Daily News Analysis

What Consumption Expenditure Survey Leaves Unanswered

stylish_lining

Why in News?

The release of the Household Consumption Expenditure Survey (HCES) for 2022-23 marks a significant milestone after a decade-long hiatus.

The factsheet offers valuable insights into present patterns of household consumption, but decisive conclusions should not be made due to changes in methodology, survey design, and item coverage.

Also, it is crucial to understand key takeaways from the factsheet, notable changes, challenges in comparability, and indicators such as rural-urban inequality, inter-caste differences, and shifting consumption patterns.

The HCES for 2022-23 and Difference from Earlier Rounds of Surveys

A New Survey Structure

In contrast to earlier survey rounds, the HCES adopts a segmented approach by conducting three separate surveys on food items, consumables and services, and durable goods.

This departure from the traditional single-questionnaire method aims to enhance the precision of responses by focusing on specific categories.

While this change aligns with the need to combat respondent fatigue, it raises concerns about comparability with previous rounds that followed a more unified structure.

Introduction of Multiple Household Visits

Another notable change in the methodology is the introduction of multiple separate visits to households.

This adjustment acknowledges the well-documented issue of respondent fatigue associated with lengthy questionnaires conducted in a single sitting.

Shorter, focused questionnaires are expected to yield more precise answers. However, this modification poses challenges in terms of comparability, potentially resulting in higher expenditure estimates.

To assess the magnitude and direction of this potential bias, a subset of households could have been subjected to the older single-visit design for comparison.

Imputed Values for Social Welfare Programs

The HCES incorporates imputed values for items received or consumed free of cost through various social welfare programs.

This includes essentials like rice, wheat, footwear, laptops, and motorcycles. However, the validity of these imputed values remains uncertain until unit-level price and quantity data are released.

Understanding the impact of such imputations on the overall consumption expenditure distribution is crucial for a comprehensive analysis.

Changes in Item Coverage

The survey covers 405 items of consumption, compared to 347 in the 2011-12 round.

Such revisions in item coverage are not uncommon and are reflective of evolving consumption habits over time.

However, these changes further contribute to the challenge of ensuring comparability across different survey rounds.

An Analysis of HCES Data for Within-Survey Indicators

Rural-Urban Inequality

Average all-India urban monthly per capita consumption expenditure (MPCE) at Rs 6,459 in 2022-23, is roughly 72 percent higher than in rural areas (Rs 3,773).

 

The corresponding figure was 84 percent in 2011-12. This seems to indicate a decline in rural-urban inequality over the decade.

 

However, there are two caveats. This does not account for the rural-urban price differential, which can fluctuate.

Additionally, a longer view reveals that the rural-urban gap tends to fluctuate. From

75.9 percent in 1999-2000, it rose to 90.8 in 2004-05, and then declined to 83.9 in 2011- 12.

Moreover, there is no indication of whether the ratio increased or decreased in 2017- 18.

Distribution of Consumption Expenditure

In 2011-12, the ratio of the 10th percentile of the rural expenditure distribution (Rs 710) to the 90th percentile (Rs 2,296) was 0.31.

This ratio is 0.33 in 2022-23 (Rs 1,782/Rs 5,356). In other words, the consumption expenditure of the bottom 10 percent of the rural distribution is roughly one-third of the top 10 percent a ratio that has not changed substantially over the decade.

For urban areas, the corresponding ratio was 0.21 in 2011-12, which has risen to 0.27 in 2022-23, indicating a reduction in urban inequality.

Inter-Caste Differences

The ratio of average rural Scheduled Caste (SC) MPCE to that of the higher-ranked castes was 0.73 in 2011-12.

This has remained unchanged at 0.7 in 2022-23. For rural Scheduled Tribes (ST), this ratio has improved marginally from 0.65 to 0.69 and for Other Backward Classes (OBC), from 0.83 to 0.87.

While rural India does not show a marked narrowing of inter-caste gaps in MPCE, the urban figures suggest a narrowing of inter-group MPCE gaps.

