The segment under the spotlight this week is H1, the urban consumer segment that includes households whose chief wage earners are unskilled workers, in their middle years, and married with young children. With a little over 700,000 households, this segment is the 18th largest among the 33 in the series. The large household sizes bring the population in this segment to at least 3.3 million; in fact, nearly half the households have five or more members. The defining characteristic of the H1 households is the lack of skills and low education levels among the chief wage earners, which lead them to very few employment opportunities. Just 13% have passed class VIII—the highest level of education in this group—and an overwhelming majority dropped out before class V. The education level of the spouses is the lowest among all in the series—nearly 63% are illiterate or schooled below the primary level. Just 16% of the chief wage earners have salaried jobs and a mere 2% are self-employed, indicating that these households lack the skills to get regular jobs and also lack access to funds that can kickstart them in the numerous entrepreneurship opportunities that exist at the very lowest level on Indian streets and in bazaars. Contrast this with the G3 households, where the chief wage earners are at the same life stage but have some skills. Nearly one-third in that segment are self-employed and a little more than a third have regular salaried jobs. In H1 households, the chief wage earners depend on daily wage labour, in most cases. The sector that contributes the most to income is, obviously, construction and real estate, which accounts for 54% of the employment. Manufacturing in the unorganized sector, transport and trade are the other sectors that provide sustenance to these households. The spouses in most cases provide domestic help in neighbouring areas. Income-wise this segment ranks very low; median household income is Rs63,000 per annum. Going with this low income profile, there are a large number of children in this segment, and nearly half the households have more than two children. Not all the children attend school—those who attend will be predominantly in government schools, where uniforms and books are supposed to be provided, easing the financial burden on households. With the poor quality of schooling and little support coming in from their mostly uneducated parents, unfortunately, the younger generation in these households also faces a lifetime of low income ahead. Out of all the segments, H1 households spend the largest share on providing the most basic of necessities. So while this segment has the second highest share among all segments on food expenditure, H1 households spend the highest share on basic food—cereals and pulses that take up 18% of the household budget. In addition, 33% of the household budget goes into high value-added food—milk, fruits, vegetables, meat, etc. This segment also spends the highest share among all segments on clothing and footwear. H1 households live in cities but follow rural consumption patterns at the lower end, without the benefit of farm produce to boost their consumption. And yet, they clearly consider it worthwhile to continue living in the cities. This points to the army of landless labourers that teem the countryside of India, with nothing to their name, forming the core of this segment in the city.

1. Published: Mint dated 5th July 2010
Indicus Consumer Segment