Long-awaited insights
Coming after an extensive gap of 10 years, excluding the 2017-18 edition, the Household Consumption Expenditure Survey (HCES) for 2022-23, released by the Ministry of Statistics and Programme Implementation (MoSPI), has filled a major void. Since it is one of the guiding lights of economic policy formulation in the country, the HCES’ absence had been insidiously affecting the nation. The government’s denial of HCES in 2017-18, citing inconsistencies in data, had created a furore then, and not without reasons. The survey back then had painted the state of the Indian economy in a grim light. However, the HCES for 2022-23, in sync with the factsheet presented a couple of months ago, has a lot of positives for the economic outlook. The resumption of HCES holds great significance because consumption is one of the four major engines of economic growth. In a populous country like India, the relevance of this very basic parameter only increases. The HCES 2022-23 indicates a significant shift in expenditure priorities among households, reflecting broader socio-economic changes.
Households across India, both in rural and urban areas, displayed a notable preference for ‘beverages, refreshments, and processed food’ in their consumption expenditure. This category commanded the highest share among food items in 2022-23. Of course, some states diverged from this trend. In rural areas, Haryana led in spending on ‘milk and milk products’ with 41.7 per cent of total food expenditure, while Kerala topped the list for ‘egg, fish, and meat’ at 23.5 per cent. This pattern was mirrored in urban areas where Rajasthan's households spent the most on ‘milk and milk products’ at 33.2 per cent, closely followed by Haryana and Punjab. For ‘egg, fish, and meat’, Kerala again had the highest expenditure at 19.8 per cent.
Interestingly, urban and rural spending patterns exhibited notable contrasts and similarities. In rural India, where food accounted for about 46 per cent of household consumption, ‘beverages, refreshments, and processed food’ held the largest share at 9.62 per cent, followed by milk and milk products (8.33 per cent), and vegetables (5.38 per cent). Cereals and cereal substitutes comprised 4.91 per cent of food expenditure. In urban India, food constituted approximately 39 per cent of the average monthly per capita consumption expenditure (MPCE). Similar to rural trends, ‘beverages, refreshments, and processed food’ led with a 10.64 per cent share, followed by milk and milk products (7.22 per cent), and fruits and vegetables each at 3.8 per cent. The growing similarity between rural and urban food consumption can be seen positively, for it signifies a levelling trend. The preference for refreshment and processed food is generally considered a marker of improved standard of living — in the present case, it permeates across rural and urban India. However, such trends may have their own shortcomings. Efforts should be made to ensure that a major part of people’s improved income is incurred on healthier food choices including cereals, pulses, fruits and vegetables.
Over the years, the share of non-food expenditure has increased. In rural areas, non-food spending rose to 53.62 per cent, up from 47.1 per cent in 2011-12. Urban areas saw even higher non-food expenditure at 60.83 per cent. These figures, highest in this century, reflect a growing emphasis on lifestyle and utility spending beyond basic food needs, which is indeed a positive sign. Medical expenses formed a crucial part of non-food expenditure. In rural areas, Kerala, West Bengal, and Andhra Pradesh had the highest shares, while in urban areas, West Bengal and Kerala led in medical spending. These numbers need to be read very carefully to elicit policy insights for making the healthcare sector more affordable, apart from accessible.
The most crucial reading from the survey, however, has been around the decline in inequality in the country. The reduction in the Gini coefficient, a measure of income inequality, indicates a positive trend towards more equitable income distribution. Rural areas saw the Gini coefficient drop from 0.283 to 0.266, while urban areas experienced a decline from 0.363 to 0.314, suggesting a narrowing income gap. Inequality, however, remains a controversial issue, and many experts would like to argue against what the HCES projects. There may be apprehensions around the accuracy of the survey findings, but the good thing is that they are back after a long lull. Reports suggest that the work on HCES for 2023-24 is underway.
