Survey on Household Consumption Expenditure: 2022-23

FOCUS

The National Sample Survey Office (NSSO) has conducted Household Consumption Expenditure surveys (HCES) regularly since its inception in 1950. Data on household consumption was collected annually from 1950–51 to 1973-74. After the 26th round of the survey, the NSSO decided to conduct large-scale surveys every five years instead. The data collected from these surveys include crucial indicators which reflect living standards at national and state levels. They reveal the spending patterns of households across India.

The HCES: 2022-23 survey was conducted between August 2022 and July 2023 across the entire country, except for a few inaccessible villages in the Andaman and Nicobar Islands. Data for the survey was gathered from 8,723 villages and 6,115 urban blocks encompassing 261,746 households (1,55,014 in rural areas and 1,06,732 in urban areas). The survey's primary objectives were to generate estimates of household monthly per capita consumption expenditure (MPCE), analyse the distribution of consumption across different income groups and assess changes in consumption patterns over time.

This survey report contains three chapters and a set of summary statements: Introduction (Chapter One); Survey Method and Estimation of MPCE (Chapter Two); and Summary of Findings (Chapter Three). Detailed tables are also provided in four appendices: Appendix A contains detailed tables of indicators like MPCE and per capita consumption at the State/UT level. Appendix B details the estimation procedure. Appendix C includes relative standard errors (RSE) of MPCE figures for each State/UT and Appendix D contains the survey questionnaires.

The HCES 2022-23 was conducted by the National Statistical Office (NSO) during a period marked by significant economic challenges and policy shifts. The International Monetary Fund predicted global economic growth to slow down with emerging markets and developing economies projected to see a decline in growth from 4.1 per cent in 2022 to four per cent in 2023 and 2024. Additionally, the period saw rising inflation, which affected cost of living and purchasing power.

Since 2011-12, when the last HCES was published, there had been no new data to trace the effects of government policies, economic slowdown and covid-19 on the consumption habits of Indian citizens. The 2017-18 HCES had been discarded by the government over “data quality issues”. The HCES 2022–23 was anticipated to fill this gap and provide current, usable data.

There are several changes in the 2022–23 survey methodology compared to the previous survey held in 2011-12. The HCES 2022-23 was conducted in three visits per household, differing from previous rounds that involved only a single visit. There were four HCES questionnaires overall: the Household Characteristics Questionnaire (HCQ), the Food Diary Questionnaire (FDQ), the Consumables and Services Questionnaire (CSQ), and the Durables Questionnaire (DGQ). During the first visit, researchers administered the HCQ along with one of the other three questionnaires. They collected the remaining data over two additional visits. Other changes included increasing the number of items in the questionnaire from 347 to 405 and adopting the computer-assisted personal interview (CAPI) method, replacing the traditional pen-and-paper personal interview (PAPI) method.

However, as explained in an analysis of the methodology in The India Forum, there is no mechanism in the survey design to specifically ensure that the poorest households, such as those in the bottom 10 per cent of the population, are included in the sample. This could result in a potential underrepresentation of the most economically disadvantaged segments in the survey, automatically making the monthly expenditure estimates higher.  This approach also does not accurately reflect the disparities within a particular stratum.

Field investigators worked on data collection through personal interviews, covering various expenditure aspects – food, non-food items, education, healthcare, and other services. Different ‘reference periods’ (time period for which consumption is recorded) were applied to different items. It was seven days for regular groceries like edible oil, eggs, meat, vegetables, beverages, processed food and the like. The reference period for other food items, fuel and light, and rent was 30 days. And for less frequent expenditures such as durable goods like clothes, footwear and even education and hospitalisation expenses, the reference period was 365 days.

    FACTOIDS

  1. Household Consumption Expenditure refers to the expenditure a household incurs on domestic consumption during a given reference period. It does not cover expenditure related to any entrepreneurial activities of households. Monthly Per Capita Consumption Expenditure (MPCE) is calculated by dividing the total household monthly consumption expenditure by the number of people in the household. This measure is used as an indicator of the household's standard of living.

  2. Consumption may include any of these: purchases made in cash or credit during any given reference period; home-grown stock; anything received in exchange of goods and services; any other receipt like gift, charity and free collection such as government distributed foodgrains.

