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Social Transfers cuts Consumption Gap
Context:
The survey by the Ministry of Statistics and Programme Implementation focuses on social transfers’ impact on the consumption gap between urban and rural households, highlighting improving living standards.
More in News:
- The survey reveals social transfers, including state pensions and subsidies, narrowed the urban-rural consumption gap.
- Social benefits positively impact food expenditure, particularly cereals, improving living standards.
- Cuts in social transfers can widen the consumption gap, affecting purchasing power and exacerbating inequalities.
What is Social Transfer?
- Social transfers refer to benefits the government or other organisations provide to address specific risks or needs, such as old age, sickness, or family support.
- Examples include state pensions, disability benefits, child benefits, and job seekers’ benefits.
Composition of Social Transfers:
- Social transfers comprise both social benefits received by households and social contributions made by households.
- Social benefits are direct payments or services provided to households to fulfil specific needs, while social contributions are payments into schemes that provide social benefits.
- Types of Social Benefits: Social benefits can be in cash, such as pensions or child benefits, or in-kind, which include subsidised or free goods and services like healthcare and education.
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Consumption Gap: It refers to the disparity or difference in the level of consumption expenditure between different segments of the population, such as urban and rural households, indicating variations in living standards |
Key Findings of the Survey:
- Impact of Social Transfers on Consumption Gap:
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- The survey indicates that social transfers have helped narrow the urban-rural gap in per capita monthly consumption expenditure.
- When the imputed value of welfare schemes is considered, households, especially in rural areas, show an improvement in consumption expenditure, particularly on food.
- Rural households saw a rise in monthly per capita consumption spending from ₹3,773 to ₹3,860, while urban households experienced an increase from ₹6,459 to ₹6,521.
- Effect on Food Consumption:
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- Social transfers have had a significant impact on food consumption, particularly on cereals and cereal substitutes.
- Monthly per capita spending on cereals increased from ₹185 to ₹267 in rural households and from ₹235 to ₹294 in urban households after factoring in the value of benefits.
- Overall Impact on Consumption:
- For overall food consumption, the monthly per capita expenditure in rural areas increased from ₹1,750 to ₹1,832, and in urban areas, it rose from ₹2,530 to ₹2,589 after the inclusion of the value of benefits.
- Impact of Social Transfers cuts:
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- Reductions in social transfers can widen the consumption gap between urban and rural households.
- Cuts in social benefits may lead to decreased purchasing power among households, particularly affecting their ability to afford essential goods and services.
- This can further exacerbate inequalities and disparities in living standards between different segments of the population.