LIVING INCOME AND LIVING WAGE REPORT

RURAL MADHYA PRADESH, INDIA

DECEMBER 2021
(With an update to 2022)

NIDHI KAICKER KURIAKOSE MAMKOOTTAM

Living Wage
Benchmark Series
No. 2021-01-04
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA i

ABSTRACT

LIVING INCOME AND LIVING WAGE REPORT

RURAL MADHYA PRADESH, INDIA

DECEMBER 2021 (With an update to 2022)

AUTHORS: NIDHI KAICKER* KURIAKOSE MAMKOOTTAM**

Abstract: The study on Living Wages and Income for rural Madhya Pradesh was conducted by the Anker Research
Institute with support from Laudes Foundation, as part of a broader goal to help inform employers and policy
makers as they adopt suitable policies and take appropriate steps to enhance the quality of life of the farmers
and workers of rural Madhya Pradesh. Employing the Anker Methodology, the study used a combination of
secondary data from reliable sources as well as primary data collected through field investigation. Intensive field
investigation was carried out in the districts of Chhindwara in southern MP and Ratlam in western MP during
October 2021 and December 2021. These districts have been chosen as representative of southern and western
MP respectively. The estimated living incomes for rural MP are about 64% higher than the average monthly
household consumption expenditure of rural MP. These estimates are close to average monthly household
consumption expenditure of rural Punjab, but below that of rural Haryana and rural Kerala. These comparisons
clearly indicate that families in rural MP cannot afford minimum standards of decent living.

Keywords: living income, living wage, Anker Methodology, Madhya Pradesh

JEL classification codes: J30, J50, J80.
© Anker Research Institute, 2023

Any questions, comments, or observations about this study and the results it
reports should be directed to the Anker Research Institute leadership:
[email protected]

* Nidhi Kaicker, e-mail: [email protected]

** Kuriakose Mamkootam, e-mail: [email protected]
TABLE OF CONTENTS

ABSTRACT................................................................................... i
ABOUT THE AUTHORS....................................................................... iv
ACKNOWLEDGEMENTS..................................................................... v
EXECUTIVE SUMMARY...................................................................... vi

PART I. INTRODUCTION .................................................................... 1

1. CONCEPTS OF LIVING INCOME AND LIVING WAGE ............ 1

2. LIVING INCOME/ LIVING WAGE FOR RURAL
MADHYA PRADESH....................................................................... 2
3. THE CONTEXT................................................................................. 2
4. ECONOMY OF MADHYA PRADESH............................................ 5
5. THE ANKER METHODOLOGY...................................................... 9
6. FAMILY SIZE TO BE SUPPORTED ............................................... 10
7. DETERMINING REFERENCE FAMILY SIZE................................. 10

PART II. COST OF DECENT LIVING IN RURAL

MADHYA PRADESH .................................................................. 12

8. COST OF FOOD AND FOOD PRICES........................................... 12

8.1. Average Energy Requirements........................................................... 12
8.2. Preparation of Preliminary Model Diets ............................................ 13
8.3. Nutritional Content of Food Items..................................................... 13
8.4. Conversion of purchased grams to edible grams ............................... 18
8.5. Additional Model Diet Costs .............................................................. 18
8.6. Nutrition Adjustments to Create our Model Diet............................... 18
8.7. Local food prices and cost of Model Diet .......................................... 19
9. MODEL DIET ................................................................................... 23
10. NORMS FOR ACCEPTABLE HEALTHY HOUSING..................... 26
10.1. Housing Conditions in Rural MP......................................................... 31
11. COST OF HOUSING........................................................................ 35
11.1. Rental Equivalent Value of Basic Acceptable Owned Housing ........... 36
12. UTILITIES AND OTHER HOUSING COSTS................................. 37
12.1. Cost of water...................................................................................... 37
12.2. Cost of Lighting................................................................................... 38
12.3. Fuel for cooking and for heating in winter......................................... 38
12.4. Summary of Housing and Utilities Costs............................................. 39
13. NON-FOOD NON-HOUSING (NFNH) COSTS............................ 40
14. HEALTHCARE POST CHECK.......................................................... 42
15. EDUCATION POST CHECK............................................................ 44
16. TRANSPORTATION POST CHECK................................................ 48
17. PROVISION FOR UNEXPECTED EVENTS TO
ENSURE SUSTAINABILITY............................................................ 49
18. COST OF DECENT LIVING............................................................. 50

PART III. LIVING INCOMES IN CONTEXT AND

LIVING INCOME LADDER ........................................................ 52

19. CONCLUSIONS................................................................................ 54

ANNEX. LIVING WAGE FOR RUAL MADHYA PRADESH ....................... 56

A1. NUMBER OF FULL-TIME EQUIVALENT WORKERS

IN THE REFERENCE FAMILY PROVIDING SUPPORT............... 56
A2. MANDATORY PAYROLL DEDUCTIONS AND INCOME TAX
AND CALCULATION OF GROSS LIVING WAGE
(AKA LIVING WAGE) ..................................................................... 57
A3. LABOUR LAWS IN INDIA.............................................................. 58
A4. LIVING WAGE COMPARISONS AND WAGE LADDER............. 59
A4.1. Minimum wages in Madhya Pradesh................................................. 59
A4.2. Prevailing wages in rural Madhya Pradesh......................................... 59
A4.3. World Bank Poverty Line and Poverty Line Wage............................... 60
A4.4. National Poverty Line and Poverty Line Wage................................... 60
A4.5. Wage ladder....................................................................................... 60

REFERENCES .............................................................................................. 62
iv ANKER RESEARCH INSTITUTE

ABOUT THE AUTHORS

Nidhi Kaicker is an Assistant Professor of Management at Dr BR Ambedkar University, Delhi (AUD). She holds a
bachelor’s degree in Economics from St Stephens College and Post Graduate and Doctoral degrees in Management
from Faculty of Management Studies, University of Delhi. Her teaching and research interests include managerial
economics, food security and nutrition. She has been working on Living wage / income studies based on the
‘Anker Methodology’ since 2016.

Kuriakose Mamkoottam is a retired Professor of Management. He was introduced to ‘Anker Methodology’ in

2015 and since then he has been interested in living wage/ living income studies. With Post Graduate and Doctoral
degrees in Sociology from the Delhi School of Economics, University of Delhi, his areas of interest include Labour,
Human Resource Management and Technological Change.
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA v

ACKNOWLEDGEMENTS

This report on the Living Wage and Living Income for rural Madhya Pradesh is prepared under the auspices of the
Anker Research Institute. This would not have been possible without the constant support and advice of Richard
Anker and Martha Anker. They have not only conceptualized and popularized the concept of living wage across
the world but invented the most innovative methodology to assess the living wage and living income. They have
trained many scholars and researchers across many continents, including us, and arranged funding to carry out a
multitude of studies located in different parts of the world. Richard Anker and Martha Anker initiated the study
behind this report, organized funds for the same and constantly guided us in carrying it out, and patiently read
through several rounds of drafts leading to the final report. We record our deep gratitude to Richard and Martha.

The Anker Research Institute conducted this research with funding from Laudes Foundation. All views expressed in
the report are those of the research team. The boundaries and other information shown on any map in this work
are those of the research team and do not imply any judgement on the part of Laudes Foundation concerning the
legal status of any territory or the endorsement or acceptance of such boundaries.

We express our sincere thanks to Laudes Foundation, especially Mr. Varun Joseph and his team members, for
helping us with field visits through their partner organisations, such as Self-Reliant Initiatives Through Joint Action
India and Action for Social Advancement (ASA). We wish to express our special appreciation to Mr. R.C. Patel
and Dr Varan Singh of ASA and Mr. Mohammad Zahid and Mr. S Rajesh Kotma of Srijan India for their invaluable
support, which made the field investigation as smooth as it could have been. Team members of Srijan India and
ASA not only helped us to identify locations of the field investigation, but their colleagues in the field introduced
the research team to respondents in the several villages of Chhindwara and Ratlam districts.

Ms. Radhika Aggarwal, in her capacity as Research Assistant, has made valuable contribution, in various ways,
to enhance the quality of the study. We are thankful to Ms. Aashi Gupta for extending help with some of the
secondary data. We are grateful to Mr. Roshan Patil and Chandrapal Khade who carried out field investigation in
Chhindwara district and to Mr. Bhuriya Damor and Aayush Gandhi in Ratlam district. We are thankful to Mr. Pramel
Gupta for introducing us to the field enumerators in Chhindwara district and to Dr Varan Singh for introducing us
to the field team in Ratlam. We cannot, of course, forget to mention the many women and men in the villages,
the shopkeepers, the school teachers and many others who spared their time and shared valuable information
for the study.

Mr. Vinod Wankhade and Mr. Jeetendra Kushwah not only ferried us in their taxis to and from the airports in
Nagpur and Indore but also patiently took us around the various villages, often giving us valuable advice and
information, which would not have been available otherwise. We will fail in our duty if we do not acknowledge
our spouses, Ms. Valsala Kuriakose and Mr. Abhinav Chugh along with little Viaan Chugh, who supported us with
their encouragement.
vi ANKER RESEARCH INSTITUTE

EXECUTIVE SUMMARY

LIVING WAGES AND LIVING INCOME FOR RURAL MADHYA PRADESH

The study on Living Wages and Income for rural Madhya Pradesh was conducted by the Anker Research Institute
with support from Laudes Foundation, as part of a broader goal to help inform employers and policy makers as
they adopt suitable policies and take appropriate steps to enhance the quality of life of the farmers and workers
of rural Madhya Pradesh.

Employing the Anker methodology, the study used a combination of secondary data from reliable sources as well
as primary data collected through field investigation. Intensive field investigation was carried out in the districts
of Chhindwara in southern MP and Ratlam in western MP during October 2021 and December 2021. These
districts have been chosen as representative of southern and western MP respectively.

Living income refers to the total amount of income required by a family (of 4.5 persons in the case of for rural
Madhya Pradesh) to lead a decent life. Living wage, on the other hand, refers to the wage which a worker should
be paid in normal working hours so that he/she can support himself and his family of dependents. Living wage is
assessed on basis of the number of full-time equivalent working members in a reference family at a given place in
a given point of time. Living wages and living income are estimated on the basis of assessing the cost of the basic
constituents of decent living, namely, food (based on a nutritious and balanced diet), healthy and safe housing
with sufficient space and amenities such as safe water, access to electricity, cooking fuel, toilet and sanitation etc.
and non-food-non-housing (NFNH) items including cost of healthcare, children’s education, transportation and
other contingency and unexpected expenses.

On the basis of the study, Rs. 19,241 per month has been estimated as living income for a family of 4.5 in rural
Chhindwara is, Rs. 20,450 for rural Ratlam. Similarly, Rs. 12,198 has been estimated as living wage per month for
rural Chhindwara and Rs. 12,965 for rural Ratlam.

The living income (average of the two study districts) estimated in this report for rural Madhya Pradesh is
approximately 2.7 times that of the 2014 national poverty line family income, and 2.2 times the World Bank
international poverty line family income. It is 2.3 times that of family income assuming that family members
earn prevailing wages for agricultural labourers and 2.1 times if family members earn prevailing wage of non-
agricultural labourers; 1.7 times of family income assuming family members earn minimum wage for agricultural
labourers and 35% higher if family members earn non-agricultural unskilled labourers’ minimum wage. The
estimated living incomes for rural MP are about 64% higher than the average monthly household consumption
expenditure of rural MP.
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 1

PART I. INTRODUCTION
This report estimates living incomes and living wages for rural Madhya Pradesh, India. It is based on the Anker
Methodology which is a mixed methods approach that uses secondary data available from reliable sources
such as NSSO (2011-12), Census (2011), CMIE-CPHS (2020-21) as well as primary data gathered through field
investigation in the districts of Chhindwara in southern Madhya Pradesh (MP) and Ratlam in the western part of
Madhya Pradesh (MP), during October – December 2021. These study districts are typical districts for southern
and western MP and so results in this report for Chhindwara district and Ratlam district are considered to be
representative for southern MP and western MP respectively.

1. CONCEPTS OF LIVING INCOME AND LIVING WAGE

The concept of living income / living wage has been developed by Anker and Anker (2017), and Anker (2006) to
ensure that workers and their families do not live in poverty, but are able to lead a decent life. Wages or incomes
should be sufficient to support workers and their families to be able to afford a basic lifestyle considered decent
by society at its current level of development. Workers should receive a living wage in normal working hours
without having to work overtime.

The living wage has been defined by Anker and Anker (2017) as:

“[...] The remuneration received for a standard work week by a worker in a particular place
sufficient to afford a decent standard of living of the worker and her or his family. Elements
of a decent standard of living include food, water, housing, education, healthcare, transport,
clothing and other essential needs including provision for unexpected events.”

(Global Living Wage Coalition, 2016, cited in Anker and Anker, 2017).

The Living Income Community of Practice defines living income as:

“[...] The net annual income required for a household in a particular place to afford a decent
standard of living for all members of that household. Elements of a decent standard of living
include: food, water, housing, education, healthcare, transportation, clothing, and other
essential needs including provisions for unexpected events.”1

(The Living Income Community of Practice, n.d.).

1 See: https://www.living-income.com/the-concept
 2 ANKER RESEARCH INSTITUTE

2. LIVING INCOME/ LIVING WAGE FOR RURAL MADHYA PRADESH

Our estimate of living income for farmers / workers of rural Chhindwara district (MP) is Rs. 19,241 ($255)2 and
Rs. 20,450 ($271) for rural Ratlam district (MP) per month, for December 2021. The estimate for living wage
is Rs. 12,198 ($161) for rural Chhindwara and Rs. 12,965 ($172) rural Ratlam3. These estimates are considered
applicable more broadly to the rural southern MP and rural western MP.

We believe that, given the geographical proximity and somewhat similar socio-economic and agro-climatic
conditions, the estimates made for rural Chhindwara also apply to rural Southern MP. Similarly, the estimates
made for rural Ratlam could be applicable to rural Western MP. We say this because the above estimates are
based on extensive coverage of forty villages (20 each from the districts of Chhindwara and Ratlam), which should
broadly represent these areas.

This report explains in detail in the following pages below, how the living income and living wage has been
estimated for rural Madhya Pradesh.

3. THE CONTEXT
The present study has been focused on the districts of Chhindwara in southern Madhya Pradesh and Ratlam
in western Madhya Pradesh. Choice of these districts was influenced by more than one consideration. First
and foremost, Laudes Foundation, the sponsor of the study, and the partner organizations (the Regenerative
Production Landscape (RPL) Collaborative) have been interested in a scientific study to get the living income
estimated for the farmers of southern and western Madhya Pradesh. The Foundation and the Collaborative have
been engaged in local level projects to enhance the livelihood of farmers (including cotton growers) in these areas
through holistic and sustainable farming.

Secondly, before finalizing the location of the study, authors of this report examined in detail secondary district
level data available from sources such as the 2011 Census, to understand the socio-economic and demographic
structure of Madhya Pradesh, population size, percentages of scheduled castes and scheduled tribes, rural-urban
distribution, literacy rate, labour participation rates, poverty rate, agroclimatic zones, and cropping patterns.
Based on a preliminary analysis of the data, Chhindwara located in south MP and Ratlam located in west MP
appeared to represent the respective regions of the state.

Thirdly, choice of these two districts was made after consultation and discussion with several experts and senior
members of various research and NGOs such as ASA, Self-Reliant Initiatives Through Joint Action India, Green
Foundation, Anupama Education Society, and Samaj Pragati Sahyog, who have been working among the farmers
of Madhya Pradesh. These researchers and experts confirmed the appropriateness of Chhindwara and Ratlam for
southern and western MP respectively.

2 USD has been converted @75.57 INR.

3 The living income updated by inflation to mid-2022 (June) is Rs. 20,377 ($261) for rural Chhindwara district (MP), and Rs. 21,657
($277) for rural Ratlam district at an exchange rate of 78.1 Rs./$, which was the average exchange rate for June 2022. The living wage
updated by inflation to mid-2022 (June) is Rs. 12,919 ($165) for rural Chhindwara district and Rs. 13,730 ($176) for rural Ratlam.
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 3

Madhya Pradesh, which literally means the central province of India, is, by area, among the largest states in India.
In the year 2000, Chhattisgarh was formed as a new state by separating 17 districts of the southeast region of
Madhya Pradesh. It borders the states of Uttar Pradesh in northeast, Chhattisgarh in southeast, Maharashtra in
the south, Gujarat in the west, and Rajasthan in northwest. The state has a large percentage (more than 30%) of
its area under forest cover.

Madhya Pradesh is among the least developed states of India. In terms of human development indices, Madhya
Pradesh ranks 33rd from the top and 3rd from bottom among the 28 states and 8 union territories of India. The
table below indicates the broad parameters of the state’s demographics. As much as 72 percent of the population
is rural, with a relatively high percentage (21.1%) of tribal population as against 8.2% for the whole of India.

Table 1.1. Madhya Pradesh Demographics

Total Population (2011 census) 72.6 million

Percentage of Males 51.8%

Rural Population (%) 52.5 million (72%)

Scheduled Castes as % of Total Population 15.6%

Scheduled Tribes as % of Total Population 21.1%

Literate Population as % of Total Population 59.0%

Number of Workers (% of Population) 31.6 million (43.5%)

Number of Male Workers (% of Male Population) 20.1 million (53.6%)

Number of Female Workers (% of Female Population) 11.4 million (32.6%)

Source: Census (2011).

Madhya Pradesh is divided into 10 administrative divisions (see figure 1.1) and 52 districts, including two new
districts. The two new districts have been added recently which were not officially included in the 2011 census.
 4 ANKER RESEARCH INSTITUTE

Figure 1.1. Administrative divisions of Madhya Pradesh

INDIA

CHAMBAL Kilometer
0 50 100 150 200

GWALIOR

REWA
SAGAR
UJJAIN

Ratlam
BHOPAL SHAHDOL

JABALPUR
INDORE Chhindwara

NARMADAPURAM

Source: Constructed by authors based on administrative divisions of MP.