  3. Two sets of MPCE estimates have been generated from the survey. One of these does not include the imputations of the value figures of items received free by the households through various government social welfare programmes. Whereas the other set of MPCE estimates includes the imputations. The survey report provides all rupee estimates in nominal terms unless specified otherwise.

  4. The survey shows a notable rise in expenditure over the past decade. Rural MPCE increased by 164 per cent and urban by 146 per cent between 2011-12 and 2022-23.

  5. HCES 2022-23 records the average MPCE to be Rs. 3,773 in rural areas and Rs. 6,459 in urban areas. This shows that the per capita expenditure is 71 per cent higher in urban areas than in rural areas. The survey also clarifies that these are nominal figures and do not take into consideration the price level differences in rural and urban areas.

  6. The survey classifies the recorded MPCE figures into 12 ‘fractile classes’: 0-5 per cent, 5-10 per cent, 10-20 per cent, 20-30 per cent and so forth, going from the lowest to highest expenditure recorded. For example, every recorded MPCE under Rs. 1,638 falls under the 0-5 per cent fractile class whereas an MPCE between Rs. 1,638 to Rs. 1,912 is in the 5-10 per cent fractile class.

  7. According to this distribution, the average Monthly Per Capita Consumption Expenditure (MPCE) of the top 5 per cent (95-100 per cent fractile class) of the rural population is Rs. 10,501, which is about 7.6 times the average MPCE of the bottom 5 per cent of the rural population – Rs. 1,373. In urban areas, this gap is more pronounced, with the average respective MPCEs being 20,824 and Rs. 2,001 – about 10.4 times higher.

  8. The survey highlights the extreme inequality in the percentage share of each fractile class in the total consumption expenditure. The first two fractile classes accounting for the bottom 10 per cent of rural population made up just 4.2 per cent of total consumption. Whereas the last two classes accounting for the top 10 per cent of the rural population made up a 22.7 per cent share. Among the urban classes, the bottom 10 per cent accounted for 3.5 per cent of the total consumption and the top 10 per cent accounted for 25.7 per cent.

  9. The survey also states that MPCE figures are, on average, highest for single-member households and lowest for households with 10 or more members. This trend is observed in both rural and urban areas.

  10. The survey also revealed a decline in the proportion of spending on food. For rural households, the share dropped from 52.9 per cent in 2011-12 to 46.4 per cent. Urban households also saw a decrease from 42.6 per cent to 39.2 per cent over the same period. This shift indicates a diversification in household spending towards non-food items such as healthcare, education, and transportation. It could also mean that people are spending less on food due to inflation.

  11. Over the years, there has been a decline in the share of food items like cereals, pulses and pulse products, sugar and salt in MPCE. However, the category of ‘processed food, beverages, etc’ has shown remarkable growth in its contribution to total MPCE in 2022-23 compared to earlier periods. The decline in the share of cereals has been the steepest, dropping (between 1999-200 and 2022-23) from 22.2 to 4.9 per cent in rural India and from 12.4 per cent to 3.6 per cent in urban India.

  12. Among non-food items, the highest share of expenditure was recorded on conveyance in both urban and rural India. In rural India, conveyance made up 14.1 per cent of total non-food expenditure, followed by medical (13.3 per cent), durable goods (12.9 per cent), and fuel and light (12.4 per cent). In urban India, however, conveyance (14.1 per cent) was followed by durable goods (11.8 per cent), miscellaneous goods, entertainment (10.8 per cent), fuel and light (10.3 per cent) and medical (9.7 per cent).

  13. As per state/union territory numbers, Sikkim had the highest MPCE figures (without imputation) in rural India with Rs. 7,731 whereas Chhattisgarh had the lowest at Rs. 2,466. In urban India, Chandigarh had the highest average MPCE with Rs. 12,575 and Chhattisgarh recorded the lowest – Rs. 4,483.


    Focus and Factoids by Arunima Mandwariya.


    PARI Library’s health archive project is part of an initiative supported by the Azim Premji University to develop a free-access repository of health-related reports relevant to rural India.

AUTHOR

National Sample Survey Office, Ministry of Statistics and Programme Implementation, Government of India

COPYRIGHT

National Sample Survey Office, Ministry of Statistics and Programme Implementation, Government of India

PUBLICATION DATE

07 Jun, 2024

TAGS

#national-sample-survey #hces #household-consumption-expenditure-survey #per-capita-consumption

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