Title: Understanding expenditure on different commodity groups in Indian households: emerging patterns and policy implications

Authors: Bipul Kumar; Piyush Kumar Sinha

Addresses: Marketing Department, Indian Institute of Management Indore, Prabandh Shikhar, Rau-Pithampur Road, Indore (Madhya Pradesh) – 453331, India ' Marketing Department, Indian Institute of Management Ahmedabad, Vastrapur, Ahmedabad (Gujarat) – 380015, India

Abstract: This study explores the expenditure pattern on different commodity groups such as food, fuel and lighting, clothing and other items across Indian households. The study also explores the variables apart from income which affect the expenditure on commodity groups across rural and urban population in India. Estimates made for expenditure elasticity taking into account the regional differences in India across rural and urban settings provide some important implications for the marketers on issues like income-based segmentation as well as consumption pattern on commodities. This study also has policy implications with insights on social welfare programs depending upon the nature of expenditure elasticity for a particular commodity group linked with income of the household. The nature and magnitude of the elasticity also provides a policy tool for devising the tax structure based on expenditure towards necessity or luxury goods with respect to the income level of the household.

Keywords: segmentation; commodity groups; income levels; expenditure elasticity; expenditure patterns; necessity goods; luxury goods; India; rural population; urban population; cities; social welfare; commodities; tax structure.

DOI: 10.1504/IJICBM.2016.077637

International Journal of Indian Culture and Business Management, 2016 Vol.13 No.1, pp.76 - 92

Received: 05 May 2015
Accepted: 13 Jul 2015
Published online: 07 Jul 2016 *

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