The consumption expenditure survey offers us food for thought

A look at food spending patterns would raise questions of nutrition and government relief efforts

is associate professor at Jawaharlal Nehru University and visiting fellow at the Centre de Sciences Humaines, New Delhi

After a gap of more than a decade, Household Consumption Expenditure Survey (HCES) data was released by the National Statistical Office (NSO). The last officially available survey is from 2011-12. HCES findings are crucial for understanding the level and distribution of consumption expenditure across households and commodities in India. Updates of National Accounts and the Consumer Price Index (CPI) are also done with data drawn from the HCES. While no convincing reason was provided for junking the 2017-18 survey, the long gap has meant that most of our macro indicators are outdated.

In this context, the release of 2022-23 HCES data is welcome, even though the fact sheet released offers an incomplete view. Once data for the 2023-24 round is available as well, we will get valuable insights into India’s changing consumption patterns. Since significant changes were made in the survey’s design, including its sampling process and other aspects of methodology, we need to be cautious in comparing the new findings with earlier data. While the HCES 2022-23 may not be suited for any analysis of changes in poverty and inequality over the last decade, it is certainly useful for the limited purpose of revising National Accounts and price indices. But even for this, the data needs corroboration with other sources. That exercise is only possible once we not only have unit-level data for 2022-23, but also findings of the 2023-24 follow-up survey.

All the same, it is clear that Indian expenditure on cereals and pulses as a share of total spending is declining, with rising shares of milk, meat and fruits. What matters more is the real expenditure on food items. In case of cereals, an inflation-adjusted decline is seen between 2011-12 and 2022-23. This could partly be due to a long-term trend of declining spending on cereals, but also due to expanded coverage of the Public Distribution System (PDS) after the enactment of the National Food Security Act (NFSA). During 2022-23, households also benefited from an expansion in the food quantity available as part of the PM-Garib Kalyan Anna Yojana (PMGKAY), with 5kg more of grains given out till December 2022. What is puzzling is the decline seen in real spending on pulses, an important source of protein in India. While it is hard to estimate the quantity consumed per person, a drop may have implications for calorie intake and nutrition.

As part of the survey’s changes, the NSO also attempted to impute the value of free transfers or the value of subsidized goods and services provided to households. The imputed value of these transfers is surprisingly low, at ₹87 per capita in rural areas and ₹62 per head in urban zones. For the country as whole, it is ₹129,910 crore in current prices, with a large part of the total accounted for by a cereal subsidy, at ₹122,772 crore. Even this food subsidy figure is low compared to the reported expenditure on free foodgrain provision under the PMGKAY at more than ₹250,000 crore. Less than half of this sum appears to be reaching actual beneficiaries. The figure for non-food subsidies on items like free uniforms, bicycles and other durables is only ₹7,138 crore. Since it includes subsidies given by state governments, the amount reported by households is barely a fraction of what governments report. It is likely that only a small part of the reported subsidies reach their intended beneficiaries because of leakages and corruption, which raises fresh questions of distributive efficiency under the country’s ‘freebies’ debate.

Lastly, state-level patterns from the fact sheet suggest relatively uneven progress across states as far as changes in consumption expenditure are concerned. While Bihar, Tamil Nadu and Odisha report the highest rate of growth in rural and urban areas, richer states such as Kerala, Punjab and Haryana report the lowest growth among major states. The varying performance of states needs careful examination of underlying changes in consumption patterns and also the nature of governance in these states.

While the information available from the HCES fact sheet is unlikely to resolve the contentious issue of what happened to poverty reduction after 2011-12, it does point to changes in consumption patterns that require detailed analysis. Since this exercise calls for unit-level data, we need the full report. This will not only help unravel some mysteries of consumption expenditure, it will also be an important step in restoring the credibility of the country’s statistical system.