Explaining Consumption Disparities between Social Groups in Rural India during 1987 to 2012: Analysis with Decomposition Approach

Abstract

The poverty disparity between the two socially marginalised groups, STs and SCs, rose substantially during the same period. Past research revealed that the poverty disparity between social groups, mainly between STs and non-SC/STs, increased significantly in the post-reform periods in rural India. Furthermore, the rise in poverty disparity is largely due to increasing consumption disparity between these social groups. Against this backdrop, this study aims to examine the role of consumption determinants in contributing to the growing consumption disparity between social groups. This study is limited to the rural areas of India and NSSO-CES unit-level data from 1987-88 to 2011-12 have been used for this study. The study employs pooled regression analysis to assess the influence of various determinants on household consumption. Additionally, it uses Oaxaca-Blinder decomposition analysis to identify the roles of characteristic effects and coefficient effects in the consumption disparity between social groups.  The study reveals that the gap in consumption between SC and non-SC/ST has substantially decreased but remains significant. The disparity between SCs and non-SC/STs is primarily due to differences in endowments. However, the disparity in consumption between STs and non-SC/STs has increased considerably, largely attributable to regional disparities. Historically, the STs were delinked from mainstream development. Their traditional potential, their resources have not been used for their development. Their regions are generally considered bargain regions. These regions are characterised with low growth and underdevelopment. This study reveals that the differential in consumption expenditure could have been eliminated by developing the ST-populated regions. Thus, this study considers that the development of regions, along with several affirmative measures, can eliminate the consumption disparities between social groups.