Household consumption expenditure surveys do not just provide information on the changes in spending patterns, but are also used for estimating poverty and for constructing economic indicators such as the consumer price index.
Dec 30, 2024 07:15 IST First published on: Dec 30, 2024 at 07:15 IST
Last week, the government released the results of the household consumption expenditure carried out during August 2023 to July 2024. This large scale survey — information has been collected from 2.61 lakh households — follows a similar survey that was carried out the year before. While in the past, large scale consumption expenditure surveys have typically been carried out once every five years, the rationale for conducting two back-to-back surveys was to check the robustness of the results and the methodology used in the 2022-23 survey.
As per the latest survey, in rural areas, the average monthly per capita consumption expenditure rose to Rs 4,122 in 2023-24, up from Rs 3,773 in 2022-23. For urban areas, the comparable numbers are Rs 6,996 and Rs 6,459. Adjusting for inflation, consumption has grown at around 3.5 per cent during this period. Data from the survey does show a marginal increase in the share of spending allocated towards food. The percentage share of food in average monthly expenditure, which had fallen from 52.9 per cent in 2011-12 to 46.38 per cent in 2022-23 in rural areas, and from 42.62 per cent to 39.17 per cent in urban areas, edged up slightly to 47.04 per cent and 39.68 per cent in 2023-24 respectively. This could be partly because of high food inflation during this period. Some experts are also reported to have said that such differences are within the margin of error. The latest survey data also shows that the rural-urban gap continues to fall with spending in rural areas growing at a relatively faster pace. The difference in average monthly consumption expenditure between rural and urban areas has fallen from 83.9 per cent in 2011-12 to 71.2 per cent in 2022-23 and further to 69.7 per cent in 2023-24. However, as per a report in this paper, in the five years ending in 2023-24, nominal rural wages grew at 5.2 per cent, while real wage growth was -0.4 per cent. The trend of subdued rural wages has continued in the ongoing year as well. The survey results also reveal a decline in consumption inequality. The Gini coefficient has fallen from 0.283 in 2011-12 to 0.266 in 2022-23 and further to 0.237 in 2023-24 in rural areas, and from 0.363 in 2011-12 to 0.314 in 2022-23 and to 0.284 in 2023-24 in urban areas. The disaggregated data shows that in 2023-24, consumption of the top 5 per cent in rural and urban areas was actually lower than in 2022-23. In comparison, other data points towards greater spending by those at the top end of the distribution. There is also the issue of how much of total household spending is captured by these surveys when compared to consumption expenditure estimates from the national accounts.
Household consumption expenditure surveys do not just provide information on the changes in spending patterns, but are also used for estimating poverty and for constructing economic indicators such as the consumer price index. Considering the dramatic shifts in the household consumption basket since the survey in 2011-12 — for instance, the fall in the share of food, especially cereals — these surveys will have wide ranging implications.
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