Poverty and Festival Spending in India

We found some very interesting data about festival spending of Indians from a survey conducted in Western Orissa in early 2007. The survey was conducted as part of a randomized controlled trial the Centre for Micro Finance is carrying out in order to understand the impact of selling insecticide treated malaria bed nets through a Micro Finance institution. The survey was completed in 150 villages across 5 districts of Orissa, and the respondents were randomly selected from a list of microfinance clients provided by BISWA (Bharat Integrated Social Welfare Agency), who is the micro lending partner for this project. The total sample size was 1,947 households, all of which contain at least one BISWA SHG member.

In the survey, households were asked about the types of loss or unexpected spending they have experienced in the last one year. 42% of the respondents claim to have experienced “crop loss” & 38.5% claim “livestock loss.” Surprisingly, 81.5% of the households respond that they have spent some money on “marriage, funeral & ceremony expenses” in the last year. Considering that well over 50% of the household in the sample our below poverty line (BPL) card holders, this indicates that people of lower economic status also spend some portion of their income on festivals & ceremonies.

In India where 37.3% rural people and 22.5% urban people are below poverty line, is money spent on ceremonies and festivals a worthy expense? Where people do not have enough money to get food twice daily, but still they are saving something for ceremonies. National Council of Applied Economic Research (NCAER) and Max New York Life Inc. conducted a survey in 2005 -'How India Earns, Spends and Saves' in order to “gain deeper insights into the motives for financial savings, the degree of financial security of Indian households and the degree of sophistication that households bring to bear on their saving and investment decisions.” Here they found that different households save their money for different purposes like emergency, marriage, education, social events etc. The survey found that households priorities for using their spending are the following:

- 81% for education

- 69% for old age financial security

- 63% to meet future expenses like marriage, births and social ceremonies

- 47% to buy or build houses

- 47% to improve their business

- 22% to buy consumer durables and

- 18% for expenses towards gifts, donation and pilgrimage

Here also results show that people are prioritizing spending on festivals and social ceremonies. It is even a higher priority than building a new house!

Another study by Abhijit V. Banerjee and Esther Duflo (which uses survey data from 13 countries to document economic life of rural poor) also reveal some interesting results( Economic Lives of the Poor). From India, the authors use a survey conducted in Udaipur District of Rajasthan, which shows more than 99 percent of the extremely poor households spent money on a wedding, a funeral, or a religious festival. The median households spent 10 percent of their annual budget on festivals. Here the professors define the extremely poor as “those living in households where the consumption per capita is less than $1.08 per person per day,” and the poor as “those who live under $2.16 a day using the PPP [purchasing power parity] in 1993 as benchmark.” In Pakistan, Indonesia, and Cote d’Ivoire, more than 50 percent did likewise. But in some Latin American countries like─ Panama, Guatemala, Nicaragua─ festivals are not a notable part of their yearly expenditure.

As this survey only looks at a small part of India, we have to be careful with coming conclusions. But still, the question arises why poor people in India are spending a notable part of their income on these ceremonies?

It is tough to answer, but I think it proves that India is still a country of culture and tradition in this scientific world. Though lots has changed over the last century, Indians still believe in their ancient culture. Probably it is the country where people celebrate more festivals than anywhere else in the world and gatherings of family members and friends are very common in these festivals. After several weeks of hard work, a festival is necessary to pacify their mind and body. And these festivals increase the bonds between family members and friends. I do not think they should be encouraged to divert the money of festivals for other purposes, because it is one of their only sources of entertainment.