Why in news?

• For the first time in about 11 years, the government released the data of the All-India Household Consumption Expenditure Survey.
  • The survey was carried out between August 2022 and July 2023.
• 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).

What’s in today’s article?

• Consumer Expenditure Survey - About, Significance
• Background
• News Summary

Consumer Expenditure Survey (CES)

• The CES is traditionally a quinquennial (recurring every five years) survey conducted by the government’s National Statistical Office (NSO).
• It is designed to collect information on the consumption spending patterns of households across the country, both urban and rural.
• The data gathered in this exercise reveals the average expenditure on goods (food and non-food) and services.
• It helps generate estimates of household Monthly Per Capita Consumer Expenditure (MPCE) as well as the distribution of households and persons over the MPCE classes.

Significance of Consumer Expenditure Survey (CES)

• Vital in gauging the demand dynamics
  • The estimates of monthly per capita consumption spending are important in measuring the demand dynamics of the economy.
  • It is also useful for understanding the shifting priorities in terms of baskets of goods and services.
• Assessment of growth trends across different strata
  • It is helpful in assessing living standards and growth trends across multiple strata.
• Invaluable analytic and forecasting tool
  • The CES is an invaluable analytical as well as forecasting tool.
    • It helps policymakers spot and address possible structural anomalies that may cause demand to shift in a particular manner.
    • It provides pointers to producers of goods and providers of services.
  • It isused by the government in rebasing the GDP and other macro-economic indicators.

Background:

• The last survey on consumer expenditure was conducted in the 68th round (July 2011 to June 2012).
  • This is because the government had junked the findings of the last Survey, conducted in 2017–18, citing data quality issues.
• In November 2019, the Statistics and Programme Implementation Ministry said it was examining the feasibility of conducting the next Survey in 2020–2021 and 2021–22.
  • This was to be done after incorporating all data quality refinements in the survey process, as recommended by an expert panel.
  • The expert panel had vetted the discrepancies in the 2017–18 results and recommended certain changes.
• However, the Survey could not be launched in the last two years due to the pandemic.
• Finally, a decision has been taken to conduct the Survey from July 2022.

News Summary: Household Consumption Expenditure Survey 2022-23

• Ministry of Statistics and Programme Implementation has conducted Household Consumption Expenditure Survey (HCES) during August 2022 to July 2023.

Key findings: Household Consumption Expenditure Survey 2022-23

• Average monthly per capita consumption expenditure (MPCE)
  • As per the latest Survey, the average MPCE in Indian households rose by 33.5% since 2011-12 in urban households to ₹3,510.
  • Rural India’s MPCE saw a 40.42% increase over the same period to hit ₹2,008.
  • The MPCE numbers mentioned above donot include the estimated values of things people get for free through social welfare programs like the PM Garib Kalyan Ann Yojana (PMGKAY) or state-run schemes.
  • It, however, included a few non-food items received through such schemes, including computers, mobile phones, bicycles, and clothing.
    • By adding the imputed cost of free items, the average monthly consumption expenditure stood at Rs 3,860 in rural areas and Rs 6,521 in urban areas.
• Difference in average MPCE between rural and urban households
• The difference in average MPCE between rural and urban households has narrowed to 71.2 per cent in 2022-23 compared with 83.9 per cent in 2011-12.
• This suggests rural consumption spending has risen more than urban consumption spending during the 11-year period.
• Average MPCE of the bottom 5 per cent of rural population and of urban population
  • The bottom 5 per cent of rural population has an average MPCE of Rs 1,373, while it is Rs 2,001 for the bottom 5 per cent of urban population.
  • The top 5 per cent of the rural and urban population has an average MPCE of Rs 10,501 and Rs 20,824, respectively.
  • In other words, while the MPCE of top 5 per cent of rural population is 7.65 times more than its bottom 5 per cent, the MPCE of top 5 per cent of urban population has an MPCE of over 10 times its bottom 5 per cent.
• Share of expenditure on food
  • In 2022-23, the share of expenditure on food in rural India was 46 per cent (Rs 1,750), and in urban India was 39 per cent (Rs 2,530).
  • In 2011-12, it was 52.90 per cent in rural India and 42.62 per cent in urban India. This has implications for consumer price index-based inflation.
• Consumption 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, durable goods in 2022-23 as against 2011-12.
  • The share of expenditure on cereals, pulses and vegetables moderated during the same period.
• Comparison among 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.