Concepts and Definitions

A household is the basic unit of analysis in the study. Most of the quantitative classificatory factors such as income, expenditure, investment, surplus income, amount of life insurance payments, etc., refer to the household. Certain other characteristics used for the analysis such as occupation, age, education, and source of income refer, however, pertain only to the chief earner of the household.

Household: A group of persons normally living together and taking food from a common kitchen constitutes a household. The members of a household may or may not be related by blood or marriage. Servants, permanent labourers and unrelated members are treated as mem¬bers of the household in case they take their meals regularly from the same kitchen. If a person was out for more than six months during the reference period, he/she was not treated as a member of the household. Those entering the household on account of marriage or other alliances and new-born babies are counted as members of the household, even if they lived with the household for less than six months.

In ICE 3600 surveys, household has been considered as the basic unit of primary data collection as well statistical analysis.

Household size: The number of resident members of a household is its size. It includes temporary   stay-away members but excludes temporary visitors and guests.

Head/Chief Wage Earner of the household: The head is the main decision-maker in the family and the person best informed about the family’s finances. Usually, he/she is the chief earner or the oldest member in the household. The household members were expected to inform the interviewer who they regard as their ‘head/chief earner’.

Zonal Councils of India: India is composed of 28 states and eight union territories (including a national capital territory). The states of India have been grouped into six zones having an Advisory Council "to develop the habit of cooperative working" among these States. The present composition of each of these Zonal Councils is as follows.

  • Northern Zonal Council, comprising Chandigarh, Delhi, Haryana, Himachal Pradesh, Jammu and Kashmir, Ladakh, Punjab, and Rajasthan.
  • North-Eastern Council, comprising Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, and Sikkim.
  • Central Zonal Council, comprising the States of Chhattisgarh, Madhya Pradesh, Uttarakhand, and Uttar Pradesh.
  • Eastern Zonal Council, comprising Bihar, Jharkhand, Odisha, and West Bengal; Western Zonal Council, comprising Dadra and Nagar Haveli and Daman and Diu, Goa, Gujarat, and Maharashtra.
  • Southern Zonal Council, comprising Andhra Pradesh, Karnataka, Kerala, Puducherry, Tamil Nadu, and Telangana, Andaman and Nicobar Islands, and Lakshadweep.

Rural and urban areas: The definition of urban and rural areas adopted for this study is the same as that used in the 2011 Census. As per Census 2011, constituents of urban areas are Statutory Towns, Census Towns and Outgrowths.

  • Statutory Towns (ST): All places with a municipality/corporation, cantonment board or a notified town area committee, etc.
  • Census Towns (CT): Places that satisfy the following criteria termed as CTs.
    • A minimum population of 5,000
    • At least 75% of the male main working population engaged in non-agricultural pursuits
    • A density of population density of at least 400 per sq. km.
  • Outgrowth (OG): Outgrowth should be a viable unit such as a village or part of a village contiguous to a statutory town and possess the urban features in terms of infrastructure and amenities such as pucca roads, electricity, taps, drainage system, education institutions, post offices, medical facilities, banks, etc. Examples of OGs are Railway colonies, university campuses, port areas, that may come near a city or statutory towns outside its statutory limits but within the revenue limit of a village or villages contiguous to the town or city.
  • Urban Agglomeration (UA): It is a continuous urban spread constituting a town and its adjoining urban outgrowths (OGs) or two or more physically contiguous towns together and any adjoining urban out-growths of such towns.
  • RURAL: All area other than urban are rural. The basic unit for rural areas is the revenue villages.

Geographical clusters: To take a finer-grained look at the geography of inequality after considering differences across seven types of clusters that lie along a continuum ranging from metro cities to the most remote rural areas.

In the case of urban India, a combination of three different criteria helped identify the first three (of four) categories of districts - “Metros”, “Boom Towns” and “Niche Cities”. The three criteria we employ are population, rate of urbanization and per capita household consumption. As a base for selecting the first three urban clusters we have considered all cities having population of one million and above in 2021. Once the first three clusters have been defined, the fourth urban cluster has been defined as the rest of urban India and has been called as “Rest of urban”.

  • Nine ‘Metros’ – Mumbai, Delhi, Kolkata, Bangalore, Chennai, Hyderabad, Surat, Ahmadabad and Pune- garner the lion’s share of attention as India’s consumption centres. These are the country’s largest population centres (all have population above five million), and for the most part they are the largest markets in terms of household disposable income and total consumption expenditure.
  • Sixteen ‘Boom Towns’ stand out because of their potential to be the next set of large population cities are emerging cities that are quickly moving up the ranks as the largest markets (all have population between 2.5- 5 million) following the ‘Metros’. This group of cities has younger populations and has posted the fastest growth in disposable income. Cities in this group include Kozhikode, Coimbatore, Kochi, Malappuram, Lucknow, Jaipur, Thiruvananthapuram, Nagpur, Thrissur, Indore, Kanpur, Nashik, Madurai, Bhopal, Tirupur, and Kannur.
  • Thirty-Eight ‘Niche Cities’ are somewhat smaller in terms of overall population (all have population between 1- 2.5 million) but still hit well above their weight in spending per household. Cities in this group include Visakhapatnam, Vadodara, Vijayawada, Patna, Kollam, Rajkot, Agra, Raipur, Ludhiana, Jamshedpur, Srinagar, Aurangabad, Jodhpur, Meerut, Jabalpur, Tiruchirappalli, Asansol, Varanasi, Kota, Bhubaneswar, Mysore, Ranchi, Dhanbad, Allahabad, Amritsar, Bareilly, Moradabad, Gwalior, Hubli-Dharwad, Guwahati, Salem, Durg-Bhilainagar, Saharanpur, Siliguri, Aligarh, Jalandhar, Chandigarh, and Solapur.