As shown in figure 1.2, in terms of agroclimatic conditions, the state could be divided into 5 zones. This classification
is based on major crops grown in the state, namely wheat, rice, jowar, and cotton or their combinations.
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 5

Figure 1.2. Agroclimatic zones of Madhya Pradesh

Kilometer
0 50 100 150 200

Agroclimatic zones

Cotton-Jowar Zone Wheat Zone Rice Zone

Wheat-Jowar Zone Wheat Rice Zone

Source: Based on MP State Agricultural Plan 2017 – 2021 (Government of Madhya Pradesh, 2017).

4. ECONOMY OF MADHYA PRADESH

Madhya Pradesh’s economy is primarily agrarian; agriculture contributes about 46.98 percent to the state’s Gross
Value Added (GVA) in 2020-21. State’s GSDP grew at a CAGR (in rupee terms) of 13.78% between 2015-16 and
2019-20. The state is rich in natural resources and is the only diamond producing state in the country. Over
280 pharmaceutical units operate in different industrial areas of the state (IBEF, 2021). Major crops that are
cultivated in Madhya Pradesh include paddy, wheat, maize and jowar as cereals; gram, tur, urad and moong are
 6 ANKER RESEARCH INSTITUTE

the major pulses; and oilseeds such as soybean, groundnut and mustard. 4 Madhya Pradesh is also one of the ten
cotton growing states in India, along with Punjab, Haryana, Gujarat, Maharashtra, Telangana, Rajasthan, Haryana,
Karnataka and Orissa (USDA, 2022).

Tables 1.2 and 1.3 below show the demographics of the western and southern districts of Madhya Pradesh where
the current study is located.

Table 1.2. Socio-economic-demographics of Western MP by district (for rural areas only)

No of Main Marginal
No. of HH Rural Literacy SC Pop ST Pop Poverty
District Workers Workers Workers
(000s) Pop (mn) Rate (%) (%) HCR*
(mn) (%) (%)

Alirajpur 113.13 0.67 25.4% 0.35 71% 29% 3% 93% 42.8%

Barwani 204.64 1.18 35.0% 0.58 79% 21% 5% 78% 38.0%
Burhanpur 97.84 0.50 46.1% 0.24 81% 19% 8% 45% 28.1%
Dewas 221.28 1.11 54.3% 0.59 67% 33% 19% 22% 3.8%
Dhar 339.17 1.77 44.9% 0.88 74% 26% 6% 64% 5.6%
Harda 89.74 0.45 57.9% 0.19 68% 32% 16% 34% 34.5%
Indore 159.40 0.85 58.8% 0.39 83% 17% 19% 16% 11.2%
Jhabua 175.93 0.93 30.7% 0.48 71% 29% 1% 92% 23.1%
Khandwa 216.18 1.05 51.5% 0.53 79% 21% 12% 42% 41.2%
Khargone 309.32 1.57 49.1% 0.79 84% 16% 11% 45% 29.8%
Mandsaur 230.41 1.06 59.3% 0.58 77% 23% 21% 3% 21.5%
Neemuch 131.20 0.58 56.9% 0.32 84% 16% 14% 11% 20.1%
Rajgarh 292.02 1.27 48.9% 0.65 61% 39% 20% 4% 20.2%
Ratlam 211.85 1.02 49.7% 0.54 63% 37% 15% 38% 38.2%
Shajapur 244.24 1.22 56.6% 0.61 69% 31% 26% 3% 5.0%
Ujjain 238.95 1.21 55.6% 0.62 70% 30% 31% 3% 7.8%
Source: Census 2011; *Poverty HCR (head count ratio) is based on NSSO 68th Round: July 2011 to June 2012 (NSSO, 2014).

4 Madhya Pradesh is one of the ten cotton growing states in India, along with Punjab, Haryana, Gujarat, Maharashtra, Telangana,
Rajasthan, Haryana, Karnataka and Orissa (USDA, 2022). Interestingly, India is the largest cotton producing country in the world, accounting
for about one third of the total area under cotton cultivation globally. It produces about 6.1 million metric tons of cotton (Statista, 2021).
Cotton grows in tropical and subtropical regions, requiring relatively high temperature ranging between 21°C and 35°C. Sandy loamy soil
and deep black soil with adequate amounts of bacteria is suitable for growing cotton. Cotton is a predominantly Kharif crop, dependent on
monsoon rains and is planted from the end of April through September. It is harvested in the fall and winter. About 5.7 percent of total area
in India is reportedly under cotton cultivation. Cotton yields have reportedly plateaued in recent years with an average of approximately
500 kilograms per hectare.
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 7

Table 1.3. Socio-economic-demographics of Southern MP by district (for rural areas only)

No of Main Marginal
No. of HH Rural Literacy SC Pop ST Pop Poverty
District Workers Workers Workers
(000s) Pop (mn) Rate (%) (%) HCR*
(mn) (%) (%)

Betul 261.88 1.27 55% 0.68 62% 38% 9% 50% 77.2%

Chhindwara 333.15 1.59 57% 0.78 67% 33% 10% 45% 62.6%

Hoshangabad 175.53 0.85 60% 0.35 71% 29% 16% 21% 36.6%
Source: Census 2011; *Poverty HCR (head count ratio) is based on NSSO 68th Round: July 2011 to June 2012 (NSSO, 2014).

Tables 1.4 and 1.5 below show the cultivable area and the landholding patterns of the districts of southern
Madhya Pradesh and that of Western Madhya Pradesh. The last column indicates the major crops cultivated in
the districts (in volume) as per the latest official records.

Table 1.4. Land use in Western MP by district

Share Share
Total Cultivable Total No of Share of Medium
of Small of Large
District Area (Mn Area (Mn Landholdings Holdings Major Crops
Holdings Holdings
Hectares) Hectares) (000s) (2-10 Ha)
(<2 Ha) (>10 Ha)

Alirajpur 38.27 0.70 NA NA NA NA NA

Cotton, Jowar,
Barwani 52.90 0.63 90.46 52% 45% 2%
Maize
Cotton,
Burhanpur 34.27 0.16 NA NA NA Soybean,
Jowar
Soybean,
Dewas 70.13 0.28 145.62 54% 41% 4%
Wheat, Gram
Soybean,
Dhar 81.95 1.46 187.17 56% 41% 3%
Wheat, Cotton
Soybean,
Harda 33.06 0.53 35.37 30% 57% 14%
Wheat, Gram
Soybean,
Indore 38.31 0.20 107.72 62% 35% 3%
Wheat, Gram
Maize, Urad,
Jhabua 29.31 1.84 186.09 65% 35% 1%
Wheat
Soybean,
Khandwa 77.56 0.01 168.48 53% 44% 3%
Cotton, Wheat
Cotton, Jowar,
Khargone 81.87 1.60 161.27 55% 42% 3%
Wheat
Mandsaur 55.18 1.62 161.51 64% 34% 2%
 8 ANKER RESEARCH INSTITUTE

Share Share
Total Cultivable Total No of Share of Medium
of Small of Large
District Area (Mn Area (Mn Landholdings Holdings Major Crops
Holdings Holdings
Hectares) Hectares) (000s) (2-10 Ha)
(<2 Ha) (>10 Ha)
Soybean,
Neemuch 39.36 1.72 94.72 69% 30% 1%
Wheat, Rape
Soybean,
Rajgarh 61.63 2.71 469.49 26% 73% 1%
Wheat, Rape
Soybean,
Ratlam 48.60 1.64 346.90 28% 71% 1%
Wheat, Maize
Soybean,
Shajapur 61.66 1.26 187.60 60% 37% 3%
Gram, Wheat
Soybean,
Ujjain 60.99 0.81 160.38 52% 43% 5%
Wheat, Gram
Source: MP State Agricultural Plan 2017 – 2021 (Government of Madhya Pradesh, 2017)

Table 1.5. Land use in Southern MP by district

Share Share of Share

Total Cultivable
Total No of of Small Medium of Large
District Area (Mn Area (Mn Major Crops
Landholdings Holdings Holdings Holdings
Hectares) Hectares)
(<2 Ha) (2-10 Ha) (>10 Ha)

Betul 100.78 3.94 178,027 56% 40% 4% Wheat, Jowar

Chhindwara 118.49 4.02 252,871 62% 36% 2% Wheat, Jowar

Wheat, Other
Hoshangabad 66.87 3.81 112,424 57% 40% 3%
Cereals
Source: MP State Agricultural Plan 2017 – 2021 (Government of Madhya Pradesh, 2017).

The Chhindwara district is located in the southern part of the state, approximately 125 km from Nagpur
(Maharashtra) and 218 km from Jabalpur (Madhya Pradesh). Ratlam, as mentioned earlier, is located in western
part of Madhya Pradesh.

Chhindwara district has a population of 2,090,922 out of which 1,064,468 (50.90%) are male and 1,026,454
(49.09%) are female, with a sex ratio of 966 females for every 1,000 males. It has a literacy rate of 72.21%,
with 90.70% among urban males, 75.17% among rural males, and in contrast 80.57% among urban females and
57.26% literacy among rural women. Approximately 75.84% of Chhindwara’s population lives in urban areas and
24.16% lives in rural areas. The district also has a relatively high percentage of tribal population with nearly 37%
belonging to Scheduled Tribe (ST) and a little over 11% belonging to Scheduled Caste (SC) (Census, 2011).

Ratlam district has a total area of 4,861 kms, out of which 4,749.21 km (97.7%) is rural and 111.79 km is urban.
Again, 1,020,038 persons (70.1%) out of the total population of 1,455,069, live in rural areas and the remaining
435,031 (29.89%) live in urban areas of the district. A little less than half (49.36%) of the rural population are
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 9

female while the share of female population in urban areas is a very similar 49.02%. Compared to Chhindwara,
the tribal population of Ratlam is 28%, and a little over 14% belonging to Scheduled Caste (SC) (Census, 2011).

Chhindwara district has 1,948 villages and is divided into 12 tehsils (or community development blocks (CD) for
administrative purposes. Ratlam district, consisting of a total of 1,053 villages, and is divided in to 8 Tehsils /
Blocks / (Community Development Blocks) for administrative purposes (Census, 2011). The CD Block is a rural area
earmarked for administration and development purposes which is administered by a BDO (Block Development
Officer). Under a given CD block there are several gram panchayats which are the local administrative units at the
village level.

The people of the Chhindwara district depend on multiple livelihoods, with agricultural farming as the major
occupation. It is famous for its forest and mineral wealth. Although the primary crop grown in Chhindwara is corn,
other crops such as wheat, paddy, soyabean, pulses, and fruits including oranges and cash crops such as cotton
are also cultivated here. Soyabean is a main crop of Ratlam district.

5. THE ANKER METHODOLOGY

This report is based on the living income and wage benchmarking methodology developed by Richard Anker and
Martha Anker (Anker and Anker, 2017). The Anker Methodology recommends a detailed process to ascertain the
living income and living wage for a family in local conditions. This process takes into account the cost of nutritious
food, healthy housing, adequate healthcare, children’s education through secondary school, transport and other
costs including those for unforeseen events.

The principles and innovative aspects of this methodology include:

• Assumptions used to estimate a living income and living wage are clearly stated, so that all the
stakeholders understand how living wage benchmarks are estimated, and what farmers and workers
and their families would be able to afford if they earned a living wage and living income.
• The living incomes and living wages estimated are based on normative standards such as a nutritious
and palatable diet, safe housing, adequate health care, education for children, costs of transportation,
and unexpected events.
• It is based on a realistic estimation of costs calculated specifically for a given time and place. Therefore,
living income and living wage increase with economic development and rising living standards.
• Separate living income and living wage benchmark estimates are necessary for rural and urban areas.
• Wages paid and income earned should include all forms of remuneration including fair and reasonable
value of benefits paid in-kind and cash allowances, but should exclude overtime.
• The living income and living wage methodology is internationally comparable as the estimates are
based on the same principles everywhere.
• The methodology is practical and relatively inexpensive, as it uses a judicious mix of critical analyses of
secondary data and rapid assessment methods for collection of primary data.

Figure 1.4 below explains how the living income and living wage were estimated in this report for rural Madhya
Pradesh. It shows the components of a basic but decent life for a typical size family, moving from cost of a basic
but decent life to net living income and living wage and moving from net living wage to gross living wage.
10 ANKER RESEARCH INSTITUTE

Figure 1.4. Estimation of Living Income and Living Wage

Living income = Cost of basic

but decent life
Nutritious diet

Workers per family

Healthy housing

Net Living Wage

Other essential
needs
Taxes and payroll
deductions

Unexpected
events
Living Wage

Source: Anker and Anker (2017)

6. FAMILY SIZE TO BE SUPPORTED

The cost of a basic but decent living for a typical family, including in the chosen areas of our study in rural MP,
depends in part on the family size. The cost of living naturally increases with the size of the family. A typical or
reference family size of 4.5 is used in this report.

7. DETERMINING REFERENCE FAMILY SIZE

The appropriate family size for a living wage is arrived at by considering both the average household size (excluding
single person households and very large households) and the typical number of children per woman born and
surviving) as measured by the total fertility rate adjusted for under 5 mortality rate.

The average household size in rural Madhya Pradesh in 2011 was 4.75 when single person households (that do
not have children) and especially large households of 9 or more members (that are probably extended families
with more than two potential adult workers) are excluded. For the specific locations of the current study, the
average household size for rural Chhindwara district was 4.66 when single person and very large households are
excluded. The average household size for rural Ratlam was 4.64 when single person and very large households
are excluded. (Census, 2011).
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 11

Another way to arrive at an appropriate reference family size is to determine the typical number of surviving
children per woman in the study area and add 2 adults (the parents) to this. This calculation is based on the total
fertility rate (i.e. number of children born per woman) and the child mortality rate. The total fertility rate in rural
MP ranges from 3.0 (SRS Bulletin, 2017) to 3.1 (SRS Bulletin, 2016). When adjusted for the child mortality rate of
60 per 1,000 births in rural MP (SRS Bulletin, 2018), this amounts to an average of 2.87 surviving children. The
reference family size based on these calculations is 4.87 (2 adults + 2.87 surviving children).5

Based on the above, a reference family size of 4.5 is used for this study. Since the data used above for calculating
average household size and child mortality adjusted total fertility rate are somewhat dated (e.g., the latest census
data available goes back to 2011), and there is a general downward trend in these parameters, the child mortality
adjusted total fertility rate of 2.87 for rural Madhya Pradesh. The average adjusted household size of 4.75 for rural
Madhya Pradesh (and 4.66 for rural Chhindwara and 4.64 for rural Ratlam) were rounded down to a reference
value for this study of 4.5.6

5 Although child mortality rate was somewhat higher in Ratlam compared to Chhindwara (AHS Factsheet, 2012).
6 The choice of the reference family size of 4.5 was further corroborated by our field investigation. In Chhindwara, the research team
visited a total of 68 farm households, out of which 27 households comprised 4 members (typically a couple and two children), 10
households comprised 5 members, and 20 households comprised 6 or more members (mostly when three generations were found to be
living in the same house). Focused group discussions with women in several blocks also revealed the growing preference for small families,
and most of them have two children. In Ratlam, out of the 100 households visited, 53 comprised more than 5 members, mostly when
multiple generations were found to be living in the same house in a joint family setup, and 39 houses comprised 4 or 5 members. The
number of children in 41 out of the 100 households was 2; in 23 houses, the number of children was 1, and only 12 houses had 3 children.
12 ANKER RESEARCH INSTITUTE

PART II. COST OF DECENT LIVING IN RURAL MADHYA PRADESH

Cost of decent living consists of expenses incurred for a nutritious diet, healthy housing, and non-food and non-
housing (NFNH) expenses. NFNH expenses include several components such as the cost of adequate healthcare,
children’s education through secondary school, transportation, clothing, and other necessary expenses. This
section discusses the process and method of determining these costs. This has been done for a typical reference
family of 4.5 persons consisting of two adults and 2.5 children (see section 1.7 for reference family size).

8. COST OF FOOD AND FOOD PRICES

The cost of food is the most important component that makes up the cost of living. The cost of food has been
calculated on the basis of a low-cost but nutritious diet and the prices of food items (for preparing such a diet)
prevailing in the study districts for a family of 4.5 persons.

8.1. Average Energy Requirements

Ability to undertake routine activities is a pre-requisite for leading a normal life or decent living; all activities
consume human energy. The energy required for basic bodily functions (indicated by Basal Metabolic Rates) has
been calculated by the Schofield equations recommended by WHO, which is based on a person’s age, gender
and body size. The body size (weight) input is typically based on an assumption of BMI of 21 (the midpoint of the
normal healthy weight range for BMI). The average attained height of an average Indian adult male is 1.780 meters
and 1.627 meters for an average Indian adult female in MP (ICMR - NIN, 2020).7 The basic energy requirements
thus determined were further adjusted for different levels of physical activity. Children were assumed to have
moderate activity levels. Adults in the current study, because of the nature of their work and life style (involving
non-mechanized farm work for both males and females as well as vigorous housework for females) are assumed
to have vigorous activity levels. After making small adjustments for the extra calories needed for pregnancy and
lactation, our calculations suggest a requirement of 2,489 calories per person per day in the reference family.

To validate the above calculation, we also examined the average calorie requirements using norms developed
by the National Institute of Nutrition (NIN) on recommended dietary allowance (RDA) (ICMR – NIN, 2020). The
average requirement (EAR) of calories for Indians estimated in the 2020 NIN report were also investigated. Using
the NIN recommended norm of 3470 Kcal/day for adult males with vigorous activity levels, 2720 Kcal/day for
adult females with vigorous activity levels, and 1902 Kcal/day for children, the average calorie requirements per
person for a family size of 4.5 is 2,432 (excluding small increases for pregnancy and lactation). Thus, our estimate
of calorie requirement for rural MP using Schofield equations is similar to that recommended for all-India by the
National Institute of Nutrition (NIN).

