09-January-2025-Editorial

HOUSEHOLD CONSUMPTION EXPENDITURE SURVEY (HCES) 2023-24

The Ministry of Statistics and Programme Implementation (MoSPI) recently published the factsheet for the Household Consumption Expenditure Survey (HCES) 2023-24.

This survey provides valuable insights into the spending habits, consumption patterns, and overall economic well-being of households in India. The data collected aids in formulating policies that address inequality, poverty, and regional disparities.

What is the Household Consumption Expenditure Survey (HCES)?

• The HCES collects information on household spending to assess living standards, consumption behavior, and economic well-being.
• Conducted by the National Statistical Office (NSO) since 1951 as part of the National Sample Survey (NSS).

Significance:

• Used to calculate Consumer Price Indices (CPI) and update the base year for key macroeconomic indicators like Gross Domestic Product (GDP).
• Helps in evaluating poverty levels, inequality, and the social welfare impact of government programs.

Key Findings of HCES 2023-24

1. Rising Consumption Patterns:

Rural Areas:

• The average monthly per capita expenditure (MPCE) increased to ₹4,122, a 9.3% rise from ₹3,773 in 2022-23.
• With imputed values (e.g., free benefits like food grains), rural MPCE rose to ₹4,247.

Urban Areas:

• Urban MPCE reached ₹6,996, an 8.3% rise from ₹6,459 in 2022-23.
• With imputed values, urban MPCE increased to ₹7,078.

2. Reduced Rural-Urban Gap:

• The rural-urban consumption gap reduced significantly, from 83.9% in 2011-12 to 69.7% in 2023-24, indicating faster growth in rural consumption.

3. Regional Disparities:

States with Highest MPCE:

• Sikkim: ₹9,377 (rural) and ₹13,927 (urban).
• Union Territory Chandigarh: ₹8,857 (rural) and ₹13,425 (urban).

States with Lowest MPCE:

• Chhattisgarh: ₹2,739 (rural) and ₹4,927 (urban).
• Union Territories like Dadra and Nagar Haveli and Daman and Diu also had lower MPCE (₹4,311 rural).

4. Reduced Consumption Inequality:

The Gini coefficient (a measure of inequality) dropped:

• Rural areas: From 0.266 to 237.
• Urban areas: From 0.314 to 284.

5. Spending on Food:

Food expenditure increased:

• Rural Areas:04% of total spending.
• Urban Areas:68% of total spending.

Most spending was on beverages, processed foods, milk, and vegetables.

6. Non-Food Expenditure:

Non-food expenses remained high:

• Rural Areas:96%.
• Urban Areas:32%.

Key spending areas:

• Rural: Conveyance (7.59%), medical expenses (6.83%), clothing (6.63%).
• Urban: Conveyance (8.46%), miscellaneous goods (6.92%), rent (6.58%).

7. Fractile Consumption Patterns:

Consumption spending for the top 5% in both rural and urban areas declined compared to 2022-23.

Significant growth for the bottom 5%:

• Rural: 22% increase.
• Urban: 19% increase.

This indicates improved economic conditions for lower-income groups.
Key Terms

Monthly Per Capita Expenditure (MPCE):

• The average spending per person in a month on basic needs like food, education, healthcare, and transportation.

Consumption Inequality:

• Refers to the uneven distribution of spending among households or individuals.
• Measured using the Gini coefficient, where a lower value signifies more equality.

Implications of HCES Findings for Policy-Making

1. Rural Development:

The narrowing rural-urban gap suggests rising rural incomes, likely influenced by programs like:

• Pradhan Mantri Kisan Samman Nidhi (PM-KISAN).
• Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).

Policies should focus on:

• Enhancing rural transport infrastructure to reduce conveyance costs.
• Encouraging investments in rural non-food sectors like durable goods.

2. Economic Shift to Services:

Increased spending on services (e.g., transport, entertainment) indicates a shift toward a service-driven economy.

Policymakers should:

• Promote skill development in service-related sectors.
• Support rural industrialization to sustain growth.

3. Urban Housing and Transport:

High urban spending on rent and transport highlights the need for:

• Affordable housing policies.
• Enhanced public transportation infrastructure.

4. Addressing Regional Disparities:

States with low MPCE, like Bihar and Uttar Pradesh, require focused interventions in:

• Employment creation.

5. Consumer Protection:

• With rising food expenditure on processed items, strict regulation is necessary to ensure quality and safety.

Conclusion

The findings of the HCES 2023-24 reflect a dynamic shift in India’s consumption patterns. Rising rural incomes, reduced inequality, and increased spending by lower-income groups indicate progress toward inclusive growth. However, challenges like regional disparities and high urban living costs demand targeted policies to sustain economic development and improve the standard of living for all citizens.