Occasional Papers

The paper examines spatial differences and the change in the share of consumption expenditure on selected food and non-food items during 2004-05 and 2007-08 covering rural and urban sectors for 18 major states in India. The analysis is located in the contemporary debate cover the declining share of food expenditure across almost all income strata, including the poor, in rural and urban sectors in the country. Arguably a part of the shift away from food expenditure is explained by the lifestyle related impacts, recent evidence has highlighted the influence of some of the more compelling factors, such as the increased private cost of health, education and other basic services. The recent inflationary trends are likely to have worsened the scenario with respect to household's ability to meet their basic needs. The analysis, tracing the changes in the average consumption expenditure revealed that: a) whereas the expenditure on food in absolute terms has increased almost universally, the share in total expenditure has declined in most of the states; b) the rural-urban gap in food consumption has increased marginally; c) the share of expenditure in education has decline in the case of nearly 50 per cent of the major states; d) for almost all the states the share of health expenditure has declined in both rural as well as urban areas. Conversely the share of expenditure on other non-food items such as fuel, transport and rent has increased. The changes observed in the expenditure pattern may have significant welfare implications across different segments of the population as discussed in the paper.

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