Decoding consumption: On the Household Consumption Expenditure Survey

The 2022-23 household spending survey signals shifts in people’s priorities

In an uncharacteristic late Saturday release, the Statistics Ministry unveiled (to show or introduce something new or make it known publicly for the first time) the broad findings of the Household Consumption Expenditure Survey done between August 2022 and July 2023. This is significant (important or noticeable) as it is the first major survey-based data released since 2011-12 that captures ground realities at the household level — especially with the once-a-decade Census (a count for official purposes, esp. one to count the number of people living in a country and to obtain information such as age, sex, race, etc), due since 2021, nowhere in sight. Conducted every five years by the National Sample Survey Office (NSSO), the results of the last such consumption (the act of using, eating, or drinking something) survey in 2017-18, along with a similar employment survey, were junked with the government citing “quality issues” with the data — viewed as a euphemism (a word or phrase used to avoid saying an unpleasant or offensive word) for the unhappy tidings it may have showed. If the 2017-18 Survey was abandoned (left behind, or left without care and protection) because it captured the deleterious (harmful) after-effects of the demonetisation (to officially stop using particular notes or coins, or a particular currency) of high-value currency notes in late 2016 on India’s largely informal economy, and the subsequent (happening after something else) onset of the Goods and Services Tax, the 2022-23 survey also needs to be interpreted (to decide what the intended meaning of something is) with a dash of salt. For, it may likely magnify the exuberance seen in consumption after two years of pandemic-induced curbs and income losses — what economists call the release of pent-up demand.

To be clear, the Survey suggests some interesting transitions in consumption patterns and the complete findings must be published swiftly to enable deeper analysis. Households’ average monthly per capita consumer expenditure (MPCE) rose 33.5% since 2011-12 in cities to reach ₹3,510, and 40.4% in rural India to ₹2,008. The government has sought to paint this as a signal of rising incomes, narrowing (limited to a small area of interest, activity, or thought) inequality, and a sharp slippage in poverty levels. But this only implies a 3.5% compounded (something consisting of two or more different parts) annual growth in rural spends over 11 years, with a 3% growth for urban households — well below the inflation and GDP growth rates in this period. Puzzlingly, even after adding the imputed values of free goods received through a myriad (very large in number, or having great variety) of welfare schemes such as the PM Garib Kalyan Anna Yojana, the average MPCE only rose to ₹2,054 for rural households and ₹3,544 for urban peers. That the proportion of monthly spends on food has slipped below 50% in rural homes (to 46.4%), and under 40% in urban homes, with cereals seeing the sharpest drop, is remarkable, and may ease inflation trends if used to rejig Consumer Price Index weightages. However, it is pertinent to recall that food inflation (a general, continuous increase in prices) began spiking last June just ahead of the Survey’s completion, and has remained elevated (high or important) since. So, proportional spends have likely changed. A clearer picture, devoid of pent-up demand and inflation flip-flop effects, is expected from the fresh Survey that concludes this July. So, any recalibration (a change in the way you do or think about something) of poverty, inflation or GDP calculations must wait till those results are compiled (to collect information from a variety of places and arrange it in a book, report, or list), and released as well.

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