Indian Household Consumption Shifting from Necessities to Asset Building: EAC-PM Report Reveals Changing Economic Patterns

New Delhi:

A survey report by the Economic Advisory Council to the Prime Minister (EAC-PM) reveals that Indian households are significantly shifting their spending patterns from basic necessities toward asset-building expenditure.

The findings indicate households are now prioritizing Personal Goods and Cooking & Household Appliances over traditional categories like Clothing and Footwear. This trend is noticeable even among the bottom 40 percent of households across the country.

According to the report, "Household spending is shifting from basic necessities like clothing and footwear towards asset-building expenditure on personal goods, and cooking & household appliances."

This consumption shift, attributed to rising awareness, improved financial access, and better market connectivity, has substantial implications for productivity levels and overall living standard improvements.

Based on analysis comparing the Household Consumption Expenditure Survey from 2011-12 and 2023-24, motor vehicle ownership emerged as the fastest-growing durable asset category in India.

The expansion demonstrates notable urban-rural convergence, both for the general population and the bottom 40 percent of households across numerous states. Lower-income households have shown substantial catch-up with the broader population, especially in urban regions.

Key enablers for this growth include improved road infrastructure, enhanced market access, and wider vehicular financing options.

Meanwhile, television ownership has grown at a slower pace compared to other durable goods. The survey observed that in many urban areas across several states, TV ownership has actually declined for both the general population and lower-income groups.

The report emphasized that near-universal mobile access has transformed consumption preferences, with mobile phones increasingly replacing or supplementing television screens as the primary medium for information and entertainment.

Analyzing four major durable assets—motor vehicles, refrigerators, televisions, and mobile handsets—the report found clear evidence of convergence. This narrowing of ownership gaps across consumption groups was particularly pronounced in urban areas.

Motor vehicle ownership disparities have steadily diminished in rural areas but decreased much faster in urban regions. Refrigerator ownership similarly reflects strong convergence, primarily driven by urban growth.

Mobile phones have achieved near-universal adoption across both the top 20 percent (T20) and bottom 40 percent (B40) consumption categories, making them the most equitably distributed durable asset in the country.

Additionally, analysis of asset categories owned across different consumption groups (Bottom 40 percent, 40-60 percent, 60-80 percent, and Top 20 percent) reveals an increasing share of households owning multiple asset categories in both rural and urban sectors, highlighting reduced inter-group consumption gaps.

The report further highlighted that households without any durable asset category now represent only 5 percent or less across all groups and geographies, signaling a significant decline in asset poverty throughout India.