Commuting and medical costs pinch Indians

Rashi Aditi Ghosh / ZRG

Two contrasting trends emerge from the latest National Sample Survey (NSS) for 2011-12 in the miscellaneous goods and services category: while a majority of urban Indians are spending to meet commuting costs, rural Indians seem to be burdened with higher medical expenses.

The survey shows that miscellaneous goods and services constitute 26.1 per cent of consumer expenditure in rural India while it stands 39.7 for urban India in 2011-12. The category miscellaneous goods and services includes expenses on education, medical care, entertainment, toilet articles, other household consumables, consumer services excluding conveyance, conveyance, minor durable-type goods, rent, taxes and cesses.

Within the category, more urban consumer expenditure is spent on conveyance which stands at 7.5 per cent for urban India. As for rural India, a 6.9 per cent of consumer expenditure goes into medical care suggesting lack of affordable health centres.

Experts suggest that access to affordable and quality health care is still an issue for most rural Indians. Government hospitals can hardly make for the gap and therefore, most rural Indians are left with no choice but to look at costly private hospitals.

Sunil Sinha, head of economic research and chief economist at rating agency Crisil concurs, “Out of all other miscellaneous expenses the expenditure share on medical care is higher in rural India because rural India lacks affordable medical options and in that case the only available options are costly private hospitals.”

While rising fuel costs burn a hole in urban Indians’ pockets, they also end up spending more on rent and education in the miscellaneous expenditure category. Rent at 7 per cent and education at 5.7 per cent constitute other major expenditure under the category for urban Indians.

In rural areas, a good share of miscellaneous expenditure is spent on conveyance and education. Rural consumer expenditure on conveyance stands at 4.8 per cent while education is at 3.1 per cent.

Commenting on the pocket share on conveyance and medical care in urban and rural India, Jyotindar Kaur, senior economist at HDFC explains, “High fuel costs put enormous burden on commuting expenses of the people in cities.”

The NSS report indicates that food preferences of Indians are fast changing with non-food items constituting bulk of food expenditure. The figures are revealing in this regard. Both rural as well as urban households families bought over 51 per cent of non-food items in their monthly bills worth Rs.1, 430 in rural areas and about 62 per cent out of an urban monthly spend of Rs.2, 630.

More people are spending on non-food items due to rise in disposable income both in rural and urban areas.

“India’s expenditure on food items is not declining but rising disposable income is motivating people spend more on non-food items,” Singh at Crisil adds.

Back in 1993-94, Indian families’ non-food bill was almost 37 per cent in rural areas and about 45 per cent in urban areas.