Consumer Pyramids Results from India's Largest survey of Households
Over 158,000 Households Surveyed every Quarter
Demographic characteristics of over 700,000 individuals
31 Jul 2015 4:32 PM, Insights Mansi Daga

Top 10% of households save more than they consume

Bottom ten per cent barely meet consumption expenses from their incomes

The average monthly expenditure of a household was Rs.8,054 during the quarter ended December 2014. This is what a household spent, on an average, on consumption items such as food, clothing, cosmetics, toiletries, restaurants, recreation, rents, energy, transport, communication, education, health, etc. It does not include expenses on buying capital goods such as motor vehicle or a refrigerator, air-conditioner, washing machine, TV or a house. Eight thousand rupees is what households spent on consumption although this includes EMIs for the purchase of capital goods.

The average household monthly income, at Rs.15,000, is much higher than the average monthly expenditure. But, income distribution is skewed in favour of richer households. There is an over 20-times difference between monthly income of the lowest and highest percentile of households compared to a 10-times difference in terms of household expenses. A summary measure of this difference would be the Gini coefficient, which is 0.26 in the case of household expenses and a much higher 0.42 for income.

The skewed distribution of income makes the average income 86 per cent higher than the average expenses. However, the median income is only 33 per cent higher than the median expenses. While the median income is Rs.9,000 per month, the median expenditure is Rs.6,788 per month.

The gap between income and expenses narrows sharply at the lower end of the spectrum. Incomes fall rapidly but expenses do not. As a result, about ten per cent of the households can barely meet their monthly expenses with their incomes.

The top quartile of the households have a healthy saving after meeting consumption expenses. Incomes rise rapidly but expenses do not correspondingly rise quickly. As a result, top ten per cent of the households save much more than they spend on consumption expenditure. There is a limit on the amount that a person can consume. But, there is no limit on the amount a person can earn.

Distribution of Household Income and Expenditure: October-December 2014
Percentile Income/month (Rs.) Expenditure/month (Rs.)
1st 69,167 24,025
5th 35,000 14,682
10th 25,000 11,775
25th 15,000 8,818
50th 9,000 6,788
75th 6,000 5,230
90th 4,333 4,164
95th 3,200 3,604
99th 0 2,641