For SCs, the ratio increased from 0.63 to 0.72; for STs, from 0.68 to 0.74 and for OBCs, from 0.7 to 0.84.

Shifting Consumption Patterns Highlighted by HCES Data

The factsheet reveals that in rural India, the percentage share of cereals, a food staple, in average MPCE is now 4.91 percent and 3.64 percent in urban India, compared to

10.75 percent and 6.66 percent respectively in 2011-12.

This is accompanied by an increase in the share of processed foods and beverages.

Overall, HCES indicates a decline in the share of food expenditure over the decade, which stands at 46 percent in rural and 39 percent in urban India.

There have been notable shifts which include an increase in the share of medical expenses on hospitalization, conveyance, and durable goods in rural India, and paan, tobacco, intoxicants, conveyance, and durable goods in urban India.

Way Forward: Need to Follow-Up the Survey

The release of the HCES findings for 2022-23, while limited in scope, represents a welcome development in the pursuit of understanding India's consumption landscape.

The provided factsheet offers valuable insights into present consumption patterns, rural-urban disparities, and inter-caste differences.

However, its limited scope necessitates a prompt release of the full price and quantity unit-level data for the surveyed year, 2022-23.

This complete dataset is crucial for researchers, policymakers, and analysts to delve deeper into the intricacies of the survey and draw more nuanced conclusions.

A continuous and updated flow of data ensures a more accurate understanding of evolving consumption habits, poverty indicators, and other critical socio-economic parameters.

Timely follow-up surveys enable policymakers to adapt strategies based on current trends rather than historical data.

Conclusion

While the changes in HCES survey design aim to improve data collection methodologies, challenges in comparability and potential biases need careful consideration.

The insights into rural-urban inequality, inter-caste differences, and evolving consumption patterns highlight the complexity of India's socio-economic landscape.

For a comprehensive understanding, the swift release of full price and quantity unit- level data is imperative, ensuring that future analyses and policy decisions are well- informed and nuanced.

Maharashtra Scraps Hindi as Compulsory Third Language

The Maharashtra government recently scrapped its Government Resolutions (GRs) that mandated Hindi as a compulsory third language from Grades 1 to 5 in Marathi and English medium schools. While the
Share It

River Pollution in India

The Delhi government's focus on cleaning up the Yamuna River is part of a larger national effort to rejuvenate the Ganga River and its tributaries, in alignment with the Namami Gange Programme
Share It

Infrastructure Failures

The recent collapse of the Mahisagar River Bridge in Vadodara, which tragically claimed the lives of 20 people, underscores the growing concern over India's infrastructure quality. Similar
Share It

Special Intensive Revision (SIR)

The Supreme Court (SC) is currently reviewing the Election Commission of India’s (ECI) process for the Special Intensive Revision (SIR) of electoral rolls in Bihar, suggesting that Aadhaar,
Share It

GM Crop

In ongoing trade talks, the United States is advocating for India to open its agriculture market to genetically modified (GM) crops. However, India has firmly rejected this proposal, citing concer
Share It

India-Brazil Relations

India and Brazil share a growing and dynamic bilateral relationship that has evolved across various sectors since the establishment of diplomatic ties in 1948. Their Strategic Partnership, formali
Share It

Legislative Productivity

The Lok Sabha Speaker’s remarks about the need to enhance legislative productivity reflect growing concerns about the diminishing effectiveness of India’s legislative bodies. The chall
Share It

Economic Growth

India's rapid urbanization is set to dramatically shape its future. The transformation of its cities holds immense potential for economic growth, but it also brings significant challenges. As
Share It

Global South

Prime Minister Narendra Modi's visit to Brazil from July 2-9, 2025, for the BRICS summit, was not only his longest international visit in 11 years but also marked a significant diplomatic outr
Share It

Maharashtra’s Special Public Security Bill, 2024

The Maharashtra Assembly has recently passed the Special Public Security Bill, 2024, aimed at combating “urban Maoism” and left-wing extremism in the state. The Bill criminalizes activ
Share It

Newsletter Subscription


ACQ IAS
ACQ IAS