Deepak Dwivedi
THE fact sheet of the Household Consumption Expenditure Survey (HCES) for the year 2023-24 released by the Ministry of Statistics & Programme Implementation is significant as the survey was undertaken consecutively after the 2022–23 study. Back-toback surveys were necessary to capture sequential consumption trends, ensuring methodological consistency and data reliability. This approach facilitates the recalibration of base years for macroeconomic metrics and provides policymakers with a more granular understanding of household expenditure dynamics to inform evidencebased economic planning. The data has some interesting findings.
The average monthly per capita expenditure (MPCE) has been estimated Rs 4,122 in rural areas and Rs 6,996 in urban areas, rising to Rs 4,247 and Rs 7,078, respectively, when accounting for the imputed value of items provided through social welfare programmes. Both rural and urban MPCEs have increased nominally by approximately 9 pc and 8 pc respectively, from 2022-23 levels. Importantly, the urban-rural MPCE gap has narrowed significantly, falling to 70 pc in 2023-24 from 84 pc in 2011-12, suggesting a sustained consumption growth in rural areas. Additionally, the most significant increase in MPCE has been observed among the bottom 5-10 pc of the population in both urban and rural regions, highlighting improved spending capacity among lower-income groups.
The findings indicate a significant shift in household expenditure patterns, with nonfood items constituting 53 pc of rural and 60 pc of urban household spending. This marks a notable trend of diversified spending and a move away from food-dominated expenditure. An EAC-PM paper by Mudit Kapoor et al., based on the unit-level data of HCES 2022-23 also points to this trend. For the first time since independence, the average household spending on food has fallen below 50 pc of overall monthly expenditures. The findings align with Engel’s Law, which posits that as household income increases, the proportion of income spent on food declines.
Within food categories, cereal expenditure has declined markedly, especially among the bottom 20 pc of households in rural and urban areas, likely reflecting the effectiveness of Government food security initiatives. These trends have important implications for agriculture and nutrition policies. There is now a need to promote diverse food production.
Further, key non-food expenditure categories include conveyance, clothing, durable goods, and entertainment. In food expenditure, beverages, refreshments, and processed foods dominate, indicating evolving consumption preferences. Rent contributes 7 pc to urban household non-food spending, underscoring the growing significance of housing costs. Notably, consumption inequality has declined, with the Gini coefficient dropping to 0.237 for rural areas and 0.284 for urban areas from their 2022- 23 levels. These trends imply a positive trajectory in bridging economic disparities and enhancing living standards across India.
The HCES provides detailed insights into household consumption patterns, and applying this data to a revised poverty line could give a more accurate measure of deprivation in the country. The latest data confirms that the Indian economy has done exceedingly well in recent years and India has managed to eliminate extreme poverty while simultaneously reducing inequality. Adjusting data for inflation to get a comparable poverty line for 2022-23, this turns out to be Rs 1,452 in rural areas and Rs 1,752 in urban areas. Based on this, the proportion of Indians living below the poverty line translates to less than 2 per cent.
