Cost of living in J&K: 150% rise since 2011?

3 March 2024

How much does J&K’s households spend on monthly consumption? What is the rise in household consumption since 2011? Ziraat Times’ founder, Arjimand Hussain, analyses latest Household Consumption Expenditure Survey (HCES) by the Ministry of Statistics and Programme Implementation (MOSPI)

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Srinagar: Ever imagined what is the rise in household consumption cost in J&K since 2011?

The latest Household Consumption Expenditure Survey (HCES) by the Ministry of Statistics and Programme Implementation (MOSPI) paints a fascinating, and sometimes concerning, picture of life in Jammu and Kashmir (J&K).

Ziraat Times delved into the findings of the Household Consumption Expenditure Survey (HCES) of 2022-23 report to analyse J&K’s situation. The findings are staggering, painting a stark picture of how the financial landscape has evolved over the past decade.

J&K by the numbers:

The HCES is a comprehensive survey that offers insights into the average monthly per-capita consumption expenditure (MPCE) across rural and urban areas in the country. In Jammu & Kashmir, the figures are stark. The average MPCE in J&K in 2022-23 is Rs 4,357 in rural areas and Rs 6,200 in urban areas. That means a family of six members in a rural area of Jammu & Kashmir, say in Kupwara and Kathua, on average, is spending Rs 26,142 on their monthly consumption.

This also means that households of six members in Srinagar and Jammu spend, on average, Rs 37,200 on their monthly consumption. If compared with the national level data of 2011, these numbers represent a steep rise, indicating an almost 150% increase in the consumption cost of living in J&K.

The question that arises is, what has led to this unprecedented surge in household expenses?

National trends and J&K’s situation

Before delving into the specifics of Jammu & Kashmir, it’s crucial to understand the broader context. According to the all-India country level findings, the MPCE has witnessed a significant surge nationwide since 2011-12. In rural areas, MPCE rose from Rs. 1,430 in 2011-12 to Rs. 3,773 in 2022-23. Similarly, in urban areas, MPCE increased from Rs. 2,630 to Rs. 6,459 during the same period. This rise in consumption mirrors the overall J&K situation.

However, it’s not just the increase in expenditure that catches attention. The share of household expenditure on food items has declined both in rural and urban India over the last decade. While this could suggest a relatively higher rise in the costs of non-food family expenditures, it could also suggest an improvement in living standards. J&K’s situation on this also follows the overall national trend.

Unpacking J&K’s expenditure trends

The HCES findings reveal a significant disparity between rural and urban areas in Jammu & Kashmir. The average MPCE is substantially higher in urban areas, indicating the growing financial strain for households in cities. The monthly consumption cost of Rs 4,357 in J&K’s rural areas and Rs 6,200 in urban areas suggests many things – one being the rural households’ ability to manage their food needs to a large extent from their productive agricultural lands.

To better understand these figures, we analyzed the data based on the number of households surveyed in J&K. In rural areas, 1,761 households were surveyed out of an estimated 18,12300, while in urban areas, 1,772 households were surveyed out of an estimated 6,34700. While the sample size might seem small, the survey’s methodology is said to have ensured a representative picture of the overall situation.

Rising urbanization and cost of living

One plausible explanation for the higher MPCE in urban areas is the rising urbanization trend in J&K. As more people migrate to cities in search of better economic and social opportunities, the demand for housing, services, and amenities has increased, subsequently driving up living costs. Jammu & Kashmir’s urban landscape has witnessed significant changes in the past decade, with the real estate prices constantly rising despite multiple economic shocks.

The changing face of household expenditure

A striking aspect of the HCES findings is the decreasing share of food expenditure in both rural and urban areas. In rural India, the share of food expenditure declined to 46% in 2022-23, while in urban areas, it dropped to 39%. While this may suggest diversification in spending patterns, it also hints at potential challenges.

While specific data about the nature of changes in Jammu & Kashmir’s food basket is not available, if the national trend is seen as a barometer of the J&K situation, the declining share of food expenditure may suggest improved living standards among farming communities as well.

Widening income inequality: J&K in focus

Another noteworthy finding from the all-India survey is the widening income inequality. The gap in MPCE between the top 5% and bottom 5% of the population has grown, emphasizing persistent income inequality. This trend is particularly concerning in the context of Jammu & Kashmir, where socio-economic disparities have long been a challenge.

Regional disparities

To truly understand the socio-economic dynamics at play influencing J&K’s food basket across its diverse regions and sub-regions, baseline or the end line data from within states are not available in this report.

In the urban areas surveyed, Srinagar takes center stage with its MPCE of Rs 6,200. This average figure is likely influenced by the city’s role as the economic and administrative hub of the region. The lower and the upper range of consumption expenditure would have given better insights into the level of poverty and affluence. The existing averages figures tend to shroud the decline in financial means of households in paying for nutritious food needs of their families.

Possible factors driving the surge in living costs

While the report in itself does not delve into the factors driving the surge in living costs in J&K or at the country level, plausibly, several there are several factors contributing to this surge.

Admittedly, J&K is in a state of economic transition. As the erstwhile state is shifting from an agrarian economy to one with a growing focus on services and industry, the associated costs of living are bound to rise. As the demand for modern amenities, mainly education, better housing (both cold and heat resistant) and healthcare increases, the additional pressure on household budgets is inevitable.

While essential for long-term growth, rapid infrastructure development can initially strain the finances of both the government and residents. The costs associated with building and maintaining J&K’s fledging infrastructure has translated into increased living expenses. This can be true for the cost of transportation on new highways to introduction of new taxation systems.

J&K’s burgeoning population, coupled with urbanization trends, mainly in its rural hinterland, are straining existing resources and services. This, in turn, has lead to increased competition for housing, education, and healthcare, contributing to a higher cost of living. The persistent housing demand, as I said at the beginning, is sustaining a considerable upward trend in real estate prices.

Jammu & Kashmir’s economy is closely tied to agriculture. Climate change impacts, such as erratic weather patterns and natural disasters, could deeply impact farming activities in the years to come, affecting the ability of agricultural households to take care of their food needs. This report should guide the formulation of public policy in J&K with due regard to these changing dynamics.