Earnings and Consumption by Indian Rural Laborers: Analysis with an Extended Linear Expenditure System N. S. S. Narayana and B. P. Vani, Economic Analysis Unit, Indian Statistical Institute, Bangalore, India This paper analyzes consumption pattern of agricultural and nonagricultural labor households in rural India using a new extension of the familiar Linear Expenditure System (LES) model. This extension accounts for changes in commodity consumption not only due to changes in prices and total expenditure but also due to changes in certain other “status” variables. The analysis extends to assess differential impacts on consumption pattern due to different welfare programmes.  2000 Society for Policy Modeling. Pub- lished by Elsevier Science Inc. 1. INTRODUCTION In India, rural population forms nearly 78% of the total. More than one-third of the rural population is poor. The majority of them are either landless agricultural laborers or marginal and small cultivators (who also work as laborers). This paper deals with consumer behavior of agricultural and nonagricultural poor labor households in the rural areas whose wage income, on aver- age, is above 50% of their total income. Because wage incomes are not adequate enough to meet their consumption needs, these households earn supplementary incomes from other activities such as livestock operations (selling milk, dung-cakes, etc., from cattle and buffaloes, hiring out bullocks, etc.), minor cultivation (garden Address correspondence to N. S. S. Narayana, Economic Analysis Unit, Indian Statistical Institute, R. V. College P.O., 8th Mile, Mysore Road, Bangalore, 560059, India. Very useful comments and suggestions from several critics helped us in improving an earlier draft of this paper. We thank all of them and in particular Professors Sanjit Bose, Kirit S. Parikh, and A. Vaidyanathan. Thanks are also due to A. K. Ganesh for helpful discussions and H. M. Rajashekara for typing the manuscript. Received February 1996; final draft accepted November 1996. Journal of Policy Modeling 22(2):255–273 (2000)  2000 Society for Policy Modeling 0161-8938/00/$–see front matter Published by Elsevier Science Inc. PII S0161-8938(97)00068-9