India’s upcoming CES has several gaps to fill

Next month, India will start a fresh attempt at its reputed household consumer expenditure survey (CES)
Next month, India will start a fresh attempt at its reputed household consumer expenditure survey (CES)


The prolonged wait for official poverty estimates has forced experts to rely on proxy datasets, which often paint inconsistent pictures of poverty in India. The upcoming official survey that starts on 1 July has a lot of gaps to fill in.

Come July, India will start a fresh attempt at its reputed household consumer expenditure survey (CES) that will give the first national official estimates on the extent of poverty in over a decade. The prolonged wait has forced experts to rely on proxy datasets, which often paint inconsistent pictures of poverty in India. But the upcoming CES itself has a lot to do to fill in that gap reliably again.

While junking the report of the previous survey held in 2017-18, the government had cited “data quality issues" and set up a panel to review it. (Experts argue the issues had always existed, and the report was suppressed due to adverse findings.) However, a proposed revamp to address these issues could make historical comparisons difficult, Mint reported this week. This could make it tricky to map India’s poverty trajectory over time, such as to compare the performance of different governments, economists said.

An earlier Mint analysis based on leaked 2017-18 data had suggested a four-percentage-point increase in rural poverty since 2011-12, to 30%. The decision to withhold the report means a decade has passed—the longest-ever gap—since the last official CES. The pandemic has delayed it further. It won’t be until two to three more years until fresh poverty estimates arrive.

Meanwhile, divergent estimates have muddled the story of India’s poor. Two recent working papers, one by the World Bank and another published by the International Monetary Fund, have given much-debated—and different—estimates, while an attempt by Niti Aayog to create a poverty index has invited its own criticism.

Tricky proxies

The problems with alternative sources trying to fill in for CES range from flawed methods to poor sampling, economists told Mint. The IMF paper extrapolates data from the National Accounts Statistics (NAS), which is used to compute GDP, while the World Bank paper uses a continuous household survey by the Centre for Monitoring Indian Economy, a private body. While the former is known to overestimate consumption, the latter has been found to under-represent poorer households by researchers.

“While CES gives household-level data and is linked to expenditure, NAS is only given at an all-India level, so it should not be used," said S. Mahendra Dev, vice chancellor, Indira Gandhi Institute of Development Research.

The Niti Aayog’s multidimensional poverty index is based on a global index by the same name, which has the conceptual flaw of combining “input", “process" and “outcome" and “output" indicators in the same bucket, said Santosh Mehrotra, an economics professor at Jawaharlal Nehru University.

Costs of revamp

While NAS data may overestimate consumption (and hence underestimate poverty), the CES itself may be doing the opposite, as it excludes the spending space that in-kind welfare subsidies give, some experts point out. The divergence, which the Centre cited to suppress the survey in 2019, has indeed grown over the years, with private consumption expenditure captured by CES accounting for only 32% of what the NAS computed for 2017-18.

The upcoming revamped survey has incorporated changes in the questionnaire to capture free food and healthcare schemes and may be conducted in three visits per household instead of one, several officials told Mint. But the National Statistical Commission is worried that such changes will leave data difficult to compare with previous surveys, officials said. Independent experts also believe the statistics ministry must ensure that improvements do not come at the cost of comparability, to avoid any controversy over the credibility of the data, as was the case in 1999.

Shooting in the dark

What are the implications of missing poverty data? For starters, experts say policymakers are shooting in the dark without it. “The assumption that economic growth translates into reduction in poverty and inequality is not true," said Lekha Chakraborty, professor at National Institute of Public Finance and Policy. “Having an official poverty number will help one quantify that link."

Missing estimates also help efficiently identify beneficiaries for welfare schemes and determine grants for states, economists point out. “While states have tapped into other data sources like the Socio Economic and Caste Census to identify the poor, CES estimates can give policymakers stronger information armour to map the poor population down to the district level," said Amit Basole, associate professor of economics at Azim Premji University.

Lastly, researchers have also faced difficulties in assessing the impact of events like demonetization and the pandemic, allowing the government to deny adverse impacts altogether. Official data can give better direction on this front as well.

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