How India earns , spends and saves....

For the first time, the number of high income households in India has exceeded the number of low income families, the National Council of Applied Economic Research (NCAER) has estimated. In its report, How India Earns, Spends and Saves, released on Saturday, the NCAER estimated that despite the slowdown in the economy in the last three years of the decade, the number of high income households would have reached 46.7 million by March this year, exceeding 41 million low incomes households. If true, this would be a remarkable turnaround within just a decade. At the start of the decade, the number of high income households, those having incomes of more than Rs 1.8 lakh per annum at 2001-02 prices, was only 13.8 million as against 65.2 million low income ones, that is those with annual incomes less than Rs 45,000. During the decade, the number of middle income households—those with incomes between Rs 45,000 and Rs 1.8 lakh per annum—is also estimated by the NCAER to have risen sharply from 109.2 million in 2001-02 to 140.7 million by 2009-10. Though in absolute terms the number of middle class households grew from 135.9 million in 2007-08 to 140.7 million by 2009-10, in percentage terms it fell marginally from 62% of all households to 61.6% in the same period. Interestingly, the slowdown did not impact the expansion in the number of high income households, which grew from 16.8% to 20.5% of all households in the last two years. The fall in the number of low income households was also sharp, from 21.1% to 17.9% during the period. The NCAER also estimated the number of families with incomes between Rs 2 lakh and Rs 10 lakh per annum, which is close to the World Bank definition of middle class, at 28.4 million by 2009-10. The number of such middle class households was 4.5 million in 1995-96 and 10.7 million in 2001-02. The report said that twothirds of the Indian middle class is to be found in urban India and that trend has continued in the last 15 years also. On the spending side, the report said while rural households spend on an average Rs 18,266 on food items in a year, urban households spend about Rs 26,524. As the income level of urban households is higher than that of rural ones, rural households spend a little more than a third of their income on food, whereas for urban households it is slightly more than a quarter of their income. The report, which is based on the National Survey of Household Income on a sample size of 63,016 households, pointed out that ceremonies and rituals constitute 51.5% of the unusual expenditure, which includes education, medical and travel. However, in rural areas, this is 55.4% and in the urban households it is at 44.9% of total expenditure.