Only 0.2% of the Population Spends Over 1,000 rupees ($12) Daily

Newsreel Asia Insight #279
July 12, 2024

Nearly 34% of India’s population lives on less than 100 rupees ($1.2) a day, according to the latest household consumption expenditure survey. Further, 47.3% of Indians manage with less than 200 rupees ($2.4) daily. Combined, these figures account for 81.1% of the population living under this threshold.

Conversely, a mere 0.2% of the population spends over 1,000 rupees ($12) daily, reflecting the vast disparities in income distribution, according to an analysis by Ishan Anand, an economics professor at IIT Delhi, published in The India Forum journal.

According to the survey, the average monthly per capita consumer expenditure for the bottom 50% is just 2,621 rupees. In contrast, the top 1% spends around 25,000 rupees ($300) per month per capita, a figure that likely underestimates their actual consumption.

The consumption share of the top 1% was reported at about 6%, significantly lower than their income share of 22% and wealth share of over 40%.

The consumption share could indicate higher savings rates among the wealthiest, which is not unusual, but it may also suggest underreporting of consumption or effective tax strategies that minimise visible spending. A high income share reflects significant earning power and control over economic resources, revealing the concentration of income within a small segment of the population. The proportion of total national wealth owned by the top 1% suggests that the wealthiest individuals not only earn a lot of money but also accumulate it, leading to a greater disparity in wealth compared to income.

The survey also challenges the optimistic declarations of a poverty-free India by showing deficiencies in access to basic amenities.

For example, over 40% of the population still relies on traditional fuels like firewood or dung cakes for cooking. Furthermore, despite official claims in 2019 that all states were free from open defecation, about 18% of the rural populace lacked access to toilets as of 2022-23.

India’s recent economic growth has led to a pronounced increase in income and wealth inequality, surpassing levels observed during British rule, according to a recent study by the World Inequality Lab, as reported by Article 14 earlier. The research indicated that the concentration of wealth in India was more severe than in countries like the United States, Brazil and South Africa, with the top 1% of the population holding a disproportionately large share of the nation’s wealth.

The findings of the study revealed a sharp rise in inequality since the early 2000s, with a significant uptick post-2014-15. The top 1% now accounts for 22.6% of income and 40.1% of wealth in India, it said.