High inflation to weigh on real income growth, says survey

Mumbai, Jan 17 (PTI) Income disparities in India arelikely to widen further in view of the high inflation, whichthe Government has so far failed to arrest, according to asurvey conducted by global financial institution, CreditSuisse.

High inflation has weighed on real income growth overthe past year and looks set to do so again over the next year,the survey said.

Income disparities--that are already wide--are set toincrease as the high-income brackets are expected to continueto see much greater growth than the low-income brackets in allmarkets, the survey conducted across four core BRIC markets(Brazil, Russia, India and China) besides Egypt, Indonesia andSaudi Arabia, said.

According to Credit Suisse, food price inflation has beena major negative while the current spending and spendingintentions remain heavily skewed towards essential items.

However, a priority that stands out for the Indianconsumer is education, it said, adding household spending oneducation is by far the highest within the survey at around7.5 per (more than twice that of Russia, at 3.1 per cent).

This, partly reflects that the household has tocompensate for low public sector spending on education as wellas the relatively high school-age population in India, but italso reflects the importance attached to education byhouseholds.

According to the survey, savings are clearly anotherimportant part of the allocation of Indian household income asdespite relatively low average GDP per capita only 2 per centof the respondents in India suggested they had no extra incomeavailable for savings, compared to 72 per cent in Egypt and 52per cent in Brazil.