7 The estimates of average adult male and female height in India are 1.77 meters and 1.62 meters respectively, given by the National
Institute of Nutrition. Due to the unavailability of recent state level data on adult heights, we have increased the Indian averages by 0.5%
based on the findings of a study on state-wise differences in adult heights by Mamidi et.al, 2011. The study assesses the average adult
height in different states of India based on the data from National Family Health Survey. It found that the adult height is slightly higher (by
0.5%) in MP compared to all-India. Average adult male height in MP is 1.656 meters compared to 1.647 meters for all India. Similarly, the
average adult female height in MP is 1.526 compared to 1.519 for all India.
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 13

8.2. Preparation of Preliminary Model Diets

Determining the cost of a low-cost but nutritious diet for the reference family is a critical step for estimating
a living wage and living income. It is important that the diet suits the food habits and preferences of the local
people. The diet needs to be not only nutritious, meeting the WHO recommendations of minimum nutrient
intakes, but should also be consistent with local food preferences, relatively low cost for a nutritious diet, and
consistent with the country’s development level. Therefore, the recommended model diet for this study must
meet the average calorie requirements that have been calculated above and include appropriate macro and
micronutrients.

As a starting point to prepare our model diet, actual food consumption data for rural Madhya Pradesh available
from the latest National Sample Survey (NSS) – Round 68: July 2011-June 2012 (NSSO, 2014) - on household
consumption and expenditure have been used.8 This provides a good starting point for developing the model
diet, because it indicates the general consumption pattern of food across major food groups.

The National Sample Survey Office (NSSO), Ministry of Statistics and Programme Implementation, undertakes all-
India survey on household consumption expenditure (CES) at quinquennial intervals. The latest available survey
(the 68th round) on consumer expenditure was conducted during July 2011-June 2012.9 The NSS Consumer
Expenditure Survey generates estimates of household Monthly Per Capita Consumer Expenditure (MPCE) and
the distribution of households and persons over the MPCE classes. It is designed to collect information regarding
expenditure on consumption of goods and services (food and non-food) consumed by households.

These NSS data include information on consumption (in kilograms) of various food items per person for 30 days
for rural MP. We converted these data into number of purchased grams per day.10 We also aggregated listed
food items under eleven different food groups that are typically used in model diets to determine the number
of grams purchased for each food group. Details of how edible grams for each food group were calculated from
purchased grams and the specific food items that we used to represent each food group are provided in Table
2.1.1. This includes both purchased grams according to NSS data as well as the adjustments we made to construct
our nutritious model diet for rural MP which is expressed in edible grams. It should be mentioned here that NSS
2011-12 data for rural MP used to create a preliminary model diet was further modified by making adjustments
based on local food preferences and local food prices and discussions with workers, farmers and key informants
during our field research.

8.3. Nutritional Content of Food Items

Instead of using the USDA Nutrition Database (which is often used in Anker living wage and income studies), the
Database of the National Institute of Nutrition (NIN, 2012) was used. The latter provides nutritional content of
each food item (based on edible portions) such as calories, proteins, fats and carbohydrates). The NIN database
is preferred, because of its specific reference to the Indian context.

8 It is worth noting that model diets based in part on actual food consumption observed in household expenditure surveys have also
been used widely by government ministries and the World Bank to estimate food costs for poverty lines.
9 Data from a more recent NSO CES survey for 2017-18 was withheld (Seshadri, 2019).
10 In case of a few food items, consumption is not given in weight, but in number of units consumed (e.g.: Eggs, Lemon, Bananas, etc.).
In such cases, average weights of these food items were used to convert them to number of grams.
14 ANKER RESEARCH INSTITUTE

Table 2.1.1. Number of purchased grams and specific foods for rural MP

Details for NSS data Adjustments to create to create

Food group # Food group
for rural MP final model diet for rural MP

According to NSS data, a to-

We added maize and reduced wheat and
tal of 385 grams of cereals
rice accordingly. During our field investi-
was purchased per person in
gation, we observed that maize is popular,
rural MP. This has been pro-
primarily because it is grown at home by
portioned between wheat
Cereals and many rural families and so inexpensive.
1A and rice, the two common
Grains Many farm households indicated consump-
cereals in the study region
tion of maize; but wheat was stated to be
using the same ratio as indi-
the preferred cereal. Therefore, we includ-
cated by the NSS consump-
ed maize as 4% of cereals in our model diet
tion of these two items [79%
and reduced wheat and rice accordingly.
and 21% respectively].

Prepared
NSS data does not report Prepared cereals were not found to be
Cereals
1B consumption of prepared ce- popular in our fieldwork, and hence we ex-
(e.g., bread
reals. cluded this food group.
and pasta)

Actual consumption of roots

and tubers, according to NSS
Potato was used to represent the roots
data, was 47 grams per per-
Roots and and tubers food group, because it is wide-
2 son per day. Roots and tu-
Tubers ly consumed and relatively inexpensive in
bers are an important source
rural MP.
of starch and calories in In-
dia.

Arhar dal represents pulses in our mod-

el diet, because it is the most consumed
pulse/legume in the study regions. We
found in our field investigation in Chhind-
Pulses are a popular and in- wara that 60 out of 68 households sur-
expensive source of protein veyed consumed Arhar dal as part of their
worldwide. According to NSS daily food. Similarly, in Ratlam, all 100
3 Pulses
data, 29 grams of pulses was households we spoke to consumed Arhar
consumed per person per dal as part of their daily food. Other pulses
day. (Chana, Moong, Urd) are not consumed of-
ten; nor are they much different in cost per
kg. The average price per kg of Arhar dal,
Moong dal and Urd dal were found to be
Rs. 108, Rs. 111 and Rs. 109 respectively.
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 15

Details for NSS data Adjustments to create to create

Food group # Food group
for rural MP final model diet for rural MP

The field investigation in the two study

districts, especially Chhindwara, revealed
little consumption of milk, primarily due
to unaffordability. Only households, which
Actual consumption of Buf- owned milch cattle, consumed milk regu-
falo milk, as per NSS data, larly (mostly in Ratlam).
was 135 grams per person
per day. Purchase of other We increased milk consumption to en-
4 Dairy dairy products is limited in sure a nutritious diet to 1 cup per day for
rural MP as many of these, children and ½ cup for adults per day in
especially Curd and Paneer Chhindwara and ¾ cup for adults per day
(cheese), are prepared at in Ratlam (which is also consumed in the
home from raw milk. form of curd and paneer). A higher dairy
consumption is taken for Ratlam to provide
additional proteins for the primarily veg-
etarian population because of lower con-
sumption of eggs and meat.

Consumption of eggs in the two study dis-

tricts was found to be limited because of
According to NSS data, con- affordability. The few who owned hens
sumption of eggs was a neg- would consume eggs more frequently,
ligible 1 gram per person per compared to those who had to buy them
day. Data on eggs was given from the market.
5 Eggs in numbers/units in NSS data
which we converted to grams We included two eggs per week to pro-
(assuming an average weight vide proteins and a palatable diet for Ch-
of 50 purchased grams and hindwara, and 1 egg per week for Ratlam
44 edible grams per egg). since a good percentage of population is
vegetarian. Only 29% of the households we
contacted in Ratlam consumed eggs.
16 ANKER RESEARCH INSTITUTE

Details for NSS data Adjustments to create to create

Food group # Food group
for rural MP final model diet for rural MP

In-depth interviews with respondents in

Chhindwara revealed that chicken was the
preferred meat and mutton was hardly
consumed. In Ratlam, about one-third of
respondents consumed meats (and infre-
quently, due to lack of affordability). The
preferred meat was chicken. We allocat-
Actual consumption, accord- ed meats to poultry only. It was by far the
ing to NSS data, was 6 grams most preferred meat – and also the least
6 Meat & Fish
of all meats and fish together expensive.
per person per day.
We included 1 serving per week to provide
proteins and a palatable diet for Chhind-
wara, and ½ serving per week for Ratlam
as large percentage of population was veg-
etarian. In Ratlam, 43% of the households,
we contacted, indicated consumption of
meat.

Vegetables included in our model diet was

based on in-depth interviews with respon-
NSS data report an actual
dents in Chhindwara and Ratlam as well as
consumption of 132 grams
observed prices. This revealed that cauli-
of vegetables per person per
flower was a popular and inexpensive veg-
day. Common vegetables in-
etable (and according to NSS, cauliflower
clude: (i) spinach (the most
is third most commonly purchased vegeta-
common green vegetable),
7A & 7B Vegetables ble). Other commonly consumed and inex-
(ii) pumpkin, (iii) brinjal, (iv)
pensive vegetables in the study areas were
and (v) tomatoes and onions
spinach and brinjals as well as, of course,
(which are consumed inde-
tomatoes and onions.
pendently but also are im-
portant ingredients in Indian
Each of these 5 vegetables have been allo-
cooking).
cated equal amounts of edible grams in our
model diet.
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 17

Details for NSS data Adjustments to create to create

Food group # Food group
for rural MP final model diet for rural MP

According to NSS data, 24

grams of fruits was con- Since bananas are available throughout the
sumed per person per day. year and it is also the cheapest fruit, we in-
Bananas were the most pop- cluded it in our model diet.
ular fruit in the region. Since
consumption of bananas and It is worth noting that respondents in Ch-
several other fruits was ex- hindwara stated that oranges, custard
8 Fruits
pressed in number of units apple and mangoes were commonly con-
in NSS data, these were con- sumed in different seasons. In Ratlam, pa-
verted to purchased grams payas and guavas were commonly eaten
using appropriate weights fruits. So, we included a second common
per unit (e.g., an average fruit in our model diet – oranges in Chhind-
weight of 120 gram per unit wara and guavas in Ratlam.
is used for bananas11)

Type of cooking oil used differs in various

Actual consumption of oil is parts of India. Soyabean oil was found to
9 Oils & Fats 22 grams per person per day, be the least expensive and most widely
according to NSS data. used cooking oil in the study districts. It is
typically purchased in 1-liter bottles.

According to NSS data, 27

grams of sugar was con-
Based on WHO recommendation on max-
sumed per person per day.
imum amount of sugar, 30 grams per per-
10 Sugar Other sugar products like
son per day has been included in our model
gur (jaggery) and candy were
diet.
negligible and so were ig-
nored.

Tea is popular in this part of the country,

NSS data reports consump- and so has been included in our model diet
Non- tion of a negligible amount and expressed in grams of tea leaves per
11 alcoholic of 0.16 grams of tea per per- person per day (using 2 grams per cup of
Beverages son per day. This amount is tea and assuming 2 cups per day for adults).
clearly too low. This amounts to 1.78 grams per person in
the family per day.

11 The average weight was calculated by the research team by weighing quantities (in dozens) of various fruits and estimating the per
unit weight in grams. We weighted a dozen bananas repeatedly and the total weight ranged from 1.3 kilograms to 1.5 kilograms.
18 ANKER RESEARCH INSTITUTE

8.4. Conversion of purchased grams to edible grams

We used the he USDA Nutrient Database12 to calculate the edible proportion of each food item, with some
adjustments made to suit local conditions.

8.5. Additional Model Diet Costs

We added three additional costs to our model diet to make it more realistic. In order to ensure reasonable variety
to the diet, 12% was added to the cost of the model diet; 8% was added to account for costs of salt, spices,
condiments and sauces (as indicated in NSS data for these food items); and another 5% was added to account for
wastage and spoilage in the preparation and storage of food.

8.6. Nutrition Adjustments to Create our Model Diet

After obtaining the edible grams for each food group and food item in the initial diet based on NSS food
consumption data from 2011-12, these amounts were first adjusted to ensure 2489 calories.13 The following
adjustments were then made to ensure that our model diet meets the WHO and ICMR nutritional standards of
calories, macronutrients, and micronutrients. Features of our model diet are as listed below:

• The diet is palatable for rural MP, i.e. reflects local food preferences. The choice of various food items
in each food group represents commonly purchased and relatively inexpensive items, including non-
vegetarian food that is commonly consumed in rural MP.
• The diet is of relatively low cost for a nutritious diet. For food items (cereals, vegetables, fruits, and
pulses) where a number of varieties are available, items of lower cost have been chosen when they are
widely available and considered locally palatable.
• Based on observed differences around the world, Anker and Anker (2017) recommends that 11-12%
of calories should come from proteins for a lower-middle income country such as India. In our model
diets, around 12% of calories come from proteins. Also it is important that minimum amounts of
animal-based foods as well as protein-rich plant-based products are included, despite their high cost
per calorie. Hence, the following adjustments have been made:
ჿ For Chhindwara district, one serving (85 edible grams per serving) of meat per week, which
implies ~12 grams per day has been included. This has been allocated to chicken, which is the
least expensive and widely consumed item of the category in the study areas. For Ratlam, since a
larger part of population is vegetarian, one serving of meat in every two weeks has been included.

12 There is no reliable source available in India providing edible proportions of the various food items. Hence, we rely on the USDA
database. However, some adjustments were made, as the methods of preparation for several vegetables differ between the United State
and India. For instance, skin of potato is eaten locally and hence the edible portion is higher in India (90%) compared to the United States
(75%). Similarly, the edible proportions of some vegetables are also higher in India compared to the United States. For example, 80% of
spinach in India vs 72% in the US (this may be because spinach is bought without large roots in India, only large stems are removed); 75%
of Cauliflower in India vs 39% in the USDA database (this could be because stalks and stems are also used in the vegetable preparation
in India); 100% of Tomato used in India vs 91% in USDA NAL (this may be because tomato is purchased without stem, and the core is also
consumed in India); 95% of Guava in India vs 78% according to USDA because the skin is consumed and only a small core is not eaten);
Chicken in rural India is mostly bought live. Feather, legs and head of the chicken are removed while dressing it before cooking, while
giblets including neck, liver, heart and gizzard are cooked and eaten in rural India, leaving the wastage to 25% only.
13 The starting model diet based solely on NSS food consumption data indicated too few calories (1971 calories). Hence, the number of
edible grams for each food in the NSS diet was proportionately scaled up so that the total number of calories in the model diet equalled
the total number of calories required (as calculated and indicated above).
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 19

ჿ 2 eggs per week (44 edible grams per egg) which implies ~12 edible grams per day in Chhindwara.
For Ratlam, one egg per week is included.
ჿ As per the recommended norms, at least one cup (240 ml) of milk for children and ½ cup for
adults is considered necessary. This amounts to about 187 grams of milk per capita per day (this
amount is taken for Chhindwara). In Ratlam, as large part of the population is vegetarian, and
as fewer servings of eggs and meat have been included, the adult milk consumption is taken as
¾ cup per day, amounting to 213 grams per capita. Although higher than actual consumption at
present, because of low consumption of meat, fish and egg, consumption of adequate amount of
milk is included as an important source of protein. Further, it is a common practice that families
use milk to prepare curd and paneer at home.
• Based on WHO/FAO (2003) and Anker & Anker (2017) guidelines, 325 grams (for lower-middle income
countries) of fruits, vegetables (excluding roots and tubers), pulses and legumes are included in our model
diet. NSS data on food consumption indicate that vegetable and fruit consumption is only about 77 and 19
edible grams per capita per day respectively. Accordingly, the amounts of vegetables and fruits in our model
diet has been increased substantially to meet the requirements of 325 grams.
• 30 grams of sugar, which is the maximum amount WHO recommends per day, has been included in the model
diet; this is a little higher than 27 grams of current consumption which is reported in NSS data.
• The WHO standard restricts oil consumption and Anker and Anker (2017) sets this at a maximum 34 grams
per person per day. Oil consumption is 27 grams as per our model diet.
• In rural India, prepared cereals such as pasta and bread are uncommon and hence prepared cereals are not
included in our model diet.
• In order to ensure reasonable variety in the diet, 12% was added to the cost of the model diet and eight
per cent was added to account for cost of salt, spices, condiments and sauces. NSS data indicates the same
percentage for these food items. An additional 5% has been added to account for wastage and spoilage in the
preparation and storage of food.

8.7. Local food prices and cost of Model Diet

As is evident, cost of a model diet depends on the prices of the food items that constitute it.

In case of Chhindwara, in-depth interviews with 68 farmers and other respondents revealed that the workers/
farmers shop primarily at the weekly markets. Given that houses and villages are spread out, residents buy
most of their food and other necessities from the nearest weekly haat (see Picture 1 below). Occasionally they
purchase some of the daily essentials from small shops located in the village. None of these shops sell fruits,
vegetables or cereals. It is a common practice found among the villagers to buy most food items on a weekly
basis. The field team made repeated visits to four separate weekly markets where there are a few permanent
stores selling groceries and a large wet market. The team visited around 30 stores located across the four blocks
to get estimates of prices of cereals, tea, oil and sugar. Prices of milk were collected from 15 dairies and prices
of meats from 13 shops and prices of eggs were collected from eight shops. Prices of vegetables and fruits were
collected from 30 vendors who put up their wares in weekly markets.

In Ratlam district, villagers typically shop in the market area in the nearest town (see Picture 2 below). A few
villages had small local shops selling toiletries, tobacco, and packaged food (like biscuits, chips, tea leaves, cooking
oil). These shops did not carry major food items such as cereals, pulses, fruits, vegetables and dairy products. The
20 ANKER RESEARCH INSTITUTE

market area where the farmers shop comprises a mix of departmental stores14, wholesale shops, kirana shops,
standalone shops and temporary wet markets (see pictures below). The field team visited 18 market areas in
this district. Price of cereals, tea, sugar and oil were obtained from departmental stores and kirana shops for
different qualities and quantities of the products. Prices of fruits and vegetables were gathered from temporary
wet markets, street vendors and permanent establishments. Prices of milk and eggs were collected from kirana
shops, departmental stores, and dairies. There were fewer shops selling meat in the main market; the field team
visited a few standalone meat shops located near each village. In total, prices were collected from about 65 price
points for each of the different food items included in the model diet.

Table 2.1.2(a) and table 2.1.2 (b) describe types of markets where residents of the two study districts typically
shop for food.

Table 2.1.2 (a). Markets in Chhindwara where rural residents typically shop for food

Wholesale and
Village Neighbor- Street vendors / Produced at
departmental Weekly
Food item hood shop / Wet Markets in PDS store Home for Self-
stores in nearby markets
Kirana Shops Nearby Towns Consumption
town
Cereals – Rice Yes Yes Yes

Cereals – Wheat Yes Yes Yes

Pulses Yes Yes

Milk Yes Yes

Egg Yes Yes Yes

Chicken Yes Yes

Vegetables Yes Yes

Fruits Yes Yes

Tea/Sugar / Oil Yes Yes

14 Retail establishments offering a wide range of consumer goods, in which specialized category of products are stored in different areas
of the store.
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 21

The following pictures show the markets in Chhindwara:

Chhindwara markets

Street Vendors at Weekly Markets in Chhindwara

Weekly market with several vendors selling Street vendor selling groceries in the
different food items weekly market
22 ANKER RESEARCH INSTITUTE

The following pictures are taken from the markets in Ratlam:

Ratlam markets

Kirana shop in a village

Town market – Shivgarh in Ratlam district

Another Kirana shop for villagers Street vendors selling fruits

 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 23

Table 2.1.2(b). Markets in Ratlam where rural residents typically shop for food

Wholesale/
Departmental Village Neighbor- Street vendors / Produced at
Weekly
Food item Shops / hood shop / Wet Markets in PDS store Home for Self-
markets
Standalone Shops Kirana Shops Nearby Towns Consumption
in Nearby Town

Cereals Yes Yes Yes

Pulses Yes

Milk Yes Yes

Egg Yes Yes Yes

Chicken Yes Yes Yes

Vegetables Yes Yes

Fruits Yes

Tea/Sugar/ Oil Yes Yes

On the basis of food price data thus collected, the median price per kilo was obtained for a variety of food items.
Food items that were widely available, commonly consumed, sold in reasonable sizes, and relatively inexpensive
were selected to include in the model diet for Chhindwara and Ratlam districts. The prices of food items which
are mainly self-produced and self-consumed were determined on the basis of prices of the same prevailing in the
market. We assumed that no food is obtained from the Public Distribution system (PDS) when costing our model
diet, because the people we spoke to in both study districts expressed concerns that the quality of food grains
obtained through PDS was not good enough for consumption; a few even stated that the lot received from the
PDS is used to feed their animals. 15

9. MODEL DIET
The model diets, which were prepared using the Anker Methodology and adjustments discussed in the previous
section, are presented in Table 2.2(a) and 2.2(b). The model diets are similar for the two districts, except the
choice of fruits included as well as the quantity of meats and eggs and milk. The prices of food items differed in
the two study districts, and therefore the cost of food also differed. Prices of cereals, tea, milk, and meat were
more expensive in Ratlam compared to Chhindwara, whereas prices of vegetables and fruits, except tomatoes,
were similar or slightly lower in Ratlam. Two separate model diets have been prepared.

15 The Public Distribution System (PDS) is an Indian Food Security System established under the Ministry of Consumer Affairs, Food and
Public Distribution. The State Governments are responsible for distribution of commodities – primarily wheat, rice, sugar and kerosene – to
eligible households through fair price shops. The PDS in India faces a number of challenges such as incorrect identification of beneficiaries,
leakage of food grains (both transportation leakages and black-marketing by fair price shop owners), lack of storage facilities and rotting
of food grains, among others.
24 ANKER RESEARCH INSTITUTE

Table 2.2(a). Model diet for Chhindwara

Purchased
Food group Food item Edible grams Cost per kilo Cost
grams

Wheat 337 337 20 6.74

1. Cereals and grains Rice 98 98 30 2.95

Maize 19 19 18 0.34

2. Roots and tubers Potato 53 59 25 1.48

3. Pulses, legumes, beans Arhar / Toor 36 36 80 2.88

4. Milk Milk 187 187 40 7.47

5. Eggs Chicken egg 13 15 200 2.95

6. Meats & fish Chicken 12 16 140 2.24

7A. Dark green leafy
Spinach 41 52 35 1.81
vegetables (GLV)
Cauliflower 41 55 20 1.10

Brinjal 41 51 20 1.02
7B. Other vegetables
Tomato 41 41 35 1.45

Onion 41 46 30 1.38

Orange 41 57 40 2.26
8. Fruits
Banana 41 65 37 2.42

9. Oils & fats Oil (soybean) 27 27 140 3.80

10. Sugar White sugar 30 30 40 1.20

11. Nonalcoholic beverages Tea 1.8 1.8 200 0.36

Total cost of model diet excluding additional costs indicated below 43.84

Total cost of model diet including additional costs indicated below 54.80

Percentage added for salt, spices, sauces, and condiments 8%

Percentage added for spoilage & waste 5%

Percentage added for variety 12%

 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 25

Table 2.2(b). Model diet for Ratlam

Purchased
Food item Edible grams Cost per kilo Cost
grams

Wheat 335 335 28 9.38

1. Cereals and grains Rice 98 98 35 3.44

Maize 19 19 17 0.32

2. Roots and tubers Potato 53 59 30 1.77

3. Pulses, legumes, beans Arhar / Toor 36 36 100 3.59

4. Milk Milk 213 213 50 10.67

5. Eggs Chicken egg 6 7 160 1.09

6. Meats & fish Chicken 6 8 150 1.20

7A. Dark green leafy
Spinach 41 52 20 1.03
vegetables (GLV)
Cauliflower 41 55 20 1.10

Brinjal 41 51 20 1.02
7B. Other vegetables
Tomato 41 41 60 2.48

Onion 41 46 30 1.38

Guava 41 46 30 1.38
8. Fruits
Banana 41 65 30 1.94

9. Oils & fats Oil (soybean) 27 27 140 3.80

10. Sugar White sugar 30 30 40 1.20

11. Nonalcoholic beverages Tea 1.8 1.8 280 0.50

Total cost of model diet excluding additional costs indicated below 47.29

Total cost of model diet including additional costs indicated below 59.11

Percentage added for salt, spices, sauces, and condiments 8%

Percentage added for spoilage & waste 5%

Percentage added for variety 12%

Cost of the model diet for rural Chhindwara is Rs. 54.80 per person per day compared to Rs. 59.11 for a similar
model diet for rural Ratlam. Therefore, the cost of food per month for a family of 4.5 in Chhindwara is Rs. 7,502
(USD 99.3) and in Ratlam is Rs. 8,092 (USD 107.1).
26 ANKER RESEARCH INSTITUTE

While estimating the cost of food, the research team was conscious of the Public Distribution System (PDS) that
exists in India, especially for the benefit of the BPL population. The public distribution system (PDS) of essential
commodities (food grains, kerosene and sugar) in India during the period of war and subsequently during the
acute food shortage in the 1960s. Thanks to the Green Revolution, agricultural production of the country grew
and the outreach of PDS was extended in the 1970s and 1980s to areas across the country especially where
incidence of poverty was high. In 1992, PDS was revamped to ensure that minimum quantities of food grains,
kerosene and sugar reached the poor (Below Poverty Line) at 50% of the cost.

In 2000, PDS was reorganised again targeting the poorest segments of the BPL population. The poorest of the
poor families from amongst the BPL families were identified within each state and food grains (rice and wheat)
were distributed at a highly subsidized rate (@Rs. 2/- for wheat and @Rs. 3/- for rice). In 2001, states/UTs were
allowed the flexibility in the matter of fixing retail prices of the commodities distributed through the PDS. The
criteria used to identify those who live below the poverty line (BPL) vary from state to state and between urban
and rural locations. As approved by the government of India, the annual income of the household cannot exceed
Rs. 27,000 to qualify as BPL.

It is certainly pertinent to note here that the monthly living income that has been estimated in December 2021 in
the report for farmers / workers of rural Chhindwara district is Rs. 19,241 and Rs. 20,450 for rural Ratlam district
(MP). These amounts are clearly above the annual income which have been notified for qualifying a household
as BPL and therefore will not be eligible for PDS. At the same time, it should be mentioned here that the research
team also came across respondents who qualified for PDS, but were unhappy with the irregularity of availability
and quality of the products received. Some of them even said that the quality of the food grains received through
the PDS was not fit for human consumption and hence used it to feed domestic animals.

10. NORMS FOR ACCEPTABLE HEALTHY HOUSING

The second most important dimension that contributes to decent living anywhere, including rural Madhya Pradesh,
is the quality of housing. Therefore, cost of housing becomes a major component of the cost of decent living. We
estimate the cost of basic but acceptable healthy housing by first setting minimum standards for housing for a
typical family with 4.5 members. The local healthy housing standard is based partly on (i) international minimum
housing standards (see Anker and Anker 2017); (ii) partly on local housing conditions; and (iii) partly on housing
norms as prescribed by the Government of India. The international as well as local norms require, apart from the
size and physical condition of the dwelling unit, provision of basic services such as potable water, good sanitation,
good drainage and electricity.

A good percentage of India’s population lives in rural areas and majority of them live in kutcha16 (non-permanent)
houses, which do not often meet acceptable hygienic conditions. A large percentage of the economically weaker
sections of the Indian population live in dwellings which do not meet the minimum international or national
standards.

16 A kutcha house is a temporary and makeshift structure usually made of mud and straw.
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 27

To ensure healthy and acceptable minimum standards of housing, international organizations such as WHO, FAO,
ILO and UN-HABITAT recommend access to: (i) privacy; (ii) security; (iii) hygiene; (iv) safety; (v) safe drinking
water; (vi) sanitary toilet; and (vii) fire and electrical safety. According to Anker and Anker (2017), acceptable/
adequate housing should have the attributes of (i) durable structure, (ii) sufficient living space, (iii) access to safe
water, (iv) access to sanitary toilet and washing facilities, (v) adequate lighting, (vi) adequate ventilation, (vii)
adequate space for food storage, (viii) separation from animal quarters, and (ix) protection from cold, damp,
heat, rain, wind or other threats to health, structural hazards, and disease vectors. Accordingly, an acceptable
housing cannot be located in a slum, unsafe area, hazardous area, area without refuse disposal, area without site
drainage, or an area lacking emergency services.

Taking the above international norms and the local conditions into account, the Bureau of Indian Standards
(BIS), Government of India (BIS, 2016) has evolved the National Building Code of India. It is a comprehensive
guideline for regulating construction activities, including residential houses, across the country. It serves as the
basic model code stipulating general building requirements, safety aspects, structure of the building, materials
used, plumbing services, sustainability, etc.

Based on the norms discussed above, which also meet the minimum international standards for healthy and
decent housing, the following standards are accepted for our healthy housing in rural MP:

1. Minimum area of 48 square meters (517 sq. feet) of living space, or 53.8 square meters (579 sq. feet)
of built area
2. Minimum two rooms (living room and one bedroom); in addition to separate kitchen or cooking area
inside the house
3. Sufficient clearance above the ground
4. Floor made of cement or mosaic
5. Walls made of concrete, burnt brick, un-burnt brick, wood, stone
6. Roof made of burnt brick, concrete, stone, tiles, metal sheets
7. Ceiling with a minimum height of 2 meters
8. Flush toilet - even if shared, pit latrine with slab
9. Water from a safe source, hand pump or well located close to home
10. LPG, PNG, firewood as cooking fuel
11. Electricity (supplemented by possibly kerosene) as standard source of lighting
12. House is maintained in a reasonably good condition

Data from Census (2011) classifies the condition of houses into three universal categories of (a) good, (b) liveable
and (c) dilapidated. A house in good condition is defined as one which is in fairly good condition and does not
require immediate repairs; while a house in liveable condition is one which needs minor repairs; and a dilapidated
house is one which shows signs of decay or is breaking down, requiring major repairs. Table 2.3.1 below describes
the housing conditions in rural areas at all-India level, in rural Madhya Pradesh, and in the rural study districts of
Chhindwara and Ratlam. Forty six percent of houses in rural India at the national level were reported to be in good
condition, while 47.5% were in liveable condition and 6.5% were in a dilapidated state. The situation is somewhat
similar in rural Madhya Pradesh with 47.5% of houses in good condition, 48.5% in liveable condition, and 4.5%
of houses in dilapidated condition. Chhindwara district reported 49.1% of rural houses in good condition, 46.1%
in liveable condition, and 4.8% of houses in dilapidated condition. The corresponding numbers for rural houses
in Ratlam district were similar at 47.8%, 49.2%, and 3%. The urban scenario, both at the national level and in
Madhya Pradesh, is slightly better.
28 ANKER RESEARCH INSTITUTE

The materials used for most houses in rural India do not meet the required safety standards. Thirty seven percent
of houses in rural areas at the national level use hand-made tiles or grass or bamboo for the roof. The percentage
of houses which uses unacceptable material for roofing is much higher at 60% in rural Madhya Pradesh. While
52% of the houses in rural areas at the national level were classified as permanent, only 33% of houses in rural
Madhya Pradesh were classified as permanent and even lower percentages in the study districts – 31% for Ratlam
and 19% for Chhindwara. In rural India, 62% of the houses use mud for flooring, including some of the houses
with pucca roof and walls. The percentage of houses with mud floor is high for rural MP as well as the two study
districts at more than 80%. In fact, 68% of the houses in rural India, and more than 85% in rural MP, including
study districts, did not have proper toilet facility. It is disheartening to note that less than 5% houses in rural MP
have access to treated tap water, and more than 40% of the houses do not have access to electricity.

Table 2.3.1. Housing conditions in rural India, rural Madhya Pradesh, and rural areas of study districts of Ratlam
and Chhindwara and our healthy housing standard

India MP Ratlam Chhindwara

Comments on our local healthy
Characteristics (Rural) (Rural) (Rural) (Rural)
housing standard
% % % %

Condition of House

Good 46.0 47.5 47.8 49.1

House should be in
Livable 47.5 48.5 49.2 46.1
reasonable condition
Dilapidated 6.5 4.5 3.0 4.8

Structure
Permanent (concrete/bricks/
52.0 33.4 30.6 18.6
zinc)
Temporary or
Semi-permanent (either wall or
30.1 55.6 62.5 75.4 kutcha houses are
roof not permanent)
not acceptable
Temporary (thatch roof &
16.7 10.5 6.3 12.0
sundried bricks)
Roof

Hand Made Tiles 16.9 49.7 34.6 50.2

Concrete 18.5 9.4 8.7 10.0

Machine made tiles 9.7 8.4 19.7 27.8

Burnt Brick 7.2 0.6 0.3 0.2 Roof made of Burnt brick/
Concrete / Stone/ Tiles/
Stone 9.3 11.5 5.4 0.8 Metal sheets acceptable
G.I./Metal/Asbestos 16.7 8.3 23.5 4.2

Thatch / Grass / Bamboo 20.7 10.7 4.8 6.1

Other (Plastic/ polythene) 1.0 1.3 2.9 0.7

 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 29

India MP Ratlam Chhindwara

Comments on our local healthy
Characteristics (Rural) (Rural) (Rural) (Rural)
housing standard
% % % %

Floor

Cement 24.9 11.9 7.2 16.9

Burnt Brick 2.6 1.0 0.8 0.5

Earth/dung / mud 61.7 82.5 81.5 80.7

Floor made of Cement,
Wood/bamboo 1.0 0.2 0.2 0.1 Mosaic, Stone or Wood
acceptable
Stone 5.9 2.5 6.1 1.1

Mosaic/Floor tiles 3.6 1.8 4.2 0.6

Other (specify) 0.3 0.1 0.1 0.1

Wall

Concrete 1.8 0.5 0.5 0.7

Wood 1.0 1.0 0.3 1.3

Mud/Unburnt brick 28.2 56.5 60.2 72.4

Walls made of Concrete/
Burnt brick 40.5 28.2 26.1 20.1 Burnt brick/ un-burnt
brick / wood/ stone
Bamboo/grass/thatch 12.8 4.5 3.8 3.1
acceptable
Stone (both packed and not
13.9 8.7 8.4 1.9
packed with mortar)
Other (Metal/Asbestos sheets/
1.8 0.3 0.6 0.6
plastic/ polythene)
Toilet facility

Pit latrine with slab 8.2 1.8 1.3 1.1

Pit latrine without slab/open pit 2.4 0.8 0.6 0.8

Flush toilet 19.4 10.3 11.4 10.3 Flush toilet, even if shared
or a Pit latrine with slab
No facility, bush 67.3 86.4 86.2 87.5
acceptable17
Public toilet 1.9 0.5 0.4 0.2
Other (Night soil into open
drain or services by animals or 0.8 0.2 0.1 0.1
humans)

17 There is a government drive to encourage use of toilets, private or public, in rural areas. Most of the toilets, wherever constructed, are
not usable primarily due to water shortages and poor maintenance.
30 ANKER RESEARCH INSTITUTE

India MP Ratlam Chhindwara

Comments on our local healthy
Characteristics (Rural) (Rural) (Rural) (Rural)
housing standard
% % % %

Number of rooms (or number of bedrooms)

No exclusive room 4.3 2.8 4.1 0.1 Minimum two rooms

(living room and one
1 39.4 44.5 55.6 26.9
bedroom); in addition
2 32.2 32.6 28.1 36.0 to separate kitchen or
cooking area inside the
3 12.7 11.5 6.9 28.2
house acceptable if well
4+ 11.4 8.5 5.3 8.8 ventilated

Drinking Water source

Tap water (treated source) 17.9 4.7 7.1 9.5

Tap water (untreated source) 13.0 5.3 7.7 15.0

Borehole/tube well 8.3 4.9 10.4 3.2 Water from a safe source,
Handpump 43.6 58.3 52.8 41.7 hand pump or well or
pipe located close to
Protected well 1.5 1.0 0.9 1.3 home is acceptable
Unprotected well 11.8 24.0 18.5 27.1

Unprotected spring/river/lake 2.6 1.6 2.4 1.9

Other (specify) 1.4 0.3 0.2 0.3

Electricity - Lighting source

Electricity 55.3 58.3 64 74.3

Paraffin/kerosene 43.2 40.9 35 25.0 Electricity as standard
source of lighting is
Solar energy 0.5 0.3 0.1 0
acceptable18
Other (specify) 0.4 0.3 0.4 0.5

No lighting 0.5 0.2 0.5 0.3

18 On government records, electricity has been provided to all households in all villages. However, we found that the connection is
temporary without installing electricity meter. The local official collects a lump sum amount of money as electricity charges for minimum
and intermittent supply
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 31

India MP Ratlam Chhindwara

Comments on our local healthy
Characteristics (Rural) (Rural) (Rural) (Rural)
housing standard
% % % %

Cooking fuel

Wood 62.6 78.6 78.9 89.8

Charcoal/coal/lignite 0.8 0.0 0.0 0.1

Kerosene 0.7 0.2 0.3 0.3

LPG/ PNG /firewood as
LPG/PNG 11.4 3.5 4.8 5.3 cooking fuel is acceptable
Other (Crop Residue, Cow dung
24.3 17.5 15.8 4.3
Cakes, electricity, biogas)
No cooking 0.2 0.1 0.1 0

Consumer durables

Radio/transistor 17.3 13.0 8.7 13.4

Motorbike or scooter 14.3 12.0 15.1 11.7 Availability of private

vehicle (motorbike) and
Car/jeep/van 2.3 1.1 0.8 1.0 mobile phone is neces-
sary for decent standard
Television 33.4 18.6 20.0 20.7
of living – Low percent of
Computer/laptop 5.2 3.2 2.7 2.8 motorbike in 2011 is not
indicative of situation in
Mobile Phone/landline phone 54.3 35.2 38.6 25.5 2021
Bicycle 46.2 36.4 30.9 34.2

Source: Census (2011)

10.1. Housing Conditions in Rural MP

The research team visited 143 houses in the 40 study villages (20 villages in each study district) chosen from four
blocks of Chhindwara district and four blocks of Ratlam district. These study villages were chosen on the basis of
recommendations made by NGOs who have been working closely with villagers in these areas. Individual houses
visited within the study villages were chosen randomly, as far as possible, but ensured that they were located
in different areas of the village and also represented different communities. In several of the villages, if not all,
different communities (social groups) lived in separate (segregated) parts of villages. The residents/ owners of
these houses were either land owning cultivators (mostly owning small sized farms ranging from 1.5 to 5 bighas19,
and a few holding land between 6 to 30 bighas). Some respondents were landless labourers who worked on a
daily wage. In many cases, small farmers also worked as daily wagers during several months of the year, especially
when it was not possible to cultivate land primarily due to non-availability of irrigation and scarcity of water.

19 Bigha is a common unit of measurement of land size in India. 1 hectare=approximately 4 bighas of land.
32 ANKER RESEARCH INSTITUTE

Overall, the quality of material used, the condition of houses and the surrounding environment are not satisfactory.
It was heart-rending to see human beings and domestic animals (cattle, goats and chicken) living in close proximity
to each other sharing the same space. Most houses did not fulfil minimum safety norms. Large percentage of
houses did not have sufficient area of living space; only a few had permanent structures with basic amenities of
sanitation and water supply. In majority of cases in Chhindwara and Ratlam districts, a single unit was occupied
by four or five members of the family (husband, wife and two-three unmarried children). It is common practice
among the tribal communities in Madhya Pradesh, that the grown up child (son/ daughter) moves out to a new
dwelling unit soon after marriage. However, some houses (belonging to non-tribal communities) were inhabited
by more than five persons, who lived in joint families.

Table 2.3.2 below provides a brief summary of the poor condition of houses that the research team visited in the
two study districts. The condition of houses in rural Ratlam was found to be relatively better compared to that
of houses in rural Chhindwara. A majority of houses in the study villages (70% in Chhindwara and 69% in Ratlam)
had kutcha or semi-pucca structure (primarily made of thatch, sun-dried bricks and temporary roof). However, a
much larger percentage (88%) of houses visited in Chhindwara were found in unliveable or dilapidated condition
compared to 40% in Ratlam district. Similarly, 79% of houses in Chhindwara and 67% of houses we visited in
Ratlam did not have roof made of concrete or similar permanent material. Most houses used a combination of
metal sheet, asbestos or cement sheet for the roof. As much as 77% of houses visited in rural Chhindwara and
58% in rural Ratlam did not have walls made of concrete or brick. Mud is the most commonly used material for
walls of the houses visited in the study. Most of the houses (76% in rural Chhindwara and 71% in rural Ratlam)
have mud floors. A few houses were found having walls and roof made of concrete.

More than 50% of houses visited (52% in Chhindwara and 53% in Ratlam) had a total area ranging between 200
sq. ft. to 400 sq. ft., with less than 2 rooms and no separate kitchen. A good many houses we visited (30% in
Chhindwara and 37% in Ratlam) did not have access to toilet facility, private or public. Most people defecated
in open fields. The houses which had toilet facilities with pit latrines but without slabs were found to be in poor
condition. The overall quality of sanitation, drainage and safety conditions in the neighbourhood were extremely
poor. Most houses did not have adequate ventilation.

Table 2.3.2. Conditions of houses visited by the field team

Chhindwara Ratlam

Number of Houses Visited 43 100

% of kutcha or semi-pucca houses 70% 69%

% of dilapidated houses 88% 40%

% of houses without a roof made of concrete or similar material 79% 67%

% of houses with a mud floor 76% 71%

% of houses without a concrete or a brick wall 77% 58%

% of houses with less than 2 rooms 52% 53%

% of houses without a toilet (inside or outside) 30% 37%

Source: Authors calculations based on primary research
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 33

The pictures below illustrate the poor condition of houses and the unhygienic environment in which many
villagers of Chhindwara and Ratlam live. Pictures 3a-3d show the general condition of houses in rural Ratlam
and the state of sanitation in the neighbourhood, while Pictures 3e and 3f show a pucca and a semi-pucca house
respectively in the same district. Pictures 4a-4f depict the poor condition of average houses in rural Chhindwara,
while picture-4g is a pucca house built in one of the villages with money received from a public housing scheme.

Ratlam houses

Picture-3a: View of a hamlet in rural Ratlam Picture-3b: A typical house in rural Ratlam

Picture-3c: Another view of a hamlet in rural Ratlam Picture 3d: A typical Kutcha house in rural Ratlam

Picture 3e: A pucca house in rural Ratlam Picture 3f: A semi-pucca house in rural Ratlam
34 ANKER RESEARCH INSTITUTE

Chhindwara houses

Picture-4b: Another view of a hamlet in rural

Picture-4a: View of a hamlet in rural Chhindwara
Chhindwara

Picture-4d: Another typical house in rural

Picture-4c: A typical house in rural Chhindwara
Chhindwara

Picture-4e: A third typical house in rural Chhindwara

 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 35

Chhindwara houses

Picture-4f: A fourth typical house in rural Picture-4g: A pucca house in rural Chhindwara built
Chhindwara with partial funds from PM’s housing scheme

11. COST OF HOUSING

Most poor people in rural India live in their own houses, as compared to relatively more affluent sections of
Indians in urban India that might live in houses on rent. According to the Household Survey on India’s Citizen
Environment & Consumer Economy (ICE 360°) conducted in 2016 and as reported by Bhattacharya (2016), 97%
of households belonging to the bottom-income quintile (that is, bottom 20% of India’s income distribution) live
in their own homes, while only 81% of the households in the top-income quintile (top 20% of India’s income
distribution) live in their own homes. According to NSS 2011-12 (NSSO, 2014), 91.1% of rural MP and 65.9% of
urban MP owned their own houses.

11.1. Rental Equivalent Value of Basic Acceptable Owned Housing

The fact that more than 90 percent of residents in rural India, including those in rural MP, live in their own houses
means that it is rare that a farmer or rural worker with or without owning land lives in a rented house. During the
field visits, the research team did not find a single case of rented house in the forty villages (20 in Chhindwara
district and 20 villages in Ratlam district) that were included in the study. Given the absence of well-established
rental markets, and non-availability of rental expenditure data in consumption expenditure surveys, it is not
possible to assess housing cost based on rental value. Instead, we have relied on the user cost value of housing, as
recommended by Anker and Anker (2017). For this purpose, the monthly user cost of a basic house is estimated,
which meets acceptable healthy housing standards. The user cost is estimated using the construction cost of the
house and assumptions of its expected service life and cost of maintenance. The standard (recommended) 53.8
sq. meters (579 sq. ft.)20 of built area of living space has been used a for a decent house. The cost of construction
was determined on the basis of information provided by local people who have constructed houses in recent
past. The cost of construction was also orally shared by contractors in the area. Members of the NGOs who had

20 The living space of 48 sq. meters is equivalent to 53.8 sq. meters of built-up space considering an additional 12% to account for
thickness of outer and inner walls (Anker and Anker 2017).
36 ANKER RESEARCH INSTITUTE

themselves, or people they knew, constructed houses in or around rural Chhindwara and rural Ratlam, further
corroborated these estimates.

The research team could not procure written estimates of the cost of construction from contractors, as they were
not keen to do so. However, several (at least 5-6) respondents each in both Chhindwara and in Ratlam districts,
who had constructed pucca houses recently, were specifically asked about the cost. Some of these respondents
had built part of the house using the funds received under housing scheme promoted by the Prime Minister (The
Pradhan Mantri Awas Yojana) or the Chief Minister (Mukhya Mantri Awas Yojana). An eligible applicant received
a maximum of Rs. 130,000 under these schemes, an amount which is far from adequate to construct a house
fulfilling the minimum standards.21 In fact, many such houses were only partly completed as the recipients did
not have sufficient (supplementary) private funds to complete the construction. Based on the amount spent
by the respondents for the quantum of area constructed, the local estimate in both the study districts of rural
Chhindwara and in rural Ratlam ranged from Rs. 1,100 to Rs. 1,300 per sq. foot. This variation in range of cost
could be explained partly because of difference in the quality of material used and partly due to lack of accuracy
in calculating the labour cost. The cost of construction quoted by the contractors and members of the local NGOs
was Rs. 1,200 per sq. ft., which has been accepted for the purpose of our calculation. Moreover, the construction
cost for rural housing estimated by the Central Public Works Department (CPWD, 2021),22 is much higher at
Rs. 17,640 per sq. meter (or Rs. 1,639 per sq. ft.). The local estimate of Rs. 1,200 per sq. foot is 27% lower than
central government estimate provided by the CPWD.

Therefore, based on local cost estimates, the cost for constructing a house with a built up area of 579 sq. ft
(53.8 sq. meters)23, with two rooms, a separate kitchen, toilet and bathing facility outside the house with basic
parameters of safety and durability has been calculated to be Rs. 694,800 (i.e., 579 sq. ft. x Rs. 1,200 per sq. ft.).
The annual user cost is further calculated by assuming the depreciation on a straight-line method plus the costs
of maintenance and interest. The interest amount is assumed as cost of borrowing or the opportunity cost of
the invested funds. Depreciation cost has been calculated on the basis of the average service life of 50 years
for a house built with concrete in rural India. This is the rule of thumb for middle-income countries like India as
suggested by Anker and Anker (2017) which is similar to the 50-60 years for India (Gupta, 2020).

Assuming a service life expectancy of 50 years and 2% for annual maintenance (Anker and Anker, 2017), the
average monthly user cost of housing has been calculated and presented in table 2.4.1. The cost of interest
rates has been ignored, primarily because an effective financial system is absent in rural areas. Moreover, it is a
common practice in rural India that most farmers/workers build their houses either out of their own savings or
from inherited wealth or from the partial grant received under the government housing scheme.

Based on the aforesaid premises, the user cost for housing has been calculated (see table 2.4.1) to be Rs. 2,316
per month.

21 Our in-depth interviews with residents in Chhindwara suggested that in addition to this amount, they spent Rs. 300,000 – 400,000
to upgrade their existing house to a pucca one. These houses, as described and illustrated in the pictures in the previous section, are
significantly below acceptable standards.
22 We use the plinth area rates for 2021. Plinth Area is built up covered area of a building measured at the floor level including balconies.
Plinth area rates published by Central Public Works Department (CPWD) is a technical document for preparation of preliminary cost
estimates of projects and development works by engineers in the construction industry. This is also used by other organisations, PSUs,
builders, architects and valuation experts.
23 The living space of 48 sq. meters is equivalent to 53.8 sq. meters of built-up space considering an additional 12% to account for
thickness of outer and inner walls (Anker and Anker 2017).
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 37

Table 2.4.1. User cost of decent housing based on construction cost, service life expectancy, and maintenance

Built up area 53.8 sq. meter or 579 sq. ft.

Rate per sq. ft. (Rs.) 1,200

Cost of Construction 694,800

Life expectancy (Years) 50

Annual Depreciation Cost (Rs.) 13,896

Annual Maintenance Cost (%) 2.0%

Annual Maintenance Cost (Rs.) 13,896

Total Annual Cost (Rs.) Depreciation + Maintenance 27,792

Total Monthly Cost (Rs.) 2,316

Source: Authors Calculations

12. UTILITIES AND OTHER HOUSING COSTS

Cost of water, electricity, cooking fuel and lighting are added to assess a realistic cost of housing.

12.1. Cost of water

It is difficult to calculate the cost of water as it is accessed free of cost from the nearest source. At the same time,
it is reasonable to consider the labour cost involved in collecting water. In most cases, the source of water is the
hand pump or the common well located in some parts of the village. We also came across many cases where
villagers fetched water from the river, which was not very close either.

About 20 per cent of villagers we spoke to in Chhindwara reported spending one-two hours a day and a lot
of physical effort to collect water from the nearest source which was located at a distance of 500 meters - 2
kilometres from their residence. The cost of collecting water involving manual labour of one hour per day is
calculated to be Rs. 22.5 per day or Rs. 684 per month based on the daily wage rate of Rs. 180.24. Assuming 20
per cent of households have to go through this ordeal, and the remaining have a handpump in their vicinity, the
monthly imputed cost of water is calculated to be Rs. 137 in Chhindwara.

In Ratlam, on the other hand, most homes we visited had access to tap water outside their house or had a hand
pump in their vicinity. It is only during extreme summer months that adequate quantity of water is not available
from these sources and has to be fetched from far away areas. Using the same calculations as above, (i.e., Rs. 684
per month), and assuming almost everyone needs to depend on faraway sources for 2 months in the year, the
imputed monthly cost is Rs. 114 in Ratlam.

24 This is the prevailing wage for a low paid menial job in the area, based on our discussion with the respondents.
38 ANKER RESEARCH INSTITUTE

12.2. Cost of Lighting

Approximately 74% of rural households in Chhindwara and 64% in rural Ratlam have access to electricity as a
source of lighting, while 25 per cent in Chhindwara and 35 per cent in Ratlam used kerosene for lighting (Census,
2011). Every household that the research team visited had electricity connection; but the power supply was
minimal and often interrupted and availability varied from 10-18 hours per day. According to NSS 68th Round
2011-12 (NSSO, 2014) household expenditure data, Rs. 28.64 per person per month was spent on electricity,
which is equivalent to Rs. 128.9 for a family of 4.5. Taking the inflation into consideration, this amounts to Rs.
218.2 in 2021. Electricity supply in the houses we visited almost exclusively was used only to light 1-2 bulbs in
addition to a table fan and to charge mobile phone. The cost of electricity per household for the 43 houses in
Chhindwara and 100 houses in Ratlam we visited ranged from Rs.100 to 200 per month. To ensure that each room
has a bulb and a fan, and there is sufficient power to charge mobile phones, we assumed the monthly electricity
cost to be Rs. 300 per month.

12.3. Fuel for cooking and for heating in winter

Ninety percent of households in rural Chhindwara and 79% in rural Ratlam use firewood for cooking. Moreover,
4.3 per cent in Chhindwara and 15.8 per cent in Ratlam use cow dung cake or crop residue, while only 5.3 per cent
in Chhindwara and 4.8 per cent in Ratlam use LPG for cooking (Census, 2011)

All the households that the research team visited in Chhindwara district used firewood as a source of fuel for
cooking as well as for heating in winter months. In Ratlam, in addition to firewood, cow dung cakes were popular.
Although many households had received gas stoves under the Pradhan Mantri Ujjwal Yojana, a scheme of the
Ministry of Petroleum & Natural Gas for providing LPG connections to women from Below Poverty Line (BPL)
households, actual use of LPG cylinders was limited. The high cost of refilling the cylinder, on the one hand, and
availability of firewood from the forest, on the other, are major reasons for the negligible use of LPG for cooking.

It was not possible for most of the respondents in Chhindwara to calculate the cost they incurred for cooking fuel
as wood was available free of cost at the nearby forest. A report by PPAC and CRISIL (2016) suggests that easy
availability of firewood in the vicinity of forests is a primary barrier to adoption of LPG. In fact, Madhya Pradesh is
among the top five states where over 40% of the households procure firewood for free. However, the high price
of refilling LPG cylinder cannot be ruled out as an important reason for the continued use of wood for the use of
cooking and heating the house during winter months.

Because firewood is collected for free from the forests, and cow dung cakes are prepared for free at home, and
LPG is not widely used because of its cost, we estimated fuel costs in different ways in order to get an idea of
what would be reasonable costs for fuel. First, we estimated the cost of LPG for cooking meals. The cost of an
LPG cylinder is Rs. 905 (for 14.2 kg), which may last for about a month. But LPG cylinders are rarely used as stated
by our respondents, and their use is confined to preparation of tea and in some cases, a quick meal. Second, we
estimated the cost of firewood and cow dung cakes if we imputed value to the time taken to collect firewood
and prepare cow dung cakes. The market price for firewood varied. In Chhindwara, firewood was not commonly
sold in the markets. However, key informants indicated that the price of firewood in Chhindwara varied between
Rs. 600 per quintal and Rs. 1,100 per quintal depending on the quality of wood (how dry or wet it is). Using the
lower bound price to impute fuel costs and assuming on an average approximately 5 kg of firewood is consumed
per day to cook two meals for a family, this implies that the value of firewood collected free of cost is worth
approximately Rs. 30 per day, amounting to Rs. 913 per month. Since this is not adequate for preparing tea in the
morning and for heating in colder months, we increased fuel cost for firewood by 10 per cent to Rs. 1,004 per
month.
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 39

In Ratlam, most households use cow-dung cakes for cooking. For cooking two meals a day, four pieces of cow
dung cakes is calculated to be the typical requirement per day. The cost per cow dung cake in the area varied from
Rs. 6 to Rs. 8 per cake. Taking an average price of Rs. 7 per cow dung cake, the daily fuel cost is Rs. 28 and the
monthly fuel cost is approximately Rs. 852. In Ratlam, unlike Chhindwara, firewood is sold in the market for an
average price of Rs. 600 per quintal. Assuming a requirement of 5 kilograms of firewood to prepare two meals a
day, the monthly cost amounts to Rs. 913. The average of these two sources of fuel is Rs. 883. To allow for heating
in winter months, we increased this by 10 per cent to Rs. 971.

Thus, monthly utility costs incurred by a household has been calculated at Rs. 1,441 in Chhindwara and Rs. 1,385
in Ratlam. This includes the cost of water (Rs. 137 in Chhindwara and Rs. 114 in Ratlam), cost of lighting (Rs. 300
in both districts), and the cost of fuel (Rs. 1,004 in Chhindwara and Rs. 971 in Ratlam). This amount was validated
by the secondary data available in the 68th round of the National Sample Survey (NSSO, 2014) which reports
the amount spent on fuel and light by an average household in rural MP. According to the 2011-12 NSS data,
the average monthly per capita expenditure on fuel and light in rural MP is Rs. 114.02. If we multiply this by a
family size of 4.5 and update it for inflation to 2021, we get Rs. 868.5 per month which is only a little lower than
our estimate. This may be lower because the actual expenditure in the NSS data does not include the imputed
value of firewood or cow dung cakes which have not been purchased from the market but produced at home or
available free of cost in nearby forest areas.

12.4. Summary of Housing and Utilities Costs

The utilities and housing costs are summarized in Table 2.5.1.

The monthly housing cost for Chhindwara has been calculated to be Rs. 3,757 per month for the reference family,
which includes the cost of utilities (Rs. 1,441) and housing user cost equivalent value (Rs. 2,316).

The monthly housing cost for Ratlam has been calculated to be Rs. 3,701 per month for the reference family,
which includes the cost of utilities (Rs. 1,385) and housing user cost equivalent value (Rs. 2,316).

Table 2.5.1. Total Housing Cost (Rent + Utilities) for decent housing in rural Chhindwara and rural Ratlam

Average Cost per Month (Rs.) for reference Average Cost per Month (Rs.) for reference
Item
family in Chhindwara family in Ratlam

Water 137 114

Lighting 300 300

Fuel 1,004 971

Total Utilities 1,441 1,385

Average Rent (User Cost) 2,316 2,316

Total Housing 3,757 3,701

Source: Authors Calculations.
40 ANKER RESEARCH INSTITUTE

13. NON-FOOD NON-HOUSING (NFNH) COSTS

Based on the Anker Methodology (Anker and Anker 2017), non-food and non-housing (NFNH) expenses are
estimated in three steps as described below.

In step 1, NFNH costs are calculated on the basis of current household expenditure patterns for rural Madhya
Pradesh using CMIE Consumer Pyramids Household Survey data for January 2020 (CMIE, 2020).25 First, the ratio
between expenditure on food and NFNH is determined for households at the 30th percentile of the household
expenditure distribution because such households are likely to be out of poverty, but still living at a fairly basic
standard. This is done by taking the average of the ratios for households in the 3rd and the 4th deciles (which is
roughly the 30th percentile on average) of the household expenditure distribution for rural Madhya Pradesh. These
deciles in the income distribution have been chosen because they should represent expenditures of households
above poverty.

Table 2.6.1 shows the percentage share of total expenditure by major expenditure groups for the 3rd and 4th decile
of rural Madhya Pradesh households.

In step 2, expenditures on items such as tobacco and narcotics such as pan, that are not considered necessary
for a decent living, are eliminated. We assume that 70% of the cost of meals away from home are for the food
items in these meals and 30% for services and profit; therefore, we included only 30% of this share in NFNH and
moved 70% to food.

The preliminary NFNH to Food ratio for rural Madhya Pradesh for the 30th percentile household is 0.805, i.e.
the average of the preliminary NFNH to Food Ratio for the households in 3rd and 4th deciles of the expenditure
distribution.

Multiplying the above by the cost of the model diet (Rs. 7,502 for Chhindwara and Rs. 8,092 for Ratlam) for the
reference family of 4.5, gives us the preliminary non-food non-housing expenses as Rs. 6,039 for Chhindwara and
Rs. 6,514 for Ratlam.

In step 3, important expenditure groups such as healthcare and children’s education (which we consider human
rights) and other major expenses (such as transportation) are reviewed to assess the adequacy of the funds
included in the preliminary NFNH as estimated in step 2 for a decent living. If found insufficient, additional funds
are added to ensure availability of adequate funds for these for a decent living.

Post-checks start by determining the share of health care, education and transport allocated in the preliminary
estimate of NFNH costs. For this, the ratio of the percentage expenditure on each category as a share of the
adjusted NFNH percentage is calculated. Multiplying this ratio by our preliminary NFNH estimate (Rs. 6,039 in

25 Consumer Pyramids Household Survey (CPHS) is a continuous survey administered on a panel of sample households by Centre
for Monitoring Indian Economy (CMIE). It delivers fast-frequency data on consumption expenditure of households which are collected
thrice every year. We have calculated ratios for a pre-covid month, i.e. January 2020. The consumption expenditure patterns have shifted
somewhat to food due to the pandemic. This is reflected by the increase in food expenditures as a share of total expenditure during the
pandemic. Thus, we have taken the ratios in the pre-covid period although the consumption expenditure data is available until August
2021.
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 41

Chhindwara and Rs. 6,514 in Ratlam) indicates the amount for each expenditure group included in our preliminary
NFNH estimate. These calculations and results are presented in in Table 2.6.2 below.

Table 2.6.1. Expenditures by Major Groups as a share of Total Expenditure in rural Madhya Pradesh in January 2020

Expenditure Group Category 3rd Decile 4th Decile

Food and non-alcoholic beverages Food 49.62% 46.91%

Cooking fuel Housing 3.83% 4.94%

Alcohol NFNH 1.04% 0.90%

Tobacco and pan Excluded 5.24% 4.73%

Clothing & footwear NFNH 2.16% 3.73%

Rental Housing 0.16% 0.22%

Services - Electricity Housing 1.71% 1.65%

Household contents and appliances NFNH 0.28% 0.54%

Health services NFNH 0.67% 0.78%

Education NFNH 1.57% 1.63%

Private vehicle operation NFNH 8.11% 8.46%

Passenger transport services NFNH 1.71% 1.64%

Telecommunications NFNH 3.88% 3.87%

Recreation and Culture NFNH 0.10% 0.11%

70%-Food
Restaurants and hotels 1.27% 1.43%
30%-NFNH
Miscellaneous expenditures NFNH 18.65% 18.45%

Adjusted NFNH 38.55% 40.54%

Preliminary NFNH/ Food ratio 0.763 0.846

Source: Authors Calculations based on CMIE (2020).
42 ANKER RESEARCH INSTITUTE

Table 2.6.2. Calculating amount implicitly included in preliminary NFNH estimate for health care, education, and
transport for reference family in Chhindwara and Ratlam

Amount (Rs. per month) Amount (Rs. per month)

Percentage of total
in preliminary NFNH in preliminary NFNH
Item monthly per capita Percentage of total NFNH
costs of Rs. 6,039 in costs of Rs. 6,514 in
expenditure
Chhindwara Ratlam
Healthcare 0.73% 1.84% 111 120

Education 1.60% 4.05% 245 264

Transport 9.95% 25.18% 1,520 1,640

Source: Authors Calculations based on CMIE (2020).

14. HEALTHCARE POST CHECK

Information collected (by the research team) from the sample of 40 villages of Chhindwara and Ratlam districts
indicated that facilities for education and healthcare available to the villagers are far from adequate. We specifically
examined the funds needed for adequate healthcare for the reference family and education through secondary
school as we consider these to be part of citizen rights.

Almost every respondent met during the field investigation expressed the view that public healthcare in rural
Chhindwara and rural Ratlam was unsatisfactory and inadequate. Although public health centres (PHC) have
been set up by government authorities at different locations in the villages, doctors and medicines were said
to be rarely available at these public clinics. Many of the residents shared humiliating experiences which they
encountered with the medical staff of such PHCs. Villagers have been left with little option but to visit doctors
at clinics set up by private medical practitioners. The poor and inadequate services of the public (government)
healthcare system, which in rural India are free and supposed to be easy to access, are often found inaccessible
(See Picture 5). Most villages were found to resort to using private healthcare facilities, paying much more than
what they could afford.

In section 2.6 above, the provisional NFNH amount provided for meeting monthly expenses included Rs. 111 per
family for healthcare in Chhindwara and Rs. 120 in Ratlam.

During the field investigation in Chhindwara and in Ratlam, the respondents we spoke to were asked about the
number of times they visited private clinics and pharmacies as well as the amount they spent on consulting
private doctor and the cost of medicines. The research team also visited five private clinics in Chhindwara and 15
in Ratlam to understand the pricing of these facilities.
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 43

Health centre in Chhindwara

Picture 5: A locked health centre in Chhindwara District

In Chhindwara, an average amount of Rs. 560 (including the cost of consultation fee, medicines, and tests), was
spent per visit for one spell of illness. Assuming four visits per person per year to a medical facility (i.e., every
three months), of which one may be assumed to be to a public facility (given reasons above), the annual medical
expenditure on routine illness for a family of 4.5 is Rs. 7,560, or Rs. 630 per month. This only takes care of
routine illnesses and does not include serious medical situations, which require hospitalisation, incurring major
expenditures. It also assumes one visit per year for routine medical visits to a public facility.

In Ratlam, the average expenditure incurred on a single spell of illness was lower at Rs. 482 (including consultation
fee, medicines and tests). Taking a similar assumption as above - four visits per person per year to a medical
facility, of which one is to a public facility, the annual medical expenditure on routine illness for a family of
4.5 is Rs. 6,511, or Rs. 543 per month which takes care of only routine illnesses and does not include serious
medical situations requiring hospitalisation and incurring major expenditures. It also assumes one visit per year
for routine medical visits to a public facility.

Table 2.7.1 provides a summary of estimated healthcare costs for a reference family in Chhindwara and Ratlam.26

26 According to the 75th round (July 2017 – June 2018) of the National Sample Survey on Social Consumption - health (NSSO, 2019), of all
the people reporting an ailment, 96% received an allopathic treatment, and 3.9% received an AYUSH treatment. Also, 33.7% were treated
on medical advice by a government/public hospital, 3% by an NGO run or a charitable hospital, 21.1% by a private hospital, 38.4% by a
private doctor in a private clinic and 3.8% by an informal health care provider. Moreover, 48.3% of hospitalizations were in a government/
public hospital, 3.7% in NGO-run or a charitable hospital, and 47.9% in a private hospital. The average medical expenditure incurred for
treatment during stay at hospital per case of hospitalization for rural Madhya Pradesh was Rs. 2,093 in a public hospital, Rs. 25,086 in a
private hospital, and Rs. 14,325 in all hospitals (including the NGO run charitable hospitals). The average medical expenditure per spell of
ailment for non-hospitalised treatment was estimated at Rs. 775.
44 ANKER RESEARCH INSTITUTE

Table 2.7.1. Estimated Healthcare Costs for a Reference Family

Chhindwara Ratlam

No. of visits No. of visits

Cost per
Type of provider Cost per visit per year per Total cost per year per Total cost
visit
person person
Public provider

Consultation Fee 0 1 0 0 1 0

Medicines and Investigations 0 1 0 0 1 0

Private clinic/doctor

Consultation 70 3 210 103 3 309

Medicines and Investigations 490 3 1,470 379 3 1,137

TOTAL cost per person per year 1,680 1,446

TOTAL cost per family per month
(cost per person per year x 630 543
reference family size)/12 months
Source: Authors Calculations based on Primary Research.

We estimated above the monthly healthcare expenditures for the reference family of 4.5 persons at Rs. 630 for
Chhindwara and Rs. 543 for Ratlam. Given that these are much higher than the Rs. 111 per family for healthcare
in Chhindwara and the Rs. 120 in Ratlam included in our preliminary NFNH estimates, the difference (Rs. 519 for
Chhindwara and Rs. 423 for Ratlam per month) have been added in the post checks.

15. EDUCATION POST CHECK

According to Census (2011), out of a total of 1,906 villages in Chhindwara district, 1,237 villages have pre-
primary schools, 1,727 villages have primary schools, while only 684 villages have middle schools, 256 villages
have secondary schools, 187 villages have senior secondary schools and only two villages have degree colleges.
However, five blocks of the Chhindwara district have vocational training schools, polytechnic, engineering or
management education institutes. Interestingly, this area falls under the political jurisdiction of a leading politician
of the state of Madhya Pradesh. On the other hand, 176 villages of Chhindwara district have no educational
facility whatsoever.

In Ratlam district, out of a total of 1,053 villages, there are 125 villages which have the facilities of pre-primary
school, 1,011 villages have primary schools, 476 villages have middle schools, 106 villages have secondary schools
and only 49 villages have senior secondary schools. It is troubling to note that there are no villages in Ratlam
district with a degree college in arts, science, commerce, engineering or medical courses. It is also important to
note that there are no facilities for a management institute, polytechnic institute, vocational training school, or
a formal training centre in the villages of this district. Unlike Chhindwara, which had one special facility for the
disabled, no village in Ratlam district have such facility. Moreover, 42 villages are reported to have no education
facility whatsoever.
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 45

According to the National Education Policy 2020 (Government of India, 2020):

“Education is fundamental for achieving full human potential, developing an equitable and just
society, and promoting national development. Providing universal access to quality education
is the key to India’s continued ascent, and leadership on the global stage in terms of economic
growth, social justice and equality, scientific advancement, national integration, and cultural
preservation. Universal high-quality education is the best way forward for developing and
maximizing our country’s rich talents and resources for the good of the individual, the society,
the country, and the world. India will have the highest population of young people in the
world over the next decade, and our ability to provide high-quality educational opportunities
to them will determine the future of our country”.

The new national education policy has also re-structured Indian school education into different segments of (1)
pre-school + classes 1 & 2 (for ages from 3 to 8); (2) classes 3 to 5 (for ages from 8 to 11); (3) classes 6 to 8 (for ages
from 11 to 14); and (4) classes 9 to 12 (for ages from 14 to 18), as against the earlier system of primary, secondary
and senior secondary school. Higher education takes place in colleges and universities. School education is not
only every child’s right in India but is also compulsory.

What is pronounced as policy and what is practiced in reality do not often match, and education in India is
no different. Along with the government, the private sector has always played an important role to promote
education in India. However, during the past several years, the government has reduced investment in education
as they have done in healthcare in India, leaving much more space and need for the private sector (Chopra, 2021).
Despite free education and mid-day meals provided by the government schools in lower classes, private schools,
including those in in rural areas, have been gaining popularity. In fact, the share of the private sector at all levels
of education, including the lower classes, has steadily grown during recent years (Ernst & Young and FICCI, 2014).

Our field investigations in Chhindwara and in Ratlam suggest that the situation is not different in rural Madhya
Pradesh.The research team visited at least one government school in each village. Many young children in the
villages were not attending schools. A few primary school teachers in the villages told us that 30-40 percent of
students had not returned to school after Covid. During the Covid pandemic, schools remained closed. During
the covid lockdown, neither village school teachers nor the students and their parents had the necessary infra-
structure such as computers and internet for online classes, resulting in a total breakdown of children’s education
for nearly two years. After reopening of the school, the mid-day meal scheme has not resumed despite a specific
quantity of grains being allocated to the guardians of students who attended school.

The infrastructure facilities and the student-teacher ratio were found to be hugely inadequate to facilitate
learning among the young students in both districts of Chhindwara and Ratlam. In all the government primary
schools visited in the villages of both Chhindwara and Ratlam, students of different classes/grades were found to
be kept in the same classroom primarily because of inadequate availability of space and teachers. Classes from
1 to 5 were found to operate with two rooms and 2-3 teachers (see Pictures 6a-d). Many respondents we spoke
to expressed their preference to send their children to private schools, primarily due to poor quality of education
available at the government schools of the local areas. Given this scenario, it looks imperative that for decency
and effective use of right to education, attendance in private school is required in rural Madhya Pradesh.
46 ANKER RESEARCH INSTITUTE

Pictures of Schools and Classrooms in Rural MP

6b: Students of class 1-5 taught by two teachers in

6a: Filth around a village primary school
two rooms

6c: Students waiting for teacher outside the locked 6d: Despite the odds, a happy bunch of children
class room till mid-day sitting in a class room.

The research team visited 14 private schools (4 in Chhindwara and 10 in Ratlam) where respondents enrolled
their children. In both the districts, school expenses are progressively higher in higher classes, from primary to
secondary to higher secondary. It was also found that private schools were strongly preferred, in comparison
to the government schools, by the people of Chhindwara and Ratlam, especially at the secondary and senior
secondary levels. The expenditures incurred for schooling in the two districts are summarised below.

In Chhindwara, we found that the median annual expense (based on the 4 schools visited) on schooling was
Rs. 10,500 on primary classes, Rs. 16,400 on secondary classes and Rs. 18,400 on senior secondary classes.
These amounts included registration fee, examination fee, tuition fee, cost of uniform, books, other learning
material and transportation. Transportation constituted a substantial part of the cost, as schools were located
at a distance of 5 to 15 kilometres away from the villages. The discussion with respondents revealed that the
transportation cost ranged from Rs. 500 to Rs. 800 per month. We assume that on an average Rs. 4,000 per year
is spent on transportation at primary levels, and Rs. 6,000 per year is spent on transportation at higher levels
(because these schools are farther). We further assume that families with a living income own a motorbike (see
next section on transportation post check) and this provide transportation to school. Thus, for each child, an
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 47

approximate amount of Rs. 6,500 per year for 8 years of primary education, Rs. 10,400 per year for 2 years of
secondary education and Rs. 12,400 per year for 2 years of higher secondary education are reportedly spent
(excluding the amount spent on transportation). It was also observed that children of many respondents attend
public schools in the initial years (until class 5) but move to a private school for upper primary and secondary
levels. This is also because public schools in many of the villages do not have facilities beyond Class 5. In such a
scenario, the amount spent on primary classes is incurred for 3 years of primary education (instead of the 8 years
as mentioned above). In other words, Rs. 61,500 is estimated to be spent for educating a child in private school
during 18 years of childhood, which amounts to an average annual cost of Rs. 3,617 per child, or Rs. 301 per child
per month (see table 2.8.1).

In Ratlam, the median annual expense (based on the 10 schools visited) on schooling were Rs. 7,100 on primary
classes, Rs. 20,600 on secondary classes, and Rs. 23,425 on senior secondary classes. We can clearly see that
cost of education in Ratlam, at the senior levels, is higher than that in Chhindwara. As in the case of Chhindwara,
transportation constituted a substantial part of the reported school costs. We assume that on an average Rs. 2,000
per year is spent on transportation at primary levels, and Rs. 4,000 per year is spent on transportation at higher
levels in Ratlam. The transportation costs in Ratlam are lower because schools are at a closer proximity compared
to Chhindwara. Note that as for Chhindwara, we assume that families with a living income own a motorbike
(see next section on transportation post check) and this provides transportation to school. After deducing the
transport costs, the estimated amount for educating a child in public school for until the 5th grade and in private
school for the remaining 7 years (grade 6th to 12th) is Rs. 87,350, which amounts to an average annual cost of
Rs. 4,853 per child, or Rs. 404 per child per month (see table 2.8.1).

The monthly expenditure incurred on education by a family comprising 2.5 children works out to be an average
amount of Rs. 753 per month in Chhindwara and Rs. 1,011 per month in Ratlam. Table 2.8.1 summarizes the cost
to family for children’s school.

Table 2.8.1. Cost to Family for Children’s School

Chhindwara Ratlam

Middle Middle
Type of expense Primary Secondary Primary Secondary
school school
School fees including books, uniform
6,500 10,400 12,400 5,100 16,600 19,425
(excl transport) in a private school
Number of years in each level (2) 3* 2 2 3* 2 2

Total cost x number of years in each level 19,500 20,800 24,800 15,300 33,200 38,850

Average cost per child per year

3,617 4,853
(Total Cost / 18)

Average cost for reference family per month

(Average cost per child per year x number of 753 1,011
children in reference family/12 months)
* 8 years are spent in primary school, However, we assume that the first five years are spent in a government funded school, and there
are no financial implications for the parents. Books and uniform are provided free of cost by the government. Since primary schools (up to
grade 5) are available in the vicinity, there is no transport cost involved. Parents prefer to send their children to private school from Grade
6 onwards, because of the poor quality and often unavailability of government schools.
Source: Authors Calculations based on Primary Research.
48 ANKER RESEARCH INSTITUTE

The amounts we estimated for education are much higher than the Rs. 245 (for Chhindwara) and Rs. 264 (for
Ratlam) which are included for education in our preliminary estimate of non-food and non-housing costs. This
is due to our assuming that children (i) complete secondary school which they do not at present and (ii) attend
private middle and secondary school. Therefore, the difference of Rs. 508 (Chhindwara) and Rs. 747 (Ratlam)
per month, around $7-10 per child, are added per month to non-food and non-housing expenses to ensure
availability of adequate funds to cover educational expenses at private schools through secondary school which
we consider is required for decency given the poor quality of public schools in the area.

16. TRANSPORTATION POST CHECK

In Chhindwara, the farmers and residents of the villages not only shop at the weekly markets, but also sell their
produce there. The two-way transport charge to a weekly market ranges from Rs. 40 to Rs. 100. Thus, if two
members of a family go to the weekly market, the monthly expense is a minimum of Rs. 320. The family also
incurs transportation cost to access other facilities such as schools (since private schools are not available in the
near vicinity), the healthcare centre or private medical clinics/ doctors. Given that these basic facilities are not
available at close proximity (walking distance) of residential areas, owning, maintaining and running a private
vehicle (a two-wheeler) is considered essential and required for decency.

In Ratlam, there were a few local shops situated in some of the villages for purchasing routine items like vegetables.
Therefore, for purchase of all regular items of consumption, villagers visit the larger market situated in the centre
of the Ratlam town. Like in Chhindwara, cost of owning, maintaining and running a two-wheeler is required for
decent living. Those who do not own their own two-wheeler pay Rs. 20-40 per person for commuting between
home and market.

In Ratlam district, 69% of the houses that the research team visited owned a motorbike and primarily used it to visit
the nearby market, because of non-availability of reliable and affordable public transport. In Chindwara district,
46% of the houses that the research team visited owned a motorbike. It is interesting that these percentages
of motorbike ownership in the households we visited in the two study districts are much higher than indicated
in 2011 Census (around 15%). Although it is possible that we visited a very unusual set of households, we do
not believe this to be true. The difference between what we found and what is indicated by the 2011 census
data could be attributed to the passage of time since 2011, the changing life-style and increasing availability of
reasonably priced and fuel-efficient motorbikes.

The purchase price of a motorbike is around Rs. 50,000 (ex-showroom cost of an entry level bike). In fact, many
respondents reported spending a similar amount on purchasing a second-hand motorcycle of a better variant.
Moreover, farmers who did not own their own vehicle often borrowed one from a neighbour and used it by
putting in petrol for the use. With the life expectancy of an entry level bike about 10 years, the straight-line
depreciated annual cost of owning a motorbike is Rs. 5,000.

For Chhindwara, we estimated a monthly fuel cost of Rs. 765 for private transportation. Per litre petrol price of
Rs. 109 has been used for this estimation in Chhindwara. The mileage of a 150cc motorcycle is 47 kmpl. During
the field investigation, it was found that the average distance travelled per day is 11 km. Therefore, the per day
cost of transport fuel has been calculated to be Rs. 25.5 and a monthly cost of Rs. 765. Adding the depreciated
annual cost of owning a motorbike, the annual cost on private transportation is Rs. 14,184, or Rs. 1,182 per
month. To this, we added the typical maintenance and repair costs (assuming approximately 15%) amounting
to total monthly costs of Rs. 1,359. This is lower than the amount of Rs. 1,520 included for transport in our
preliminary NFNH cost estimate, hence no adjustment is made as a transport post check in Chhindwara.
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 49

In Ratlam, the research team specifically enquired from the respondents, who owned motorcycles, about the
expenses on fuel for using the same. On average, the respondents filled their vehicle with one litre of petrol on
every alternate day, as it was the only medium to commute to the nearest market, take children to school, visit
a healthcare facility, and sometimes, even to fetch water. Compared to Chhindwara, distances to these facilities
were shorter; but public transportation was totally absent in the interior villages. To access public transport
(a privately run unsafe, overcrowded shared vehicle – see pictures 7a-b below), they had to reach the main
road which itself was quite far from the place of residence. Based on the petrol price of Rs. 107 in Ratlam and
taking an average cost of Rs. 53.5 per day spent on fuel, the transportation fuel cost amounts to Rs. 1,605 per
month. Adding the depreciated annual cost of owning a motorbike, the annual cost on private transportation is
Rs. 24,260, or Rs. 2,022 per month. To this we add 15% for repairs and maintenance, and the total monthly costs
amount to Rs. 2,325. Since this amount is lower than the amount for transport included in our preliminary NFNH
estimate, no adjustment is made as a transport post check in Ratlam.

Public transport

7a. An overloaded Magic tempo 7b. An overcrowded public transport

(transporter) in Ratlam facility in Chhindwara

17. PROVISION FOR UNEXPECTED EVENTS TO ENSURE SUSTAINABILITY

Villagers barely manage to subsist with the meagre income they have. As it often happens, unforeseen events like
illnesses, accidents and deaths incur huge expenses, which derail workers into poverty and debt from which they
find it difficult to recover. Planned and inevitable events, like marrying a daughter, create serious financial crisis in
the lives of small or marginal farmers/workers. Our respondents revealed spending approximately Rs. 100,000 (in
addition to existing food stocks, assets) on a wedding, and Rs. 50,000 on a death of a family member. Therefore,
it is important to add a small margin (saving) above the cost of a basic quality of life when estimating a living
wage or living income to allow for unexpected events. A margin of 5 percent has been added for unforeseen
emergencies and discretionary spending as recommended in the Anker Methodology.
50 ANKER RESEARCH INSTITUTE

18. COST OF DECENT LIVING

Based on the above calculations, the living income for a reference size family of 4.5 persons has been estimated
at Rs. 19,241 per month in Chhindwara and Rs. 20,450 per month in Ratlam, as shown below in table 2.11.1. It is
important to note that this is the cost of living for a basic but decent standard of living for a typical size family in
these districts of rural Madhya Pradesh.

Table 2.11.1. Estimation of Family Living Costs (Living Income) for Rural Chhindwara and Rural Ratlam

Chhindwara Ratlam

Values and Assumptions Rs. USD Rs. USD

Food Cost per Person per Day for Model Diet 54.80 0.73 59.11 0.78

Food Cost per Person per Month 1,667 22 1,798 24

Food Cost for Family per Month 7,502 99 8,092 107

User-cost per Month for Acceptable Housing 2,316 31 2,316 31

Cost per Month for Utilities (Fuel, Lighting, and
1,441 19 1,385 18
Water)
Housing Cost per Month 3,757 50 3,701 49

NFNH Costs 7,066 93 7,684 102

Preliminary Non-Food Non-Housing Costs 6,039 80 6,514 86

Healthcare adjustment 519 7 423 6

Education adjustment 508 7 747 10

Transportation adjustment 0 0 0 0
Sub-total Monthly Cost for Decent Living for
18,324 242 19,476 258
Family
Funds for Sustainability & Emergency (5%) 916 12 974 13

Total Family Costs (Living Income) 19,241 255 20,450 271

 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 51

Table 2.11.2. Key assumptions for living wage and living income estimates

Date of study December 2021

No of Days in a Month 30.42

Non-food non-housing (NFNH) to food ratio 0.8050

Reference family size 4.5

Number of children in reference family 2.5

Number of adults in reference family 2

Exchange rate (Rs. / USD) 75.57

This report, no doubt, was focused on rural areas of Chhindwara and Ratlam districts of Madhya Pradesh. However,
as mentioned in the introductory section, these districts were chosen on the basis of their broad attributes
which we thought represent the general character of southern and western Madhya Pradesh respectively and
therefore we believe that the estimated living incomes and living wages for these areas are also applicable to the
larger southern and western rural MP respectively.

Furthermore, if we compare the living income estimated separately for Chhindwara (Rs. 19,241), which is part
of southern MP and that for Ratlam (Rs. 20,450), which is part of western MP, the difference between them is
around 6%. Once again, looking at the socio-economic conditions, the agroclimatic and cropping patterns, that
we discussed in the introductory section of the report, we think that the living income and living wage that have
been estimated for rural Chhindwara and rural Ratlam are broadly applicable to the whole of rural Madhya
Pradesh, with perhaps a marginal difference of 6-8% from one area to another.
52 ANKER RESEARCH INSTITUTE

PART III.
LIVING INCOMES IN CONTEXT AND
LIVING INCOME LADDER

Figure 3.1 – the living income ladder – compares our living income estimates for rural Ratlam and rural Chhindwara
to family incomes at the national poverty line, the World Bank poverty lines, if members earn minimum wages or
prevailing wages, and average household expenditure (see Annex A for a discussion on poverty lines in India, and
minimum wages and prevailing wages in Madhya Pradesh).

Our estimate of living income for rural Chhindwara is Rs. 19,241 per month, and Rs. 20,450 for rural Ratlam for a
family of 4.5. This is around 2.7 times that of the family income at the Indian national poverty line (that is from
2014 and adjusted for inflation); around 2.2 times that of the World Bank poverty line for a lower-middle income
country such as India; around 1.7 times that of the family income if members earned the agricultural minimum
wage in MP; and around 2.3 and 2.2 times that of the family income if family members earned average prevailing
wages in MP for agriculture and non-agriculture respectively. Our living income is around 8% higher than family
income if family members earned the minimum wage for skilled workers in MP and 35% higher than family
income if members earned the minimum wage for unskilled workers in MP.

Some of the above differences are easy to explain. For example, the national poverty line in India is for 2014
and undoubtedly would be significantly higher in 2021 in real terms because of the considerable economic
development and increases in income in India since 2014. Similarly, our living income estimate is much higher
than that of the World Bank poverty line, because the latter refers to mere subsistence level while our living
income is adequate for a decent living. Finally, the minimum wages mandated in most of the states in India are
now universally acknowledged to be far from adequate for decent living.

According to the NSS 68th Round for July 2011-June 2012 (NSSO, 2014), the average monthly per capita expenditure
for rural Madhya Pradesh was Rs. 1,152.39, which equals to Rs. 5,184 per month for a family of 4.5. To make this
value relevant for 2021, we increased it by (i) inflation between 2011 and 2021 (using Consumer Price Index
of Agricultural Labourers)27, and (ii) a further 12% to take into consideration the fact that NSSO household
expenditure estimates exclude the cost or value of owner-occupied housing (as 12% is what we found in our
study for the value of owner occupied housing), and (iii) real increase in per capita household expenditure in rural
MP between 2011-12 and 2021 (using net state per capita domestic product growth rates at constant prices28).
This amounts to Rs. 12,089. Nevertheless, our living income estimate is 64% higher than our estimate of average
household expenditure in 2021 in rural Madhya Pradesh.

In addition, it is worth noting that the average monthly per capita expenditure in better developed states such as
Kerala, Punjab, Haryana or Maharashtra were in 2011-12 Rs. 2,669 (in rural Kerala), Rs. 2,345 (in rural Punjab),
Rs. 2,176 (in rural Haryana) and Rs. 1,619 (in rural Maharashtra). Taking into account inflation since 2011-12, and
making additional adjustments to account for the value of owner occupied housing and the increase in real per

27 The annual inflation rates based on Consumer Price Index for Agricultural Labourers were 10% in 2012-13, 12% in 2013-14, 7% in 2014-
15, 4% in 2015-16, 4% in 2016-17, 2% in 2017-18, 2% in 2018-19, 8% in 2019-20, and 6% in 2020-21. The compounded average annual
increase in the index is around 6% over this period.
28 The compounded annual growth rates in the net state per capita domestic products between 2011-12 and 2021 are 5% for Madhya
Pradesh, Kerala, Maharashtra and Haryana, and 3% for Punjab.
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 53

capita household expenditure during this period, the monthly household expenditure (for households of size 4.5)
in 2021 for these relatively prosperous states amounts to Rs. 29,712 for rural Kerala, Rs. 20,806 for rural Punjab,
Rs. 23,252 for rural Haryana and Rs. 18,084 for rural Maharashtra.

In other words, our living income estimate for a typical size family in rural Madhya Pradesh to maintain a basic
but decent standard of living is higher than current average household expenditure of rural Maharashtra, close to
that of rural Punjab, and lower than that of rural Haryana and Kerala.

Figure 3.1. Living income ladder for rural Ratlam and rural Chhindwara (in Rs. per month for a reference family)
25000

20,450
19,241
20000 18,451

14,714
15000

11,684 12,089

9,287 9,334
10000 8,732
7,404

5000

0
National Income World Income Income Average Income Income Living Living
Rural based on Bank based on based on HH Exp in based on based on Income Income
Poverty Prevailing Poverty Prevailing Minimum Rural MP Minimum Minimum based on based on
Line Wages in Line Wages in Wages in Wages in Wages in Anker Anker
rural rural MP - AL MP - NAL MP - NAL Methodol- Meth-
MP - AL MP - NAL (Unskilled) (Skilled) ogy: odology:
Chhind- Ratlam
wara

Source: Authors Calculations. AL: Agricultural Labourers, NAL: Non-Agricultural Labourers.

As can be seen from Figure 3.1, the living income proposed for rural MP is much higher than the World Bank
poverty line, national poverty lines and also incomes based on prevailing and minimum wages. Some possible
reasons for these large gaps have been explained above, especially due to the time gaps and different reference
points. Above all, the living income proposed here, which is based on a realistic assessment of costs of living,
reflects the fact that the benefits of economic progress and social development do not always reach the interiors
of the rural India and the rural poor continue to live with extremely low incomes and poor wages.
54 ANKER RESEARCH INSTITUTE

19. CONCLUSIONS
This report on Living Income and Living Wages for rural Madhya Pradesh is based on latest data available from
reliable secondary sources and primary data collected through detailed field investigation. The main secondary
data sources used to make living income and living wage estimates include the Census (2011), NSSO Consumption
and Expenditure Survey – 68th Round: July 2011-June 2012 (NSSO, 2014), and CMIE-Consumer Pyramids Household
Survey for January 2020 and August 2021 (CMIE, 2020, 2021). Primary data were collected through two rounds
of field investigation; the first round was carried out in the district of Chhindwara during October 2021 and the
second field investigation was conducted in the district of Ratlam during the month of December 2021.

Noticeable differences have been observed between the two districts, especially in terms of demographic
composition of the population, structure of settlements, major cultivation patterns and food habits. Large part
of rural Chhindwara consists of tribal population living in scattered settlements, with close proximity to and
dependence on forest and non-timber forest products. On the other hand, population of Ratlam consists more
of non-tribal population belonging to land-owning and other backward castes, living in clusters of settlements,
mostly segregated by communities in different areas in the villages of rural Ratlam.

Although separate studies were carried out in rural areas in the two districts of Chhindwara and Ratlam, the
findings and analyses are presented in this single report. This has been done to improve readability and to avoid
repetition. In addition, it allows for easy comparisons and highlighting of differences. Our estimate suggests that
living income for a family of 4.5 in rural Chhindwara should be Rs. 19,241 ($255) per month, and slightly higher
at Rs. 20,450 ($271) for rural Ratlam. Similarly, the estimated living wage per month for rural Chhindwara is
Rs. 12,198 ($161) which is slightly lower than the Rs. 12,965 ($172) for rural Ratlam29.

As is clear from the report, living income for rural Madhya Pradesh refers to the total amount of income which
is required by a family of 4.5 persons to lead a basic but decent life. On the other hand, living wage refers to the
remuneration which a worker needs to be paid per month without having to do any overtime. In other words,
the living wage will vary depending on the number of full time working members in a reference family as a single
unit at a given place in a given point of time. Therefore, based on our calculation of 1.672 full time (equivalent)
working members per family in the districts of Chhindwara and Ratlam, we have estimated the living wages as
mentioned in the above paragraph.

The graphically presented living income ladder and living wage ladder compared the estimated living income
and living wage for rural Chhindwara and rural Ratlam with other estimates such as the World Bank poverty line,
national poverty lines, average household expenditure, and minimum wages and prevailing wages in Madhya
Pradesh. The living income (average of the two study districts) estimated in this report for rural Madhya Pradesh
is approximately 2.7 times that of the outdated 2014 national poverty line family income, and 2.2 times the World
Bank international poverty line family income. Our living income is 2.3 times that of family income, assuming
that family members earn prevailing wages for agricultural labourers; 2.1 times that of family income, assuming
family members earn prevailing wage of non-agricultural labourers; 1.7 times of family income, assuming family

29 The living income updated by inflation to mid-2022 (June) is Rs. 20,377 ($261) for rural Chhindwara district (MP), and Rs. 21,657 ($277)
for rural Ratlam district at an exchange rate of 78.1 Rs./$, which was the average exchange rate for June 2022. The living wage updated by
inflation to mid-2022 (June) is Rs. 12,919 ($165) for rural Chhindwara district and Rs. 13,730 ($176) for rural Ratlam.
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 55

members earn minimum wage for agricultural labourers; and 35% higher than family income, assuming family
members earn the for non-agricultural unskilled labourers minimum wage.

It may also be noted that our living incomes for rural Chhindwara and rural Ratlam are around 64% higher than
the estimated average monthly consumption expenditure of households in rural MP. At the same time, our living
income estimates for rural MP are close to estimated average monthly consumption expenditure of households
in rural Punjab, while being below those in rural Haryana and rural Kerala. These comparisons clearly indicate
that families in rural MP are not able to afford the minimum standards of decent living. This is not surprising,
because based on the Human Development Index, MP is the third poorest state in India.

Although this report focused on rural areas of Chhindwara and Ratlam districts of Madhya Pradesh, it is estimated
living incomes and living wages for these areas are considered to also be applicable for the larger regions of rural
southern MP and rural western MP respectively. This report clearly shows that the current incomes and wages
for workers and farmers of rural Madhya Pradesh are far from adequate to lead a decent life. We hope this report
will help employers and policymakers adopt suitable policies and take appropriate steps to enhance the quality
of life of the farmers and workers of rural Madhya Pradesh.
56 ANKER RESEARCH INSTITUTE

ANNEX. LIVING WAGE FOR WORKERS FOR RURAL MADHYA PRADESH

This annex discusses and estimates living wages for rural Chhindwara and rural Ratlam based on family living
expenses estimated for these areas in this report.

A1. NUMBER OF FULL-TIME EQUIVALENT WORKERS IN THE REFERENCE

FAMILY PROVIDING SUPPORT

As living wage is a family concept, it is only appropriate to expect more than one adult in a family to provide
financial support through work. It goes without saying that in the Anker living income and living wage methodology,
it is unacceptable for children to work and be expected to provide support to the family. Therefore, in our living
income and living wage benchmark calculations, children are assumed to be not working, which is consistent with
the decency concept of a living income and living wage. In other methodologies, living wage often assumes that
either both the spouses/partners work full-time or that only one spouse/partner works full-time. The assumption
of one full-time worker is based on the male breadwinner model of the household that was the accepted norm till
some years ago in Western countries as well as in some parts of the world today. The assumption of two full-time
workers is based on the idea that all adults work full-time year-round. Neither assumption is realistic for rural
Madhya Pradesh. The reality is that many adults work, and many other adults are not able to find work during
many months of the year, particularly in non-peak seasons.

Number of full-time equivalent workers in our reference family is determined using the data available on (i)
age and sex specific labour force participation rates (LFPR), (ii) unemployment rates (UR), and (iii) part time
employment rate. The average proportion of full-time work per adult has been determined by adjusting the
average adult labour force participation rate by the unemployment rate and the part-time employment rate.

The following formula is used to determine the number of full-time equivalent workers in the reference family:

Number of full-time equivalent workers per family =

1+ [LFPR*(1- UR)*(1- Part-time employment rate / 2)].

This formula is calculated separately for adult males and females and then an average of the two is taken. The
data on LFPR and UR in rural MP for the age group 30-59 are taken from the Periodic Labour Force Survey (2019-
20). Part-time employment rates of 14% for men and 38% for women are used in this process. They are drawn
from the World Bank World Development Indicators (World Bank, 2022) databank which provides information
on part-time employment rates (for males and females) for 136 countries. The average part-time rate for all
countries for females (for the last 5 years) is 34% and for males is 21%. Since estimates for India are not reported,
we based our part-time employment rates (14.1% for males and 38.0% for females) on values for other countries
in the Indian sub-continent (Bangladesh, Pakistan, Nepal, and Sri Lanka).

The calculations are shown in Table A1.

 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 57

Table A1. Calculation of number of full-time equivalent workers in the reference family

LFPR (Usual Activity % of Full-time work

Unemployment rate Part-time rate
Rate) of Spouse

Male 97.8% 0.35% 14.07% 90.6%

Female 63.1% 0.05% 37.99% 51.1%

Average 0.709

Number of Workers 1.709

The above calculations indicate 1.709 as the number of full time (equivalent) workers per family. The calculated
value of 1.709 as the number of full-time equivalent workers expected to support the family in rural Ratlam and
rural Chhindwara, MP is high compared to the calculated value of 1.635 for rural all-India. The main reason for
this difference to all-India is the much higher female labour force participation rate for women of prime age in
rural MP (63.1%) compared to all-India (45.8%). This is understandable due to the much higher tribal population
in rural MP. At the same time, we feel that 1.709 for rural MP is itself an overestimate for several reasons.30
Therefore, it was thought reasonable to reduce it to 1.672 (i.e., the average of the MP and the all-India estimate).

Given 1.672 workers per family, the net monthly living wage for rural Chhindwara is Rs. 11,508 ($152) and
Rs. 12,231 ($162) for rural Ratlam.

A2. MANDATORY PAYROLL DEDUCTIONS AND INCOME TAX AND

CALCULATION OF GROSS LIVING WAGE (AKA LIVING WAGE)
To estimate a living wage, it is necessary to add possible income tax and mandatory payroll deductions to the net
living wage to ensure that workers have sufficient take home pay to be able to afford a decent standard of living
for their family (see figure 1.4 above).

Under the Indian Income Tax Act, every person responsible for paying any income, which is chargeable under the
head ‘salary’, is expected to deduct income tax (TDS) on the estimated income of the person. The deduction is
to be made at the time of the actual payment. However, no tax is deducted unless the estimated salary income
exceeds the maximum amount not chargeable to tax applicable in case of an individual during the relevant
financial year. The income tax slabs in India for the assessment year 2020-21 indicates an exemption limit of

30 There are two reasons why we feel that the estimated number of full-time equivalent workers per family for rural MP and rural India
is overestimated. First, we estimated LFPRs for persons 30-59 and not for the usual 25-59 age group as data were not available for ages
25-29. Second and much more importantly, it is likely that India’s reported LFPRs include many more part-time workers than found in other
countries, because India uses the “usual activity status” definition of labour force participation rather than the “current activity status”
definition which is used by almost all other countries in the world. Usual activity status includes more labour force activity and more
part-time employment than are included in the labour force statistics of other countries. For example, the part-time employment rate
in most countries is usually defined as persons working for less than a stipulated number of hours in the previous week. This means that
other countries generally do not consider the important aspect of part-time employment related to only working in some seasons which
is important when the usual labour force definition is used. Thus, we feel that an additional adjustment needs to be made to the number
of full-time equivalent workers expected to support the family.
58 ANKER RESEARCH INSTITUTE

Rs. 250,000 for individuals less than 60 years of age, Rs. 300,000 for individuals between 60-80 years of age, and
Rs. 500,000 for individuals of 80 years age and above. Our living wage estimates suggest that workers earning a
living wage are exempted from paying income tax.

There is a statutory payroll deduction for the Provident Fund, i.e., the contributions made by the employee
during the time he/she worked along with an equal contribution by his/her employer. This is calculated at 12% of
his/her basic salary with the same amount contributed by the employer. However, employees have the option to
contribute more than 12%.

Thus, while no income tax is due on our estimated living wage, statutory payroll deduction for provident fund
for employees is required. Although there is no legislative norm in India on the actual proportion of pay and
allowances that are subject to the 12% provident fund deduction, some court judgements31 and general practice
suggest that allowances do not generally exceed 50% of the total pay. In addition, the provident fund deduction
is assessed on the basic wage and dearness allowance components of the total salary. Given this background, we
decided to consider that 6% of the net living wage is added as employees’ contribution to the Provident Fund.
Adding this amount to our net living wage estimates, we get the gross living wage estimates of Rs. 12,198 ($161)
for Chhindwara and Rs. 12,965 ($172) in Ratlam32.

A3. LABOUR LAWS IN INDIA

Until recently, labour and employment related issues in India had been governed by a wide range of (as many as
44) legislations. This plethora of legislation were broadly grouped into broad categories of (i) working conditions,
(ii) industrial relations, (iii) wages, (iv) welfare and (v) social securities. After many years of back-and-forth
deliberations and several rounds of discussions at various levels, this multiplicity of legislations has been replaced
by four major labour codes, namely (i) the Code on Wages, 2019, (ii) the Industrial Relations Code, 2020, (iii) the
Occupational Health, Safety and Working Conditions Code, 2020, and (iv) the Code on Social Security, 2020.33

As matters of ‘labour and employment’ fall under the concurrent list in the constitution of India, both the central
government and the state governments are required to notify the rules of the four labour codes to enforce these
laws in respective areas of their jurisdiction. While the power to make the rules has been vested with the Central
Government, the appropriate state governments are required to publish the rules in their official Gazette. Many
state governments, including that of Madhya Pradesh, have published these rules under the new Labour Codes.

The Code on Wage replaced the earlier four central labour legislations, namely the Payment of Wages Act, 1936,
the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976. According
to the new definition of wage under the Code on Wage, wage includes all remuneration paid by way of salaries,
allowances or otherwise, including basic pay and dearness allowance. However, it excludes (a) any bonus payable
under any law in force; (b) value of house-accommodation/house rent allowance or the supply of light, water,

31 See, https://www.argus-p.com/updates/updates/sc-on-which-allowances-to-form-part-of-the-basic-wages-for-the-purpose-of-epf-
contribution/
32 The gross living wage updated by inflation to mid-2022 (June) is Rs. 12,919 ($165) for rural Chhindwara district and 13,730 ($176) for
rural Ratlam at an exchange rate of 78.1 Rs./$, which was the average exchange rate for June 2022.
33 See: https://labour.gov.in/labour-codes
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 59

medical attendance or other amenity; (c) contribution paid by the employer to any pension or provident fund,
and the interest which may have accrued thereon; (d) any conveyance allowance or the value of any travelling
concession; (e) any sum paid to the employed person to defray special expenses entailed on him by the nature of
his employment; (f) remuneration payable under any award or settlement between the parties or order of a court
or tribunal; (g) any overtime allowance; (h) any commission payable to the employee; (i) any gratuity payable on
the termination of employment; and (j) any retrenchment compensation or other retirement benefit payable to
the employee or any ex gratia payment made to him on the termination of employment.

A4. LIVING WAGE COMPARISONS AND WAGE LADDER

A4.1. Minimum wages in Madhya Pradesh

The new wage code mandates that employers pay workers not less than the stipulated minimum wage. Further,
minimum wages must be revised and reviewed by the central and state government at an interval of not more
than five years. Minimum wage and salary structure vary depending on the state, area within the state based
on development level (zone), industry, occupation, and skill-level. In other words, the prescribed quantum of
minimum wage depends on the skill-level of the worker and the nature of work. Broadly, workers in India are
categorized as unskilled, semi-skilled, skilled, and highly skilled. Each state in India prescribes from time to time
the minimum wages, including dearness allowance, for different occupational categories and skill levels.

The state of Madhya Pradesh has prescribed Rs. 6,988 as the minimum monthly wage for agricultural labour with
effect from 1st April 2021. At the same time, the minimum wages prescribed for non-agricultural workers in the
categories of unskilled, semi-skilled, skilled and highly skilled are Rs. 8,800, Rs. 9,657, Rs. 11,035 and Rs. 12,335
respectively34.

A4.2. Prevailing wages in rural Madhya Pradesh

Most farms in rural Madhya Pradesh are small or marginal in terms of land holding size, and many households
are landless. During our field investigation carried out in the sample 40 villages in the districts of Chhindwara
and Ratlam, two things were made amply clear by the respondents. One, the average size of land owned by the
farmers is often too small to support a family of 4-5 members. In Ratlam, out of the 100 respondents, 95 owned
land, and the average size was 6.83 bighas or 0.76 hectares. In Chhindwara, out of the 68 respondents, 60 owned
land. Out of these, 45 respondents owned less than 2 hectares of land, 11 owned between 2 to 3 hectares of
land, and only 4 owned land in excess of 4 hectares. Secondly, barring a few, farming was largely rain-fed, limiting
cultivation and use of land to only one season, leaving the land barren for the rest of the year. Migration to other
parts of the state and to other neighbouring states such as Gujarat and Maharashtra for work was a common
practice among villagers of the two study districts of Chhindwara and Ratlam. Families with more than one
working member encouraged one or more members to seek daily wage at least during off season, if not round
the year. It is a common sight to see groups of (mostly) men and women in large numbers gathered together in
several areas of the town every morning waiting for someone to pick them up for daily labour. Mostly, they are
picked up for unskilled jobs to work either for relatively large farmers or for other jobs such as construction work
or catering etc.

34 See, https://paycheck.in/
60 ANKER RESEARCH INSTITUTE

According to a Reserve Bank of India (RBI, 2021), Madhya Pradesh has one of the lowest average daily wage rates
for rural male non-agricultural labour at Rs. 232.60, compared to Rs. 677.60 in Kerala, Rs. 449.5 in Tamil Nadu and
Rs. 344.2 in Punjab. For rural male agricultural labour, the average daily wages are Rs. 217.6 in Madhya Pradesh
compared to Rs. 706.5 in Kerala and Rs. 357 in Punjab. There is clear variation both in availability of work and the
daily wage rate depending on the season. The average daily wage in rural MP reported in November 2021 was
Rs. 217.6 for male agricultural labourers and Rs. 232.6 for male unskilled non-agricultural labourers. Assuming
a worker works 24 days in a month, this equals Rs. 5,222 per month for agricultural labourers and Rs. 5,582 per
month for unskilled non-agricultural labourers.

A4.3. World Bank Poverty Line and Poverty Line Wage

The international poverty lines used by World Bank for developing countries are set at $1.90, $3.20, and $5.50
per person per day, in 2011 internationally comparable PPP (purchasing power parity) dollars for low-income,
lower-middle income, and upper-middle income countries respectively. India falls in the lower middle-income
category as per the classification of World Bank, and hence, we use the poverty line of $3.20 per person per day.
This amounts to 97 PPP per person per month and 438 PPP per month for a family of 4.5. Using a conversion rate
of Rs. 21.20 per international dollar (2020 PPP)35, the World Bank line for India for a family of 4.5 persons per
month amounts to Rs. 9,287. Dividing this by 1.672 (i.e., the number of workers) gives us the World Bank Poverty
Line wage as Rs. 5,554.

A4.4. National Poverty Line and Poverty Line Wage

Although an officially accepted national poverty line is not available for India, and official poverty estimates made
by Niti Aayog36 follow a multidimensional approach, the Rangarajan committee (Government of India, 2014)
estimated monthly per capita expenditure of Rs. 972 per month and Rs. 1,407 per month, in rural and urban areas
respectively, as the poverty threshold. This threshold is higher than the previously used Tendulkar’s poverty line
in India set at Rs. 816 monthly per capita expenditure in rural areas and Rs. 1,000 in urban areas (Government of
India, 2009). These poverty line thresholds are at 2011-12 prices and for all-India. Using the inflation rates based
on Consumer Price Indices for Agricultural Labourers, the national rural poverty lines per person per month for
2020-21 are Rs. 1,381.2 as per Tendulkar’s methodology and Rs. 1,645.3 using the Rangarajan’s methodology,
amounting to Rs. 6,215.4 and Rs. 7,403.6 respectively for a family of 4.5. If we divide these by 1.672 (i.e., the
number of workers), we get the National Poverty Line wage ranging between 3,717 and 4,428.

A4.5. Wage ladder

The wage ladder below illustrates how our living wages for rural Ratlam and rural Chhindwara compare to other
wages benchmarks which were discussed in the above sections. Our living wage is 2.8 times that of the national
poverty line wage, and 2.3 times that of the international poverty line wage. It is more than double that of
the prevailing wages for agricultural and non-agricultural labourers, 1.8 times that of the minimum wages for
agricultural labourers and 43% higher than the minimum wages for non-agricultural unskilled labourers.

35 Note that the PPP for 2021 for India is likely to be slightly higher than it was for 2020. Using a formula on how to update PPP to
subsequent years suggested by the World Bank (which uses the ratio of inflation rate in 2021 for India relative to the United States), we
estimate that PPP for 2021 might be around 2% higher than in 2020 at possibly around 21.37.
36 The Niti Aayog is the apex public policy think tank of the Government of India. This body has replaced the erstwhile Planning
Commission of India.
 LIVING INCOME AND LIVING WAGE FOR RURAL MADHYA PRADESH, INDIA 61

Figure A4.1. Wage ladder for rural Chhindwara and rural Ratlam (in Rs. per month per worker)
14000
12,965
12,198
12000
11,035

10000
8,800

8000
6,988 7,230

6000 5,554 5,582

5,222
4,428
4000

2000

0
National Prevailing World Prevailing Minimum Average Minimum Minimum Living Living
Rural Wages in Bank Wages in Wages in HH Exp in Wages in Wages in Wage Wage
Poverty rural Poverty rural MP - AL Rural MP MP - NAL MP - NAL based based
Line MP - AL Line MP - NAL (Unskilled) (Skilled) on Anker on Anker
Wage Wage Method- Meth-
ology:
Chhind- odology:
wara Ratlam

Source: Authors Calculations. AL: Agricultural Labourers, NAL: Non Agricultural Labourers.
62 ANKER RESEARCH INSTITUTE

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