Rich households to outnumber poor homes in 2009-10

NEW DELHI: The wheel of fortune continues to spin in India, with each level of household income set to move a notch higher next year.

For first time, the number of high-income households is set to exceed the number of poor households in 2009-10, while more than five million mid-income households will hit the high-income bracket.

According to an exclusive analysis done for ET by the National Council of Applied Economic Research’s (NCAER) senior fellow Rajesh Shukla, next year will see the size of high-income homes - with an annual household income (AHI) of more than Rs 2.85 lakh - rise to 46.7 million, overtaking the number of poor households at 41 million. The NCAER study pegged AHI for poor homes at less than Rs 71,000.

The study assumes a GDP growth rate of 6.7% for 2008-09 and 5.7% for 2009-10 based on average forecasts by nine Indian and global firms such as Goldman Sachs, Nomura Securities and Kotak Mahindra Bank.

For 2008-09, NCAER has estimated 42 million high-income households and 43.3 million poor households. Medium-income households with AHI between Rs 71,000 and Rs 2.85 lakh are forecast to rise to 140.7 million in 2009-10, up from 138.4 million in 2008-09.

Thus, over a million poor households will move into the mid-income bracket and nearly 5 million mid-income ones will hit the high-income category.

Before we clap hands, it would be pertinent to
ponder whether the statistics have been properly
applied to come to this happy conclusion as
highlighted by the survey.

Eg: Whether the number of slum dwellings have been
taken into account when counting the poor households.