Rural India has been grouped into three sub-regions: “Developed Rural”, “Emerging Rural,” and “Left-Behind Rural”. To enable this categorisation, a District Development Score has been calculated for all the 640 districts by using a set of 21 developmental indicators based on demographics, financial inclusion, access to basic amenities, and asset penetration, among other parameters, which are available from Census 2011. Using the score value, districts have been grouped into three sub-categories (Table 2):

  • Developed Rural (160 districts) – districts with the top 25 per cent highest District Development Scores (Examples, Thane, Pune, Kozhikode, Ernakulam, Jalandhar, Ludhiana, Sonipat, Surat, Gandhinagar),
  • Emerging Rural (160 districts) - districts with the next 25 per cent highest scores (Examples, Agra, Mathura, Warangal, Mysore, Guntur, Cuddalore, Nashik, Solapur, Jaipur, Ajmer), and
  • Left-Behind Rural (320 districts) - Districts with the bottom 50 percent of scores, the least-developed or more “backward” (Example, Firozabad, Madhubani, Adilabad, Nellore, Jodhpur, Buldana, Gaya, Samastipur, Ratlam, Ganjam, Bastar, Bilaspur) districts.

Household income: Income represents a partial view of economic well-being and comprises the regular or recurring receipts of household economic accounts. It provides a measure of resources available to the household for consumption and savings. A hierarchy of components of income is built up which provides definitions of total disposable household income. The recommended practical definition of income has been adopted for use in making international comparisons of income.  For instance, Expert Group on Household Income Statistics (Canberra City Group of UN Statistical Commission): Over 70 experts from 26 national organisations and 7 international organisations were involved in the work of the Canberra Group with objective to enhance national household income statistics by developing standards on conceptual and practical issues related to the production of income distribution statistics. It carried out a metasurvey (survey about surveys) of 106 income components that are actually collected in 30 household income surveys in 25 countries from all continents.

The total income of all household members earned during the reference period from all the sources as listed below is considered as the household income. The major components of income covered in the survey are income from regular salary/wages, income from self-employment in non-agriculture, income from wages (agricultural labour and casual labour), income from self-employment in agriculture (crop production, forestry, livestock, fisheries, etc.), income from other sources such as rent (from leased out land and from providing accommodation and capital formation), interest dividends received, employer-based pensions.

