Centre discloses key consumption expenditure survey findings after 11-year gap

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Last Updated27/02/2024

Recently, the government released findings of the All India Household Consumption Expenditure Survey conducted between August 2022 and July 2023.
It will play a key role in reviewing critical economic indicators, including the GDP, poverty levels, and the Consumer Price Inflation (CPI).

The Household Consumption Expenditure Survey (HCES) is usually conducted by the National Statistical Office (NSO) every five years.
It is designed to collect information on the consumption spending patterns of households across the country, both urban and rural.
The data gathered in this exercise reveals the average expenditure on goods (food and non-food) and services.
However, the findings of the last Survey, conducted in 2017-18 were never released due to cited “data quality” issues.

Average monthly per capita consumption expenditure (MPCE) rose by 33.5% (to ₹3,510) in urban households and 40.42% (to ₹2,008) in rural India since 2011-12.
The MPCE numbers do not include the estimated values of things people get for free through social welfare programs.
It, however, included a few non-food items received through such schemes, including computers, mobile phones, bicycles, and clothing.
By adding the imputed cost of free items, the average monthly consumption expenditure stood at Rs 3,860 in rural areas and Rs 6,521 in urban areas.

The difference in average MPCE between rural and urban households has narrowed to 71.2 percent in 2022-23 compared with 83.9 percent in 2011-12.
This suggests rural consumption spending has risen more than urban consumption spending during the 11-year period.

The proportion of spending on food has dropped to 46.4% for rural households from 52.9% in 2011-12.
The urban households spent just 39.2% of their overall monthly outgoes on food compared with 42.6% incurred 11 years earlier.
This reduction could translate into a lower weightage for food prices in the country’s retail inflation calculations.
Change in Food Composition
- Spending on cereals and pulses has reduced while expenditure on milk, fruits, and vegetables has increased.
- Rural and urban consumers are spending more on fruits and vegetables than on cereals for the first time.
Preference for Animal Proteins and Processed Foods
- There's a growing preference for animal proteins like eggs, fish, and meat over plant proteins like pulses.
- Consumers are allocating a larger portion of their expenditure to processed foods, beverages, and purchased cooked meals.
Engel Curve Hypothesis
- The observed trends align with the Engel Curve hypothesis.
- It broadly states that as incomes grow, households spend a smaller proportion on food.
- Even within food, they would buy more of “superior” and less of “inferior” items.

Consumption expenditure on non-food items increased in both rural India (54%) and urban India (61%) in 2022-23 as against 2011-12.
A greater share of spending is also now being directed towards education, health and conveyance and on consumer durables and services.
As household incomes rise and expenditure on essential items falls, discretionary spending will rise further.

The bottom 5% of both rural and urban populations had significantly lower MPCE compared to the top 5%, showcasing income disparity.
The MPCE of the top 5 percent of rural population is 7.65 times more than its bottom 5 percent
The MPCE of the top 5 percent of urban population has an MPCE of over 10 times its bottom 5 percent.

Sikkim had the highest MPCE for both rural (₹7,731) and urban areas (₹12,105).
It is the lowest in Chhattisgarh, where it was ₹2,466 for rural households and ₹4,483 for urban household members.

HCES data indicates a need to focus on promoting the production of items like milk, fish, poultry products, fruits, and vegetables.
Sectors like fruits, vegetables, livestock, and fisheries have experienced significant growth, primarily market-led.
- This is in contrast with the slower growth in cereals and non-horticultural crops.
The demand for MSP is mainly from farmers of crops not covered under MSP, highlighting the importance of aligning policy with demand trends reflected in HCES data.