GS Paper III

News Excerpt:

For the first time in about 11 years, the government released the broad findings of the All India Household Consumption Expenditure Survey (HCES) carried out between August 2022 and July 2023. 

More details about the news:

• The data will play a key role in reviewing critical economic indicators, including the Gross Domestic Product (GDP), poverty levels, and the Consumer Price Inflation (CPI).
• The Household Consumption Expenditure Survey (HCES) is usually conducted by the National Statistical Office (NSO) every five years, but the findings of the last Survey, conducted in 2017-18 soon after the demonetisation of high-value currency notes and the implementation of the Goods and Services Tax (GST), were never released after the government cited “data quality” issues.
• The estimates of the MPCE are based on data collected from 2,61,746 households, of which 1,55,014 were in rural areas, spread over all States and Union Territories.

Details of the survey:

Overall Consumption Expenditure:

• The difference in average monthly per capita consumption expenditure (MPCE) between rural and urban households has narrowed to 71.2 % in 2022-23 compared with 83.9% in 2011-12, 88.2% in 2009-10, and 90.8% in 2004-05.
• This suggests rural consumption spending has risen more than urban consumption spending during the 11 year period.
• The survey report does reveal that rural average monthly consumption spending per person increased to Rs 3,773 per month in 2022-23 from Rs 1,430 per person in 2011-12, a jump of 164 %.
• This is higher than the 146 % increase in urban average monthly consumption expenditure per person to Rs 6,459 in 2022-23 compared with Rs 2,630 per person in 2011-12.

   Consumption based on states:

• Among the States, the MPCE is the highest in Sikkim for both rural (₹7,731) and urban areas (₹12,105). It is the lowest in Chhattisgarh, where it was ₹2,466 for rural households and ₹4,483 for urban household members.

Expenditure on Food

• The proportion of spending on food has dropped to 46.4% for rural households from 52.9% in 2011-12, while their urban peers spent just 39.2% of their overall monthly outgoes on food compared with 42.6% incurred 11 years earlier.
• This reduction could translate into a lower weightage for food prices in the country’s retail inflation calculations.
• The monthly per capita consumption expenditure (MPCE) numbers cited above do not take into account the imputed values of items received free of cost by individuals through various social welfare programmes such as the PM Garib Kalyan Ann Yojana (PMGKAY) or State-run schemes, which were calculated separately.
• The average MPCE, at 2011-12 prices, was a tad higher when these items were included while excluding free education and healthcare sops — at ₹2,054 for rural households, and ₹3,544 for urban homes.

Expenditure on Non-Food Items

• Consumption expenditure on non-food items in both rural India (54 %) and urban India (61%) was mainly driven by a rise in share of spending on conveyance, consumer services, and durable goods in 2022-23 as against 2011-12.