Households allocating greater share of monthly bill to non-food spending: EAC-PM working paper

New Delhi, Nov 21 (PTI) Households are now allocating a greater share of household consumption expenditure to non-food spending on consumables and services, and durable goods, according to a working paper of the Economic Advisory Council to the Prime Minister (EAC-PM).

EAC-PM in a working paper titled 'Changes in Durable Goods Ownership in India: Analysis of the Household Consumption Expenditure Survey 2011-12 and 2023-24' on Friday noted that the share of of the monthly per capita expenditure (MPCE) spent on durables has risen in both rural and urban areas, with the rural share slightly surpassing that of urban households in many states.

Further, in absolute values (rupees), spending has increased across all states and sectors, with higher absolute expenditure in urban households.

"Consequently, a greater share of household consumption expenditure is now non-food spending on consumables and services, and durable goods. Consumables and services are the largest component of household spending in urban areas," the paper said.

It said mobile phone ownership has increased across the board. "There is near universal access for mobiles, reflecting the improved inter-connectedness and access to communication for nearly the entire population," the report said.

Driven by affordable and faster network connectivity, the paper said mobiles are emerging as the instrument of choice for information, entertainment and communication.

"Laptop/PC growth remains slow and concentrated in fewer households, likely due to limited know-how and specialised educational and professional applications," it said.

The paper noted that the trend of falling TV ownership in many states and the rise of universal mobile access provide strong support for the idea that the television screen is being replaced, or at least supplemented, by mobile devices as the medium of information and entertainment.

Expenditure on durable goods (such as transport equipment and household appliances) is a useful indicator of economic well-being and the living standards of households.

Consumption of durable goods is also reflective of the future utility to households (and improved productivity) from the use of such goods, it said.

This study compares the Household Consumption Expenditure Survey 2023–24 with 2011–12 and finds significant advancements in spending on durable goods and in the ownership of key durable assets.

Across the three components -- food items, consumables and services, and durable goods, the paper said the share of food has fallen to less to than 50 per cent in both sectors.

The paper pointed out that household spending is shifting from basic necessities like Clothing and Footwear towards asset-building expenditure on Personal Goods, and Cooking and Household Appliances, even in the bottom 40 per cent of households.

According to the paper, motor vehicle ownership is the fastest-growing among durable assets, with significant urban-rural convergence across the overall and bottom 40 per cent households in many states.

"Further, the bottom 40 per cent households have also witnessed rapid catch-up with the overall population, especially in urban areas," the paper said, adding that better market access, road infrastructure and access to vehicular finance are likely drivers of improved ownership levels across the country. PTI BKS DRR