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