Vulnerability of Consumption Growth in Rural India

The fragility of livelihoods and hence the vulnerability of consumption growth due to aggregate shocks in the Indian rural sector have been highlighted recently. However, as yet there exist no estimates of the vulnerability of consumption growth in rural India. This paper attempts to fill this lacuna by providing "certainty equivalent growth of consumption" in 14 major states of India over the period 1958-97, corresponding to NSS rounds 13th to 53rd. It is shown that certainty equivalent growth of consumption in rural India has been much lower than average real per capita consumption growth - indeed, in some cases, it has been negative. This points to the poor performance of consumer-perceived average welfare in India's rural sector and should be a matter of urgent policy concern.