Shifting Tides Of Consumption Across Bharat

The Household Consumption Expenditure Survey (HCES) 2022–23 by the Ministry of Statistics and Programme Implementation gives us a true picture of the expenditure patterns of India and all the mini-Indias within it. It paints an Indian consumption story that inspires confidence and gives us insight into rural consumption and the growth engine that will power the future of India.

On the back of this, The Bharat Lab has culled out key learnings from HCES 22–23 that will be useful to industries, marketers and product innovators looking to tap into the Bharat opportunity.

Bharat Consumption Shifts

Bharat the consumer, is different from Bharat the producer- about a 78 per cent drop in consumption of cereals in Bharat over the last two decades.

Bharat was once synonymous with makke di roti, paddy fields, chule ki garam garam rotiyan. And while agriculture still remains the primary occupation, Bharat the consumer is different from Bharat the producer.

Whereas in 99-00, cereals accounted for 22.16 per cent of monthly expenditure, in 22-23 this percentage is down to 4.91 per cent, a steep drop of 78 per cent. 

It is time for us to rethink the notions of what the staple diet and the average thali of Bharat looks like.

One interesting statistic is the rise in percentage expenditure on fruits (fresh as well as dry) over the last two decades. Fresh fruits constituted a meagre 1.42 per cent of Bharat’s monthly food expenditure in 1999–00. This number in 22–23 stands at 2.54 per cent, an increase of 78 per cent. Dry fruits see an even greater rise from 0.3 per cent to 1.17 per cent over the two-decade window, an increase of almost 300 per cent.

Beverages and processed food consumption have more than doubled in Bharat. From constituting 4.19 per cent of the monthly expenditure in 1999–00,  spending on packaged foods and beverages rose to 9.62 per cent of the total expenditure in 2002–23, an increase of 112 per cent.

Overall, over this two-decade period, Bharat’s monthly expenditure on food has fallen from 59.4 per cent to 46.38 per cent.

Non-food Expenditure

-Despite increasing inflation and a rise in oil prices over the past two decades, the monthly expenditure on fuel and light has fallen from 99-00 to 22-23, from 7.52 per cent to 6.66 per cent. What’s interesting is that this expenditure rose from 99-00 to 11-12, seeing a sharp fall from 11-12 to 22-23.

-In 99-00, durable goods made up 2.62 per cent of Bharat’s monthly expenditure. In 22–23, this number increased by more than 170 per cent, reaching 6.89 per cent of monthly expenditure.

-In 99-00, clothing, bedding and footwear cumulatively constituted 7.95 per cent of Bharat’s monthly expenditure. In 22-23, this number fell to 6.1 per cent, a decrease of almost 25 per cent.

One could attribute this to discountvertising-led proliferation of ecommerce and better value purchases facilitated as a result.

-From constituting 1.93 per cent of monthly expenditure in 99-00, education today constitutes 3.3 per cent of Bharat’s expenditure, a clear indication of Bharat’s focus on higher education, upskilling and investing in themselves.

-The service sector (restaurants, banking, entertainment and the like, excluding conveyance, has taken deeper roots in Bharat during the same time per cent - increasing from 2.98 per cent to 5.08 per cent over the two decades.

Broad Learnings Of What Bharat Needs                                                              

Productivity drives purchasing power- The data underscores a clear correlation between productivity and income levels, with significant implications for household prosperity. Notably, rural households engaged in non-agricultural self-employment demonstrate a substantially higher average monthly per capita consumption expenditure (MPCE) of `4,159 compared to their counterparts engaged in agriculture `3702.                       

Skill development building Bharat’s consumer class- The data highlights the significance of skill development and education in enhancing earning potential. As more citizens of Bharat aim to improve their lifestyle, looking beyond agriculture seems like a sure-shot way of allowing for better income possibilities, as reflected in the difference between the average monthly expenditure of the agricultural and non-agricultural classes.

Informal sector challenges: Casual labour households, whether in rural or urban areas, face economic vulnerabilities due to informal employment arrangements. Rural casual labour households have an average MPCE of '3,379, while urban counterparts have '4,474, suggesting the need for policies to formalise the informal sector and provide social safety nets. 

Regional Insights From Region-wise Monthly Expenditure Data

-Chandigarh has the highest urban monthly per capita expenditure in India, followed by Sikkim and then Andaman and Nicobar Islands.                

-The monthly expenditure of Bharat’s East and Heartland regions is lower than the national average.

-Bharat regions of states like Goa, Uttarakhand, and Rajasthan which have strong tourism industries beyond agriculture, tend to have the highest monthly expenditures.

-States like Telangana and Haryana which have megacities, tend to have lower monthly expenditures in their Bharat regions.

Conclusion

The Household Consumption Expenditure Survey calls out the shifting tides of consumption across Bharat. From openness to packaged food and beverages to spending more on fruits, from extracting value from clothing and footwear purchases to investing more in consumer durables, the Bharat consumer is showing clear signs of evolution.               

Brands and marketers will continue to play an important role in facilitating this evolution. At the same time, Bharat markets like the North East, the hills of Uttarakhand and the extreme value seekers of the East represent greenfield opportunities for businesses that have so far looked at a metro as a path to growth.                    

The upcountry opportunity of Bharat awaits a new domain of growth, and the ones who invest and understand the depths of Bharat stand a chance to win not just market share but also cultural fame.