During the quarter ended September 2015, the average income of an Indian household was Rs.39,786. This translates into an average monthly income of Rs.13,262. Extrapolating these findings from the Consumer Pyramids survey, we may deduce that the average annual income of Indian households is a little short of Rs.160,000.

A household could have multiple earning members. Members could earn income in the form of wages for labour, or in the form of interest or dividends on capital, or in the form of rents. Income also includes profits from family businesses. And, it also includes transfers that households receive from family members working elsewhere. Although the share is small, income also includes value of agricultural goods produced for self-consumption.

This is the post-tax income reported by households. It is the income that was available to them to make expenses for consumption or for savings.

The average consumption expenses of the Indian household was Rs.25,574 during the quarter. This translates into an expenditure of Rs.8,524 per month on consumption items. Consumption expenses includes all expenses on food and non-food goods and services. It includes expenses on food, clothing, cosmetics, fuel and power, transport, rents, education, health, appliances, EMIs and other miscellaneous expenses.

Total consumption expenses are computed based on responses received from households on their expenses on 119 expenditure heads. Similarly, total household income is computed from the income that a household reports on each account such as wages, interest, dividends, rent, etc.

While the total annual income worked out to about Rs.160,000, the total annual expenses works out to a little over Rs.100,000. Implicitly, households are, on an average, left with a surplus of Rs.60,000 in a year. The detailed responses from households show that the Indian households saved, on an average Rs.4,737 per month, ie nearly Rs.5,000 a month.

Consumption expenses include those on appliances, such as kitchen or households appliances or even mobile phone and mobile phone accessories. And, consumption expenses also include the servicing of household loans. Thus, the expenditure schedule includes expenses required for the deferred payments for purchase of capital goods as well, although it does not include the entire expenditure on the capital goods itself.