The Hindu | 30 January 2016
The average asset holding of the bottom 10 per cent of urban Indian households is around Rs. 291, new data from the National Sample Survey Office (NSSO) show.
Most households reported owning some kind of physical or financial assets, the survey, conducted in 2012-13 and made public on Friday, shows. On an average, rural and urban households own assets worth Rs.10 lakh and Rs.23 lakh respectively. However, the average hides a wide variation in the distribution of assets.
The bottom 10 percent (in terms of total assets) of rural households had assets worth Rs.25,071 on an average, largely as a result of the value of land, while the figure for their urban counterparts was just Rs.291, implying that the urban poor hardly own any assets. On the other hand, the top 10 per cent of the rural and urban population had average assets worth Rs.57 lakh and Rs.1.5 crore respectively.
Speaking with The Hindu, Parth Shah, founder president of the Centre for Civil Society, said, “New migrants to cities leave their assets behind in villages. Hence, the urban poor have negligible household assets.”
Haryana and Punjab had the highest average assets per household in rural areas, while Maharashtra and Kerala were on top in urban areas. Odisha lay at the bottom in both rural and urban India.
Land and buildings held the dominant share in asset holdings, as was the case in the previous decade, comprising of more than 90% of all asset worth in both urban and rural areas. Financial assets – that includes shares in companies and cooperative societies, national saving certificates, deposits in companies, banks etc – were just two percent of total assets in rural areas, compared to five percent in urban areas. The share of land as a proportion of total assets has increased with time, possibly due to price escalation of land, says the NSS report.
How indebted are people in India?
The data also shows that 31 per cent rural households and 22 per cent urban households were under debt. The average amount of debt per household in rural areas was Rs. 32,522, lesser compared to urban figure of Rs. 84,625.
“Urban poor have higher debt because they are investing in future; for instance, borrowing money to send their children to schools. All debt is not bad debt. The one that relates to investment is not bad like the consumption related debt, which is borrowed for survival, to pay for healthcare etc”, explained Mr. Shah.
The inequality in asset distribution is more visible in urban India, where the top 10% own 63% of total assets, while in rural areas, the same class owns 48%.
The debt-asset ratio – total debt as percentage of total assets owned by households, which gives an indication of the burden of debt experienced by a household - is between three and four per cent at the national level. However for the bottom ten per cent in urban India, the ratio is a crippling 1920%, while the same class in rural India had a 39% ratio.
Computing the debt-asset ratio by taking only financial assets (assumed to be converted into cash in a short time, with little or no loss in value) into consideration, reveals additional insight of debt burden, says the NSS report. This ratio was found to be 174% for rural and 77% for urban areas, significantly higher than the total debt-asset ratio.
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