This week we take a look at F3--households whose chief wage earner is a school-educated skilled worker who is married, has children, and lives in a joint family This week, the urban consumer segment in the spotlight is F3, households whose chief wage earner is a school-educated skilled worker who is married, has children, and lives in a joint family. It is contrasted with last week’s segment E5, which comprises chief wage earners with similar educational and life-stage profiles, but are skilled workers who live in nuclear families or businessmen in joint or nuclear families. The family set up that distinguishes skilled workers in F3 and E5 segments is the characteristic that defines the income, expenditure and asset ownership patterns in these two segments. F3 households are large in size—81% are of five members or more and 31% have more than two children. More than half the households have two or more earning members, joint families also comprise relatives and friends who have come to the city to earn. There is a significant geographical variation here—districts in the north in general have larger household sizes than in the south. In fact, urban districts where F3 households have more than seven members in their households are Kanpur Nagar, Alwar, Udham Singh Nagar, Gwalior, Purbi Singbhum, Ambala, Indore, Bhavnagar, Allahabad and Jabalpur. The F3 consumer segment comprises 2.5% of the total urban households, 11th in size with more than 1.8 million households. However, with a large household size supporting more people, this segment ranks seventh largest in population among all urban consumer segments. More than half the chief wage earners in this segment have completed higher secondary school and there is a relatively larger proportion of chief wage earners who are in regular salaried jobs in this segment, compared to the E5, which even includes businessmen. The sector that offers maximum scope for those with low education is that of wholesale and retail trade; 27% of the chief wage earners work in this sector. Manufacturing with 23%, transport with 13% and public administration with 10% are the other top-ranking sectors. As before, those with low skills work at the lowest rung of government jobs, but in service sectors there is significant potential to rise higher as experience becomes key to earning. Though household incomes are relatively low—the median household income is Rs136,000 and there are almost 80% of the households earning less than Rs3 lakh—2.6% of households in this segment do earn more than Rs10 lakh a year. Clearly, even with low education levels and skills, there is still considerable scope for making it big in the cities, as these numbers show. In fact, 63% of these families stay in their own homes, a higher proportion than in the E5 segment. These consumer segments have been created due to the distinctive patterns seen in asset-income expenditure profiles of the groups. One of the reasons behind higher home ownership in F3 compared to E5 is that in joint families that characterize F3 households, there is significant family support and it is easier to raise money. Moreover, the E5 segment includes businessmen and it is well known that small businesses run on their own resources, with little access to bank credit or government support of any kind. So in the E5 segment, businessmen who stay in joint families would be using such family resources support also to invest in their own businesses; home ownership waits for later years when savings build up. Looking at consumer segments through this prism, other insights come into light. For instance, financial inclusion that will bring such E5 segment businessmen into the formal credit system will have a tremendous positive spin-off, releasing resources that households can use for the family, maybe be able to own homes at an earlier age. Maharashtra, Tamil Nadu and Uttar Pradesh rank the top three states in the F3 segment with more

1. Working in a joint family Published: Mint dated 10 th May 2010 This week we take a look at F3--households whose chief wage earner is a school-educated skilled worker who is married, has children, and lives in a joint family Indicus Consumer Segment

2. Indicus Consumer Segment This week, the urban consumer segment in the spotlight is F3, households whose chief wage earner is a school-educated skilled worker who is married, has children, and lives in a joint family. It is contrasted with last week’s segment E5, which comprises chief wage earners with similar educational and life-stage profiles, but are skilled workers who live in nuclear families or businessmen in joint or nuclear families. The family set up that distinguishes skilled workers in F3 and E5 segments is the characteristic that defines the income, expenditure and asset ownership patterns in these two segments. F2

3. Indicus Consumer Segment F3 households are large in size—81% are of five members or more and 31% have more than two children. More than half the households have two or more earning members, joint families also comprise relatives and friends who have come to the city to earn. There is a significant geographical variation here—districts in the north in general have larger household sizes than in the south. In fact, urban districts where F3 households have more than seven members in their households are Kanpur Nagar, Alwar, Udham Singh Nagar, Gwalior, Purbi Singbhum, Ambala, Indore, Bhavnagar, Allahabad and Jabalpur. The F3 consumer segment comprises 2.5% of the total urban households, 11th in size with more than 1.8 million households. However, with a large household size supporting more people, this segment ranks seventh largest in population among all urban consumer segments. More than half the chief wage earners in this segment have completed higher secondary school and there is a relatively larger proportion of chief wage earners who are in regular salaried jobs in this segment, compared to the E5, which even includes businessmen.

4. Indicus Consumer Segment The sector that offers maximum scope for those with low education is that of wholesale and retail trade; 27% of the chief wage earners work in this sector. Manufacturing with 23%, transport with 13% and public administration with 10% are the other top-ranking sectors. As before, those with low skills work at the lowest rung of government jobs, but in service sectors there is significant potential to rise higher as experience becomes key to earning. Though household incomes are relatively low—the median household income is Rs136,000 and there are almost 80% of the households earning less than Rs3 lakh—2.6% of households in this segment do earn more than Rs10 lakh a year. Clearly, even with low education levels and skills, there is still considerable scope for making it big in the cities, as these numbers show. In fact, 63% of these families stay in their own homes, a higher proportion than in the E5 segment. These consumer segments have been created due to the distinctive patterns seen in asset-income expenditure profiles of the groups. One of the reasons behind higher home ownership in F3 compared to E5 is that in joint families that characterize F3 households, there is significant family support and it is easier to raise money. Moreover, the E5 segment includes businessmen and it is well known that small businesses run on their own resources, with little access to bank credit or government support of any kind. So in the E5 segment, businessmen who stay in joint families would be using such family resources support also to invest in their own businesses; home ownership waits for later years when savings build up.

5. Indicus Consumer Segment Looking at consumer segments through this prism, other insights come into light. For instance, financial inclusion that will bring such E5 segment businessmen into the formal credit system will have a tremendous positive spin-off, releasing resources that households can use for the family, maybe be able to own homes at an earlier age. Maharashtra, Tamil Nadu and Uttar Pradesh rank the top three states in the F3 segment with more than 150,000 households. Districts with the highest population in the F3 segment are obviously the big cities of the country—Mumbai, Delhi, Bangalore, Thane, Pune, Ahmedabad, Chennai, Kolkata, North 24 Parganas and Surat.