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Indicus Consumer Hand Book - Introduction

Indicus Consumer Hand Book - Introduction

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Published by Indicus Analytics
This is the introductory chapter of the forthcoming book by Laveesh Bhandari of Indicus Analytics.
This chapter provides an overview into the state of the Indian economy, its growth, expenditures by households, income distribution as well as issues of ineuqlity. This is followed by an overview of some of the broad areas covered in this volume.

The idea is to provide to the student and practitioner alike, a basic overview of the key demographic and macro-economic variables that affect consumer decisions in the short and long term. The discussion that follows then seeks to tie-in the key aspects that determine and reflect consumer behaviour in India.

High growth has contributed to greater incomes for Indian households which in turn has enabled Indian households to both save and spend more. We have in the past few years observed that household sector savings have in fact grown by far more than any of the other other macro-indicators. This is of course a desirable outcome. Greater incomes do imply greater expenditures in the short term, but greater savings (if translated into good quality investments) ensure long term growth of the economy, employment opportunities, and household incomes.

Even though India’s total household income and saving can be known from National Accounts Statistics, it does not provide the same information across economic groups. Therefore, the pattern of distribution of total income and saving across households with different economic status is not known. Thus, “What share of India’s total personal disposable income comes from the richest 10% of the households?” or “Do the poorest 10% of the households save anything at all?” – these questions remain unanswered from government data. Moreover, per household income or savings, for households with different economic status is also not known. This typically requires using data from household surveys. The problem with using survey data to estimate aggregates on a all India basis is that surveys – no matter how well they have been conducted – tend to under-report incomes and expenditures. As a consequence, we require various types of quantitative excercises to correct for this under-reporting.
Consumer markets can be reported in many different ways, size of the market in terms of number of people or households, size of the market in terms of the total or aggregate disposable incomes in those markets, or the aggregate expenditure of people or households. Therev are 35 states and Union Territories in India; among cities there are more than 5000 cities and towns, but the top 100 odd cities account for a large majority of the urban population and an even larger share of household expenditures.


These and many more insights are available from a range of tables culled from some of the most repected publications on Indian consumer markets.

This is the introductory chapter of the forthcoming book by Laveesh Bhandari of Indicus Analytics.
This chapter provides an overview into the state of the Indian economy, its growth, expenditures by households, income distribution as well as issues of ineuqlity. This is followed by an overview of some of the broad areas covered in this volume.

The idea is to provide to the student and practitioner alike, a basic overview of the key demographic and macro-economic variables that affect consumer decisions in the short and long term. The discussion that follows then seeks to tie-in the key aspects that determine and reflect consumer behaviour in India.

High growth has contributed to greater incomes for Indian households which in turn has enabled Indian households to both save and spend more. We have in the past few years observed that household sector savings have in fact grown by far more than any of the other other macro-indicators. This is of course a desirable outcome. Greater incomes do imply greater expenditures in the short term, but greater savings (if translated into good quality investments) ensure long term growth of the economy, employment opportunities, and household incomes.

Even though India’s total household income and saving can be known from National Accounts Statistics, it does not provide the same information across economic groups. Therefore, the pattern of distribution of total income and saving across households with different economic status is not known. Thus, “What share of India’s total personal disposable income comes from the richest 10% of the households?” or “Do the poorest 10% of the households save anything at all?” – these questions remain unanswered from government data. Moreover, per household income or savings, for households with different economic status is also not known. This typically requires using data from household surveys. The problem with using survey data to estimate aggregates on a all India basis is that surveys – no matter how well they have been conducted – tend to under-report incomes and expenditures. As a consequence, we require various types of quantitative excercises to correct for this under-reporting.
Consumer markets can be reported in many different ways, size of the market in terms of number of people or households, size of the market in terms of the total or aggregate disposable incomes in those markets, or the aggregate expenditure of people or households. Therev are 35 states and Union Territories in India; among cities there are more than 5000 cities and towns, but the top 100 odd cities account for a large majority of the urban population and an even larger share of household expenditures.


These and many more insights are available from a range of tables culled from some of the most repected publications on Indian consumer markets.

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Categories:Types, School Work
Published by: Indicus Analytics on Jan 27, 2009
Copyright:Attribution Non-commercial

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05/20/2012

 
 
Indicus Analytics, An EconomicsResearch Firm
 
By
Laveesh Bhandari
Indicus Analytics
Consumer Handbook - Introduction
1
 
 
Indicus Analytics, An EconomicsResearch Firm
 
www.indicus.net 
Introduction
 This chapter provides an overview into the state of theIndian economy, its growth, expenditures by households,income distribution as well as issues of ineuqlity. This isfollowed by an overview of some of the broad areas coveredin this volume. The idea is to provide to the student and practitioner alike, abasic overview of the key demographic and macro-economicvariables that affect consumer decisions in the short andlong term. The discussion that follows then seeks to tie-inthe key aspects that determine and reflect consumerbehaviour in India.
The Macro Picture
During the post liberalization decade, from 1993-94 to 2003-04 the average annualized growth rate of India’s GrossDomestic Product was a little above 6% and has arguablysince crossed the 8% mark on a long term basis. This hasbrought about a considerable increase in India’s personaldisposable income. As a result, both saving andconsumption expenditure in the household sector has hadconsiderable growth. During 2003-04, India’s total personaldisposable income was Rs. 2,358,503 crore and 24.6% of thisincome was directed into savings by the household sector.
Table 1. Components of National Income at CurrentPrices,2003-04
EconomicIndicators(
Refer Box 1for definition)
Total Per CapitaRs.BillionUS$Billion$ PPPterms Rs. US$$ PPPtermsAnnualized GrowthRatebetween1993-94and 2003-04
Gross DomesticProduct 27,6005993,03625,3565502,7896.18
Consumer Handbook - Introduction
2
 
 
Indicus Analytics, An EconomicsResearch Firm
 
www.indicus.net 
National Income 22,5204892,47720,6904492,2766.41Net NationalDisposable25,9715632,85623,8605182,6246.55Private Income 25,2965492,78223,2405042,5566.73Personal Income 24,2195252,66422,2504832,4476.59PersonalDisposable23,5855122,59421,6674702,3836.57Domestic Savingof Household5,7991266385,3281165869.77Source: CSO and author estimates
High growth has contributed to greater incomes for Indianhouseholds which in turn has enabled Indian households toboth save and spend more. We have in the past few yearsobserved that household sector savings have in fact grownby far more than any of the other other macro-indicators. This is of course a desirable outcome. Greater incomes doimply greater expenditures in the short term, but greatersavings (if translated into good quality investments) ensurelong term growth of the economy, employmentopportunities, and household incomes.
Consumer Handbook - Introduction
3

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