Consumer expenditure inequality in India: a source decomposition analysis
International Journal of Development Issues
ISSN: 1446-8956
Article publication date: 17 May 2018
Issue publication date: 2 July 2018
Abstract
Purpose
This paper aims to deal with a closer look into the nature and extent of consumer expenditure inequality in India to identify the major contributions those are embedded, particularly after the economic reforms. Relative contributions of major consumption items/sources to the overall expenditure inequality are quantitatively examined in terms of a decomposition exercise. Eventually, the paper investigates the relative marginal effects of expenditure components/sources on overall inequality.
Design/methodology/approach
Gini index is used to measure the degree of inequality in consumer expenditure. Contribution of each expenditure sources to overall inequality is estimated by using source decomposition technique of Gini index contributed by Lerman and Yitzhaki.
Findings
The study observes that the inequality in consumer expenditure has increased in both the rural and the urban parts of India during the post-reform period. Non-food expenditure is more unevenly distributed, and it has been found to be more pro-rich in nature. Expenditure on cereals and pulses still exhibits higher inequality-reducing effect in rural and urban India. Education and health-care expenses have been inequality-increasing in the country. Contribution of expenditure on miscellaneous consumer services, durable goods, education and health care to the overall expenditure inequality is significantly higher.
Originality/value
The study identifies the capacity of different expenditure sources towards increasing or decreasing the overall inequality which is crucial for better redistributive policies to be adopted to enhance the well-being of the economy in real sense.
Keywords
Citation
Sen, J. and Das, D. (2018), "Consumer expenditure inequality in India: a source decomposition analysis", International Journal of Development Issues, Vol. 17 No. 2, pp. 157-167. https://doi.org/10.1108/IJDI-08-2017-0131
Publisher
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited