The Great Indian Budget: Does Migration Influence Household’s Consumption Proportions?

This study employs the two waves (2004–2005 and 2011–2012) of the nationally representative India Human Development Survey (IHDS) to estimate the expenditure gaps (namely, expenditure gaps in food consumption, conspicuous consumption and productive investment) between migrant and non-migrant households. Using propensity score matching and inverse probability weighted regression average, the results indicate that migrant households allocate a lower proportion of their annual household expenditure to food consumption (vis-à-vis the non-migrant households), while allocating higher shares to conspicuous consumption and productive investment. These results vary by whether a loan was sanctioned, the amount sanctioned, the purpose of the loan (productive or otherwise) and the source of the loan (formal or informal channels). The findings propose policy considerations, emphasizing the importance of reassessing loan priorities by extending credit towards productive investment opportunities. This study also explores the consumption spillover effects on non-migrant households, indicating that they emulate the consumption patterns of migrant households by allocating a higher share of expenditure towards conspicuous consumption, with no discernible effect on productive investment.