the opportunity may be more illusory than real.

One of these barriers, it is clear, is the poor availability of electricity, which presumably deters a large number of households from buying appliances that they probably could afford. More generally, the issue of energy consumption by rural households is also worthy of attention. The number of households using LPG as a cooking fuel increased almost six-fold over the last decade, but still languishes at an abysmal 11.7 per cent. Firewood is still the primary source of household energy for a huge 75 per cent of households. There is evidence of significant inter-state variation on this parameter, but the fact remains that a commodity like LPG, the subsidy on which is such a bone of political contention, still remains out of reach for the vast majority of rural households, which, by any yardstick of welfare, are the ones towards whom significant subsidies should be targeted. In sum, while the survey certainly reinforces the dominant perception of significant increases in discretionary consumption, which in turn buoys the growth process, it also highlights the long distance the country still has to travel to make it a genuinely inclusive one.