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Posts Tagged ‘consumer expenditure

Why India is ruled for its cities

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RG_urbanisation_Agenda_issue_201308Over the period 2010-20, urban India is expected to create 70% of all new jobs in India and these urban jobs will be twice as productive as equivalent jobs in the rural sector, according to ‘India’s Urban Awakening: Building Inclusive Cities, Sustaining Economic Growth’, a report by the McKinsey Global Institute in early 2010.

This material produced by a consulting company has alas become the authoritative reference for India’s central ministries and planners; but McKinsey’s slanted and misguided output is well suited to fulfil the GDP growth mania of the ruling oligarchies and their banking and corporate accomplices. Nonetheless, adopting the tone that these wished for numbers will undoubtedly be marshalled through policy measures, McKinsey has projected that the population of India’s cities will increase from 340 million in 2008 to 590 million by 2030 – 40% of India’s total population.

This is the substance of my contribution to the latest instalment of the excellent journal, Agenda, published by the Centre for Communication and Development Studies through its Infochange development news website. See the full article here.

Infochange_Agenda_urbanisation“In short,” stated the report by this reckless consulting firm, “we will witness over the next 20 years an urban transformation the scale and speed of which has not happened anywhere in the world except in China. Urbanisation will spread out across India, impacting almost every state. For the first time in India’s history, the nation will have five large states (Tamil Nadu, Gujarat, Maharashtra, Karnataka, and Punjab) that will have more of their population living in cities than in villages.” This is indeed the trend for these states as it is also for Andhra Pradesh, West Bengal and Haryana.

The expectation is that as India’s cities expand, India’s economic profile will also change. In 1995, India’s GDP was divided almost evenly between its urban and rural economies. In 2008, urban GDP accounted for 58% of overall GDP. By 2030, according to the McKinsey report’s calculations, urban India will generate nearly 70% of India’s GDP. Such a transformation, if it comes to pass on the lines that global financial and consumer actors want, as India’s major ministries (commerce, industry, finance, food processing, agriculture) and its planning agencies want, is expected to deliver a steep increase in India’s per capita income between now and 2030 wherein the number of middle class households (earning between Rs 2 lakh and Rs 10 lakh a year) will increase from 32 million to 147 million.

Blocks of new apartments being completed on the outskirts of Chennai, Tamil Nadu. The blocks are crammed together by the builders to exploit all the available floor space without consideration for hygiene, ventilation and green space. These flat owners will install hundreds of air-conditioners in these flats to lower the indoor temperature, and this hideous group of eight and more ugly buildings will when occupied alter the micro-climate of what only recently were valuable wetlands.

Blocks of new apartments being completed on the outskirts of Chennai, Tamil Nadu. The blocks are crammed together by the builders to exploit all the available floor space without consideration for hygiene, ventilation and green space. These flat owners will install hundreds of air-conditioners in these flats to lower the indoor temperature, and this hideous group of eight and more ugly buildings will when occupied alter the micro-climate of what only recently were valuable wetlands.

This transformation is at the heart of the infrastructure and services obsession which is reshaping the next version of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM). The McKinsey estimate is that to meet urban demand, India needs to build 350-400 km of metros and subways every year, and that between 19,000-25,000 km of road lanes would need to be built every year (including lanes for bus-based rapid transit systems), an ambition that denies altogether the impacts on land resources, on the destructive dominance of the automobile industry and proves the lie of India aspiring to a low carbon way of life.

From a reading of the early results of the 66th round of the NSSO, ‘Key Indicators of Household Consumer Expenditure in India, 2009-10’, for the urban population, in all income deciles including those that comprise the urban poor, the situation is already grim. Bhiwani in Haryana (population: 197,662), Bhind in Madhya Pradesh (197,332), Amroha in Uttar Pradesh (197,135) and Hardoi also in Uttar Pradesh (197,046) are four urban centres whose populations are at the median of those towns in India whose inhabitants number over 100,000. The average number of children in each (in the 0-6-year age-group) is 23,890.

Based on the recommended daily dietary allowance calculated for an Indian vegetarian diet by the National Institute of Nutrition, India, the minimum annual demand of each of these four urban centres is: cereals and millets, 43,124 tonnes; pulses, 9,122 tonnes; milk and milk products (kilolitres), 33,172; roots and tubers, 22,115 tonnes; green leafy vegetables, 11,057 tonnes; other vegetables, 22,115 tonnes; and fruits, 11,057 tonnes. Whether through the lens of municipal services provisioning or as a consumer project, urban administrations rarely plan for the food required by their citizens – its sources, costs and alternatives that can help establish a nutrient cycle between urban consumption and rural producers.

What rural India does and doesn’t eat

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How much cereals (rice, wheat, millet, sorghum) and pulses do rural Indians consume in a month? In general, not anywhere near how much they should.

How much cereals (rice, wheat, millet, sorghum) and pulses do rural Indians consume in a month? In general, not anywhere near how much they should.

The circles in this chart represent the rural population of 20 of India’s largest states by population. The National Sample Survey Office (NSSO) divides the rural (and also the urban) population of each state into tenths (they call them ‘deciles’), and the NSS surveys on consumption expenditure tell us how much each decile in each state spends, for example between Rs 800 and Rs 950 a month.

I made this chart using data from the NSS report, ‘Level and Pattern of Consumer Expenditure’ (the 66th Round, which surveyed the population between 2009 July and 2010 June). With 20 states and ten categories each, I had 200 readings to plot, examining the consumption in quantities for cereals and pulses.

Depending on the population of the state, some of those circles represent 3-5 million people! Now here is the grim finding. Of these, 72 do not meet even 75% of the minimum cereals requirement (about 10.4 kg) a month, and 106 do not meet even 50% of the minimum pulses requirement (about 0.6 kg) a month – these are the National Institute of Nutrition recommended dietary allowances. And 43 of these deciles are severely deficient in both.

How can the state explain the existence of these huge deficits in basic nutrition (see the coloured area of the chart, which includes tens of millions) while simultaneously chasing 'growth' as the means to remove those deficits?

How can the state explain the existence of these huge deficits in basic nutrition (see the coloured area of the chart, which includes tens of millions) while simultaneously chasing ‘growth’ as the means to remove those deficits?

For the last week, there has been a great deal of comment and discussion about how the increase in expenditure – especially in rural India – is ‘evidence’ of increasing incomes, of widening prosperity and a general ‘lifting out of poverty’. It is misleading because neither the central government nor its supporters (there are many supporting views to be found in the media) has pointed out that an increase in expenditure will of course take place given the rise in the price of food and fuel.

Comparing what the NSS has surveyed in 2009-10 with its 2004-05 survey, in some areas of expenditure the rupee rise is 300%-400% (such as for the eggs fish and meat, fresh fruit and beverages categories) and it will be useful to extract the quantities behind these increases in expenditure (I will get around to doing this as soon as possible).

In any case, the quantities consumed for cereals and pulses have actually declined for rural and urban citizens. While the proportion of expense, out of total food expense (all-India figures for rural populations), on pulses and on milk (and milk products) has remained roughly the same – 5.6% to 5.2% and 15.3% to 15.2% – the proportion spent on cereals has dropped from 32.7% to 20.2%.

I think this an extremely significant change that can be read together with the two big increases in proportion of spending – on egg fish and meat from 6% to 9% and on beverages from 8.2% to 15%. In the NSS definition, beverages also includes purchased meals and processed food, and it is this conversion of primary cereals (including coarse cereals) and pulses to processed foods that I see as an important factor behind the biggest change in the proportions spent on food in recent years.