Solving the Income Data Puzzle
APPLYING SURVEY DISTRIBUTION TO MACRO NUMBERS TO GET THEIR DISTRIBUTION
As we said earlier, the endeavour of this exercise is to create a bridge that can link survey data (plus: provides a reliable distribtution, minus: provides in valid absolute numbers) and macro data on income and savings (plus: valid absolute numbers, minus: no distribution available), so that we can have the best of both worlds.
We now apply these survey data distributions to all macro data, so that we can get a distribution of macro indicators across income deciles - thus bridging the gap between the more valid macro numbers with no distribution available, and the less valid survey numbers which have a distribution available.
Personal Disposable Income , Household Sector Saving and GDP across Deciles, All India, 2003-04
| Deciles |
Personal Disposable Income (Rs. billion) |
Saving (Rs. Billion) |
Per Capita Income(Rs.) |
Per Capita Saving(Rs.) |
Per Household Income (Rs) |
Per household savings (Rs) |
| 1 (lowest) |
471.25 |
32.62 |
3,813 |
264 |
22806 |
1579 |
| 2 |
752.21 |
80.80 |
6,437 |
691 |
36167 |
3885 |
| 3 |
968.19 |
130.33 |
8,806 |
1,185 |
49537 |
6668 |
| 4 |
1,281.29 |
209.09 |
11,066 |
1,806 |
59909 |
9776 |
| 5 |
1,465.41 |
263.56 |
13,750 |
2,473 |
75990 |
13667 |
| 6 |
2,083.93 |
423.65 |
17,034 |
3,463 |
89123 |
18118 |
| 7 |
1,992.33 |
413.51 |
21,061 |
4,371 |
115168 |
23903 |
| 8 |
2,809.31 |
645.99 |
26,910 |
6,188 |
137889 |
31707 |
| 9 |
3,725.28 |
971.78 |
37,602 |
9,809 |
183476 |
47862 |
| 10 (highest) |
8,035.84 |
2,627.84 |
88,940 |
29,085 |
395551 |
129351 |
| Total |
23,585.03 |
5,799.17 |
21,767 |
5,352 |
115981 |
28518 |
| Top 20% |
11,761.12 |
3,599.61 |
62,090 |
19,003 |
289544 |
88618 |
| Top 5% |
5,365.25 |
1,818.12 |
124,642 |
42,237 |
527731 |
178832 |
| Top 1% |
2,038.44 |
732.12 |
257,041 |
92,318 |
1017456 |
365425 |
India's total personal disposable income during 2003-04 was Rs. 2,358,503 crore, and the domestic savings of the household sector were approximately Rs.5,799,00 crore.
For those who prefer to think in terms of US Dollars GDP per capita, the top 10% of Indian households have a GDP of USD 204.3 billion, translating into a per capita GDP of USD 1857; while the lowest 10% have a GDP of USD 12 billion translating into a per capita GDP of USD 109. For those who do believe that USD 1200 per capita GDP is indeed the magic number at which consumption takes off, the size of the consumer base is a bit over 20% of India, a population of 220 million or so.
| Deciles |
GDP (USD billion) |
Population (mn) |
GDP Per Capita (USD) |
| 1 (lowest) |
12 |
108.8 |
110.2 |
| 2 |
19.2 |
108.8 |
176.3 |
| 3 |
24.6 |
108.8 |
225.8 |
| 4 |
296.6 |
108.8 |
32.3 |
| 5 |
37.1 |
108.8 |
340.7 |
| 6 |
47.9 |
108.8 |
439.9 |
| 7 |
50.3 |
108.8 |
461.7 |
| 8 |
71.3 |
108.8 |
654.7 |
| 9 |
94.6 |
108.8 |
868.7 |
| 10 (highest) |
204.3 |
108.8 |
1876 |
| Total |
599 |
1088 |
550 |
| Top 20% |
298.9 |
217.6 |
1373.6 |
| Top 5% |
2500 |
54.4 |
136 |
| Top 1% |
51.5 |
10.9 |
4733 |
Finally, linking consumption / ownership to GDP Per Capita
Now that we have established the robustness of the survey data like the IRS in terms of getting income shares of income percentiles right, and applied those shares to GDP per capita, now the last step is to link the GDP per capita to the extent of consumption that happens at each level of GDP per capita.
Rama Bijapurkar is an independent market strategy consultant; (www.bijapurkar.com)
Laveesh Bhandari is the founder and head of Indicus Analytics.(www.indicus.com)
IRS Analysis, courtesy Vineet Sodhani,, Hansa Research (www.hansaresearch.com) |
