India’s consumption survey: A significant shift amid modest gains

While an absolute poverty ratio can be derived from the latest HCES data, the expense patterns in the Fact Sheet seem to back the Centre’s claim of 250 million people having been lifted out of multidimensional poverty in the nine years from 2013-14 to 2022-23.
While an absolute poverty ratio can be derived from the latest HCES data, the expense patterns in the Fact Sheet seem to back the Centre’s claim of 250 million people having been lifted out of multidimensional poverty in the nine years from 2013-14 to 2022-23.

Summary

  • A long-awaited survey that plugs a glaring data gap points to rising household expenditure, superior diets and a critical change: rural households spending less on food than other items. This is momentous for country emerging from deprivation.

The Household Consumption Expenditure Survey (HCES) conducted by the National Sample Survey Office (NSSO) shows Indian homes doing moderately better in 2022-23 than in 2011-12. As outlined in a preliminary ‘Fact Sheet,’ fresh results from this survey comes after a gap of 11 years, as the last one in 2017-18 was junked by the government for purported faults after leaked findings indicated a drop in consumption. That had left a glaring data gap, which now stands filled. The most notable direct reading for a country emerging from mass deprivation is that food spending has fallen below the halfway mark even in rural India. The 2011-12 round found that the share of food items in rural average monthly per capita expenditure (MPCE) was almost 53%. This shrank to 46.4% in 2022-23. Indian households can finally be said to be spending more on non-food items. This is a major shift. The needy appear less hard-up.

Yet, the incline in consumption expenditure since 2011-12 is modest at best. In rural parts, average MPCE rose from 1,430 back then to 2,008 now at 2011-12 prices (adjusted, i.e., for inflation), and in urban India, it went up from 2,630 to 3,510. At current prices, our rural MPCE was 3,773, and urban, 6,459 in 2022-23. Given the span of a decade-plus, the gains made have been slow, but there is no evidence of the stagnancy that some critics feared. A general improvement in people’s diets is also discernible. Although the MPCE share spent on cereals fell to 4.9% in 2022-23 from 10.7% in 2011-12, this sharp drop can be explained by the government’s free food handouts, which aim at food security and enable the needy to spend on other stuff. Increased spending on protein-rich dairy products, eggs, fish and meat, apart from fresh fruits, beverages and processed food, suggests a better-fed country on the whole. With foodgrain staples assured for another five years, have-nots can count on using their money for various other purchases as we go along. Hopefully, this will lead to better nutrition among our multitudes. While an absolute poverty ratio can be derived from the latest HCES data, the expense patterns in the Fact Sheet seem to back the Centre’s claim of 250 million people having been lifted out of multidimensional poverty in the nine years from 2013-14 to 2022-23.

After the HCES of 2017-18 was scrapped, however, suspicions arose of political optics getting the better of data reliability. The survey, after all, had long served as a tool for poverty estimation and an input for other statistical measures used by economic policymakers. Revisions in the basket of items that make up India’s retail price index, for example, are usually based on this survey. The value of its accuracy, thus, cannot be overestimated. The methodology for the 2022-23 round has reportedly been tweaked, which will surely attract scrutiny once we have clarity on the changes. The NSSO is reported to have altered the process so that its field staff gather data at three different time intervals, for instance, instead of once. It is unclear whether this was done to address a recall-period problem alleged to have caused discrepancies in the past, and if so, what benefits have been obtained. Since respondents have imperfect memories, there is always scope for errors. The challenge is to minimize them. That said, with national elections due soon, we can expect both the ruling party and its opponents to try using the survey as campaign fodder. But then, it has neither much prosperity nor despair to reveal.

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