India - Mumbaikars spend the least on education

Spend 2.8% of income versus 6.7% for Delhi.
Due to the vastly different size of population (79 million in megacities versus 20 million in boom towns and 8 million in niche cities), the average size of various markets differs widely.
So, while Mumbaikars spend a smaller proportion of their incomes on food, beverages and tobacco (33.2 per cent) than Surat-ites (37.5 per cent), the total market for food, beverages and tobacco products in Mumbai in 2007-08 was Rs 28,590 crore as compared to a much smaller Rs 6,600 crore in Surat.
In education and recreation, similarly, Mumbaikars spent just 2.8 per cent of household expenditure versus 5.4 per cent in Surat — the size of this market, however, was Rs 2,420 crore in Mumbai in 2007-08 versus Rs 940 crore in Surat. Delhi had the largest market in this segment at Rs 4,480 crore.
On an average, niche city households spend around a fourth more than their megacity counterparts on housing, 18 per cent more on education, 23 per cent more on health and 27 per cent more on social spending.As a result, 40 per cent of households in niche cities own a washing machine as compared to 33 per cent in megacities and 22 per cent in boom towns.
More than a quarter of niche city households own a car, marginally higher than that in megacities and much higher than the 15 per cent in boom towns.Interestingly, niche cities fare the worse when it comes to the usage of financial products like credit cards (under five per cent of the population in towns like Amritsar, Ludhiana and Jalandhar have credit cards) and insurance policies (35 per cent for niche cities versus 47 per cent in boom towns).
As in all such cases, what drives consumption is a combination of rising income levels (reported yesterday) and changing consumption patterns across income groups as well as across cities for the same income groups.
While just 4.3 per cent of those with an annual household income of under $3,000 (Rs 1,20,000) own a car in the top 20 cities, this almost doubles as households reach the next group of aspirants (with maximum incomes doubling to Rs 2,40,000) and then again by almost seven times to 55 per cent in the case of the middle classes (where incomes range between Rs 2,40,000 and Rs 12,00,000).
In the case of mobile phones, around 16 per cent of low-income households own such modes of communication and this jumps to 53 per cent in the case of aspirant households and then to 77 per cent in the case of middle-class households. In the case of high-income households (who earn more than Rs 12,00,000 per year), this rises to nearly 90 per cent.
The combination of increasing income levels (more than half the population in niche cities is middle class as compared to 29 per cent in boom towns) and changing consumption patterns mean that the drivers of consumption are quite different across the cities.
Thus, over 70 per cent of car ownership in megacities like Delhi and Mumbai emanates from middle class households, it is just around 50 per cent in the case of the boom towns and almost as high as 80 per cent in niche cities.
In the case of mobile phones, while both aspirant and middle class households account for roughly the same proportion (45 per cent each) of ownership in megacities, the figure is 52 per cent and 33 per cent, respectively, in the case of boom towns.
In the case of air-conditioners, aspirants account for around seven per cent of ownership in megacities while this rises to nearly 30 per cent in the case of boom towns. In DVD players, similarly, the market is evenly divided among aspirant and middle class households (45 per cent each) in megacities; in the case of boom towns, however, aspirants account for around half the market while middle class households account for just around a fourth.
These are the findings of The Next Urban Frontier: Twenty Cities to Watch, an NCAER-Future Capital Research (of the Future Group) jointly written by Rajesh Shukla and Roopa Purushothaman.
Eight megacities like Delhi/Mumbai/Kolkata are the largest cities in terms of population and consumer markets, seven boom towns like Surat/Kanpur/Coimbatore represent the next set of large population cities with high expenditure levels; and five niche towns like Faridabad/Ludhiana/Jalandhar have smaller population but spend much more than cities of comparative size.