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Discretionary Spending on the Rise

Most recent survey done by the National Sample Survey Organization (NSSO) of Indian households, released early this year, reveals a pattern where Urban India’s spending on discretionary items has increased from merely 27% in FY2011-12 to about one-third as of FY2022-23. In contrast to that, the share of expenditure on essential items has reduced, clearly highlighting the impact from rise in incomes and improving lifestyles.

Shares of essential & discretionary items in monthly per capita expenditure (MPCE) in urban India, 2011-12 & 2022-23

0% 10% 20% 30% 40% 50% 60% 70% 80%

73%

67%

33%

27%

2011-12

2022-23

Share of expenditure on essential items (%)

Share of expenditure on discretionary items (%)

Source: NSSO Household Survey 2022-23

Discretionary items include packaged beverages and processed food, household consumables, entertainment, consumer services, durable goods, etc. Essential spending on the other hand, includes the purchase of food products, medical expenses, fuel, light, conveyance, rent, footwear etc., and that seems to have declined materially. Separately, data published by the Ministry of Statistics and Program Implementation (MoSPI) also indicates that the consumption pattern of Indians is changing rapidly in favor of experiences as opposed to value consciousness. For instance, there has been a decline in home cooking among mid-to-high income category families in last one decade, as monthly urban spending on food deliveries has risen to INR 971 per head in FY23, compared with a mere INR 60 per head observed earlier.

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