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Where India’s money is

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RG-District_bank_deposits_graphic_5The concentration of wealth in India’s cities, in its biggest cities, can be seen most clearly in this set of illustrations. These colourful circles describe the imbalance between the recorded wealth in the cities and in the districts.

The data come from the Reserve Bank of India’s ‘Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks’. In attempting to find and illustrate the distribution of bank deposits between India’s banking districts (there are 652) I ran quickly into the inequality challenge: how to make sense of the enormous disparities of wealth?

Graphics provides a way out. But a word about the distribution. At the 30th percentile level in the full list, a district’s bank deposits are around Rs 1,440 crore (14.43 billion). This rises to Rs 1,930 crore for the 40th, Rs 2,540 crore for the 50th, Rs 3,420 crore for the 60th, Rs 4,650 crore for the 70th, and Rs 7,420 crore for the 80th percentiles. From there the increases are much steeper: Rs 14,000 crore for the 90th and Rs 26,000 crore for the 95th percentile.

In the first image, the relative differences between bank deposits between the 30th and 60th percentiles are illustrated – a circle corresponds to bank deposits in crore and is labelled with the state code and district name. Here we see that the difference is between about Rs 1,400 crore and Rs 3,400 crore.

In the second image, the scale has changed with two examples each from the 60th, 80th and 90th percentiles. The differences are now between about Rs 3,400 crore, Rs 7,400 crore and Rs 14,000 crore.

The third image is where the disparity becomes immediately clear: Rs 14,000 crore of deposits are dwarfed by the tenth and ninth districts of the top ten – about Rs 79,000 crore and Rs 94,000 crore. And the last image shows the vast gap within the top ten – at this scale the districts which have less than Rs 3,400 crore deposits would be mere dots, and there are close to 400 of these districts!

This helps explain the structures of power in the cities and how one of the ways India’s wealth is recorded (no black money estimates, or property valuations, or stock or futures holdings) shows the staggering extent of inequality. Yes, the top ten banking districts – all heavily urbanised metropolises – have huge populations, but any per capita division would also have to take into account business and industry deposits and the large numbers of informal sector labour – households whose capacity to save may be only marginally better than that of households in rural districts.

Whichever way you choose to look at it, the picture is one of racing inequality. For more on the subject see ‘The big money in India’s cities’, ‘When the 65 million who live in India’s slums are counted’, and ‘Why India is ruled for its cities’.

Written by makanaka

November 2, 2013 at 16:26

The big money in India’s cities

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Almost seven out of ten rupees banked in India are to be found in the top 100 centres. They account for 68.5% of the total bank deposits in India.

Almost seven out of ten rupees banked in India are to be found in the top 100 centres. They account for 68.5% of the total bank deposits in India.

The concentration of the country’s bank deposits in India’s urban centres can be seen in this detail from a table I have assembled using data from the Reserve Bank of India (RBI).

This is the quarterly series that the RBI puts out and is called ‘Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks’.

The intriguing table which forms the image is of the top 100 urban centres ranked by bank deposits, and arranged alphabetically, for the years 2007, 2009, 2011 and 2013. The city names and total deposits (in crore rupees) are seen. This is the lower end of the table, and I have coloured ten cities to show how their deposits have changed over six years.

The rate of growth has been extremely steep. We have here Panaji, Patiala, Pune, Ranchi, Shillong, Thane, Thiruvananthapuram, Udaipur, Varanasi and Visakhapatnam for no reason other than their entries for all four years are visible. The patterns for the rest of the top 100 centres is generally the same.

For these ten cities, the average growth rate of their total bank deposits over these six years is 190%! This is most significant to us, especially considering the food inflation, the cost of cultivation, wage rates of agricultural labour and allied issues I write about in this diary. Have the wage rates for agricultural labour grown over these last six years at even one-third this average rate? Not at all.

RG-bank_urban_deposits_detailFrom this small set of ten cities alone, the lowest rate of growth of total bank deposits is 88% (Vishakhapatnam in Andhra Pradesh) and the highest is 249% (Thane in Maharashtra).

The progression of the size of total deposits can be seen from Shillong (in Meghalaya) from Rs 2,577 crore in 2007 to Rs 8,311 crore in 2013 (which is dwarfed by the others). In Ranchi (Jharkhand) total bank deposits have grown from Rs 6,436 crore in 2007 to Rs 21,688 crore in 2013!

That is why the top 100 centres accounted for 68.5% of the total bank deposits in India – this is a ratio that has remained roughly the same for the last six years. In addition, as the ‘Quarterly Statistics’ has noted in its highlights, the top 100 centres also accounted for 76.9% of total bank credit.

And that is why it means little for central and state governments, and for businesses and NGOs and social entrepreneurships to talk about ‘financial inclusion’ when we have proof – quarter after quarter – of the persistence of financial inequality between India and Bharat.