Household Consumption Expenditure Survey (HCES) 2023-24

Syllabus: GS3/Indian Economy

Context

• The Ministry of Statistics and Programme Implementation (MoSPI) decided to conduct two consecutive surveys on household consumption expenditure during 2022-23 and 2023-24.

About

• The National Sample Survey Office (NSSO) under Ministry of Statistics and Programme Implementation has been conducting household surveys on consumption/consumer expenditure at regular intervals as part of its rounds, normally of one-year duration.
• Since 1972, NSSO has been conducting the Consumer Expenditure Survey.
• It  is designed to collect information on consumption of goods and services by the households. 
• The survey aims at generating estimates of household Monthly Per Capita Consumption Expenditure (MPCE) and its distribution separately for the rural and urban sectors of the country. 

Methodology Used

• In the present survey, three 3 questionnaires were used, covering:

• Food items;
• Consumables and services items, and;
• Durable goods used.
• The survey had a separate provision for collection of information on the quantity of consumption of the number of items received and consumed by the households free of cost through various social welfare programmes.

Changes in the Methodology

• The number of items covered has increased from 347 to 405 items.
• There have been changes in the questionnaire of the survey.
  • Instead of a single questionnaire as used in earlier surveys, HCES 2022-23 introduced four separate questionnaires for food, consumables and services items, and durable goods.
  • Thus, there have been multiple visits for data collection instead of the usual practice of a single visit in the earlier surveys.

Major Highlights for 2023-24

• Average MPCE: The average Indian’s monthly spending increased 9.2% to ₹4,122 in rural areas and 8.3% to ₹6,996 in urban regions.

• Trends in Rural Spending: Non-food accounted for 53% of the spending.
  • Clothing, bedding and footwear had the largest share.
• Trends in Urban Spending: Non-food items accounted for 60% of the spending, led by miscellaneous goods and entertainment, clothing and footwear, and education.
  • Food categories like beverages and processed food, vegetables, and dairy products accounted for 31.5% of the urban spending growth.

• Rural Urban Gap: It has declined to 71% in 2022-23 from 84% in 2011-12.
  • It further came down to 70% in 2023-24.
  • Rural households now spend 69.7% of what urban households spend.
  • The rural-urban difference in the average MPCE among the states is the highest in Meghalaya (104%) followed by Jharkhand (83%) and Chhattisgarh (80%).
• Major Increase in MPCE: It has been the maximum for the bottom 5 to 10 % of India’s population, for both rural and urban areas.
• Consumption Inequality: It has declined from the level of 2022-23 in both rural and urban areas.
• Gini Coefficient: It has declined from 0.266 to 0.237 in rural areas and 0.314 to 0.284 in urban regions.
  • A lower coefficient indicates reduced inequality.
• Regional Consumption Patterns: Western and northern states had higher per capita consumption compared to eastern and central states.
  • States like Maharashtra, Punjab, Tamil Nadu, and Kerala had higher-than-average spending, while states like West Bengal, Bihar, Uttar Pradesh, and Odisha had lower-than-average consumption.
• Among states, Sikkim reported the highest MPCE, with Rs 9,377 in rural areas and Rs 13,927 in urban areas, while Chhattisgarh recorded the lowest.

Future Outlook 

• The findings of the HCES 2023-24 highlight the ongoing economic recovery and the narrowing gap between rural and urban consumption.
• Consumption inequality, both in rural and urban areas, has declined from the level of 2022-23.
• The difference between Rural and Urban MPCE has narrowed substantially over the years, implying the success of government policies in improving Rural incomes.
• Policymakers can use this data to design targeted interventions to further reduce inequality and support sustainable economic growth.

Source: TH