How India lives, thinks, earns and spends

Pramit Bhattacharya    December 23, 2016


How much do India’s richest earn and what do they spend their money on? Does a college education impact earnings significantly? How are Indians living in metros different from those living in other parts of the country?

In a 16-part data journalism series, Mint tried to answer these and many more questions on how India lives, thinks, earns and spends, based on fresh data from the ‘Household Survey on India’s Citizen Environment & Consumer Economy’ (ICE 360° survey) conducted this year by the People Research on India’s Consumer Economy (PRICE), and shared exclusively with Mint. The ICE 360° survey covering 61,000 households is among the largest consumer economy surveys in the country, capturing data till July 2016.

The first part of the series showed that India’s richest quintile accounts for 45% of aggregate household disposable income. The survey data also shows that an overwhelming majority (87%) of people living in metros belong to the top two quintiles of India’s income pyramid. What this means is that you are quite unlikely to encounter the truly poor in your daily life if you live in a metro, and those you think of as the urban poor (your maid or your driver, for instance) are likely to be closer to the top of India’s income distribution than to the bottom.

The second part of the series showed that the top decile earns 29% of aggregate household income, only a little less than what the bottom 60% households collectively earn. The top percentile earns 6% of the aggregate income, which is nearly equal to the share of the bottom 20% in the aggregate income pie. The data also shows that top-earners tend to be better educated on average, suggesting that a college education raises the likelihood of earning more.

The third part showed that top earners spend much more on housing compared to middle income or poor households. The data also shows that the median price of a house in a metro is Rs15 lakh compared with Rs2 lakh in an underdeveloped rural area.

The fourth part which examined access to amenities showed that while 77% of the bottom quintile have a mobile phone, only 18% of them have access to tap water. Of households reporting open defecation despite having toilets, 63% did not have running water in their toilets.

The fifth part showed that most salaried workers in India lack either written job contracts or benefits such as a provident fund.

The sixth part, which examined household spending patterns showed that the money spent on weddings is more than double the amount spent on higher education in India. The wedding industry is bigger than the entire entertainment industry of the country.

The seventh part showed that 86% of Indian households never take a trip, and 76% of households never eat out.

The eighth part showed that half the households in India own a bicycle, one in three owns a two-wheeler, and one in 10 owns a car.

The ninth part showed that washing machines top computers in popularity in the country.

The tenth part showed that with only 10% households reporting an Internet connection at home, and only 22% households having one member with access to the net, ‘Digital India’ is far from becoming a reality yet.

The 11th part showed that most households in India today are covered by bank accounts, although many still avoid using banking instruments to save.

The 12th part which examined the debt burden of households showed that social obligations such as arranging for wedding feasts or other family functions puts a heavy debt burden on Indian households. Nearly a third of those having loans reported taking loans to meet social obligations.

The 13th part showed that 3% of households in the top quintile (richest 20%) faced a health shock that wiped out more than a fifth of their annual income. The comparative figure for the bottom quintile (poorest 20%) was more than double at 6.8%.

The 14th part showed that single-earner families are less likely to own a house and slightly less optimistic about the future compared to others.

The 15th part showed that a majority of the richest Indians consider themselves ‘middle-class’. The data shows that only a very small fraction of Middle India (or the middle 60% of India’s income pyramid) has middle class characteristics such as regular earnings, ownership of vehicles and household appliances. Most of Middle India is not middle class yet, the survey suggests.

The 16th part, which examined perceptions of Indians on governance, showed that a majority of households prefer cash transfers to the existing system of in-kind food transfers, and that the Narendra Modi-led central government has more supporters among the super-rich than among the poor.