  • Agriculture and Allied Activities: Self-employed persons who operate their own farm with or without hiring labour.
    • Cultivator: Persons engaged in their own or leased in farm activities are defined as cultivator.
    • Allied agricultural activities: Persons engaged in the activities like dairy farming, poultry farming, beekeeping, fisheries, sericulture, pisciculture etc. are defined as allied agriculture workers.
  • Self-Employed (Employer) in Non-Farm Activities: Persons running their own business enterprise with or without hiring people
    • Petty traders: Persons engaged in providing retail services without permanent establishments (structure), e.g., hawkers, street vendors etc. are called petty traders.
    • Shop owners: Persons engaged in providing retail services with small but permanent establishments (structure) are called shop owners.
    • Businessman with no employee: Self-employed persons engaged in their own business and not hiring any employee and not classified as petty traders, shop owners or professionals are called Businessman with no employees e.g., wholesaler, contractor, builder etc.
    • Self-employed- Professional: Self-employed persons who have acquired professional degree/diploma and are independently engaged in their own professional work e.g., doctors, lawyers, chartered accountants, engineers, architects, scientists, cinematographers, actors, authors, consultants etc.
    • Self-employed -Non-Professional: Self-employed persons who are engaged in providing services e.g., plumber, electrician, tailor, artisan, washer man, barber etc. and are not classified as petty traders & shop owners.
  • Regular Salary/Wage: Regular salaried/wage are those who are getting salary/wage on a regular basis.
    • Grade 4: Unskilled/Skilled employee: 4th Grade unskilled employee like peon, gardener, messenger, porter, unarmed security guard, loader, cook, waiter, ward boys.4th grade skilled employee like mid wives, driver, mechanic, electrician, carpenters, fitter, fireman, armed security guard, jawan, constable etc.
    • Clerical: Includes white collar workers working as clerk and are not senior enough to be called as ‘supervisor/officer/executive’. (Interviewers should keep in mind that a salesman/field worker can work in the company as clerk or supervisor or junior or senior executive. Hence, it needs to be probed and accordingly classified)
    • Supervisory level: Includes white collar workers working as supervisor/instructor who are not senior enough to be called as ‘officers / executives’ e.g., head constables, head clerks, station masters, civil overseers. School teacher teaching up to middle level i.e. 8th standard level or below will fall in this category.
    • Officers/Executive - Junior: Includes white collar workers reporting themselves as Junior Officers/ Executive. Non-gazetted officers in the government and non-management cadre in the private sector company will fall in this category. School teacher teaching at 9-12th standard level will fall in this category.
    • Officers/Executive - Middle/Senior: Includes white collar workers reporting them as Middle/Senior Officers/Executive. Gazetted officers in the government and management cadre in the private sector company will fall in this category. University/College teacher will fall in this category. Secondary and higher secondary school headmasters will also fall in this category.
  • Casual Wage Labour: Casual (i.e., non-permanent) wage labourers are those who are paid on a daily or by piece rate basis.
    • Agriculture & allied wage labour: A person is treated as agriculture and allied wage labour if he/she works in agriculture and allied sector units (Dairy farming, bee keeping, poultry farming or fisheries) and earns daily wages in cash or kind or both cash and kind.
    • Non-agriculture (skilled & unskilled) wage labour: Includes all skilled (technical training/knowledge) casual (e.g. non-permanent) wage workers e.g. mechanics, tailors, artisans, masons, plumbers, blacksmiths, carpenters, electricians, drivers, barbers, mid wives etc. all unskilled casual (non-permanent) wage workers e.g. construction workers, helpers, sweepers etc.
  • Other sources of earning:
    • Earning from Other sources: Persons reporting their earnings from pension/Rent/Interest /Dividend/Royalty/Remittance
    • Rental (land/house): Amounts charged to the tenant by property owners for the use of the owner’s property.
    • Interest/remittance/dividend/royalty:  Interest is the amount earned on savings accounts, deposits, or amounts received by the lenders from borrowers for loans taken. Remittances are both domestic and international. Domestic Remittances is the amount sent by the family members who are living in India to the household, where the person providing the amount is not residing in the household of the recipient. International Remittances is the amount received by the household from family members or others living overseas. Dividend is the profit of companies that is distributed to the owners (Shareholders) of the company. Royalty is a fee that a business franchise owner must pay to be part of a franchise system, or the fee received by authors from publishing houses on sale of their books
    • Pension/Bonus: Pension is a monthly payment made to someone who is retired from work and by virtue of his employment in an organised sector which he/she gets periodically. On the other hand Bonus is a one-time payment made by an employer to an employee in addition to salary as a reward for good service or performance.
    • Social insurance/assistance: Social insurance is any government-sponsored program for securing the lives of Old, Helpless, permanently disabled, widow etc. For e.g., Old Age Pension from Government, Widows Pension, Permanent Disability, disability grants, for Workmen's Compensation Unemployment Insurance, Pneumoconiosis and Silicosis Funds and similar funds to promote the welfare of the people by securing and protecting, as effectively as it may, a social order in which justice, social, economic, and political, shall inform all the institutions of the national life.

Routine consumption expenditure: Household consumption that includes the value of all goods and services provided in kind by the employer or because of home production (excluding the value of imputed rent for owner-occupied dwellings). It includes food, non-food and consumer services.

  • Food items: While recording consumption, care should be taken to include consumption on ceremonies, parties, etc.  If the household makes any transfer payment in terms of commodities (like cereals, beverages, fruits, vegetables pulses, etc.), the quantity of such commodities should not be shown under domestic consumption of the payer household.  For this survey, the portion out of that receipt consumed by the recipient household during the reference period was shown against the consumption of the recipient household.
  • Non-Food items: includes house rent, LPG, other cooking fuel, conveyance-public transport, clothing & footwear, etc.
  • Consumer Services: includes expenditure on education (school uniforms, fees, stationery, etc.), health related issues such as the doctors’ fees, medicines, tests etc., on usage of mobile phone, landlines and internet, entertainment and other services like repair, maintenance etc.

Unusual household expenditure: It includes occasional but large annual expenditures on social ceremonies (marriage, birth and other social events), health/medical, higher education, leisure and holiday travel, jewelry etc.

Surplus income: Surplus income refers to the current household income less current routine consumption expenditure and unusual expenditure.

Investment: The annual investment made by all the members of household in stock markets (shares/debentures/bonds), small savings, insurance, others.

The imputed rent of owner-occupied houses is excluded from consumption expenditure. Any expenditure incurred towards the productive enterprises of the households is also excluded from the household consumer expenditure.

Reference period (The accounting period):  As per recommendation of Expert Group on Household Income Statistics (Canberra City Group of UN Statistical Commission) accounting period used for income distribution is one year, hence we considered financial year for ICE 3600 surveys as reference period for instance, the reference period for the latest round was April 2020 to March 2021, however, reference period for other household information such as demographic indicators (occupation, education, lifestyle, etc.) was collected as on the date of survey.

Period of survey: Primary data was collected during January 2021 to June 2021.