Socio-Economic Drivers of Consumption Expenditure Inequality in India (1983-2023)

Nilesh Yadav, International Institute for Population Sciences (IIPS)
Suryakant Yadav, International Institute for Population Sciences (IIPS)

This study examines the socio-economic drivers of consumption expenditure inequality in India over the period from 1983-84 to 2022-23. Utilizing unit-level data from seven rounds of the National Sample Survey Office (NSSO), the research employs a regression-based decomposition methodology to analyze the contributions of various socio-economic factors to inequality. Key factors considered include household size, caste, occupation, and the rural-urban divide. The findings reveal a significant increase in consumption inequality, with urban households showing much higher levels of expenditure growth compared to rural ones, particularly in the post-reform period. The analysis also highlights that household size plays a major role in driving inequality, especially in recent decades, as larger households tend to experience greater financial strain. Caste-based disparities, particularly among Scheduled Castes (SC) and Scheduled Tribes (ST), remain persistent contributors to inequality. Furthermore, the study underscores the widening rural-urban divide in consumption patterns, exacerbating the economic gap between regions. These results suggest the need for targeted policy interventions to reduce inequality, particularly in sectors such as education and healthcare, to ensure more equitable and inclusive economic growth in India. Keywords: Consumption inequality, socio-economic factors, household expenditure, Regression based decomposition, NSSO, India, rural-urban divide, caste inequality

Keywords: Decomposition analysis, Economic Demography, Inequality, Disadvantage and Discrimination, Human Capital, Education, and Work

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