Why in the News?

Recently, the government has disclosed the broad findings of the All India Household Consumption Expenditure Survey conducted between August 2022 and July 2023.

About All India Household Consumption Expenditure Survey (CES):

The CES is a quinquennial (recurring every five years) survey conducted by the National Statistical Office (NSO).
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.
It helps generate estimates of household Monthly Per Capita Consumer Expenditure (MPCE) as well as the distribution of households and persons over the MPCE classes.

Rise in Monthly Per Capita Consumption Expenditure:
- Urban: Witnessed a 33.5% increase to ₹3,510.
- Rural: Marked a 40.42% surge to ₹2,008 since 2011-12.

Shift in Spending Pattern:
- Food Expenditure: Decreased from 52.9% to 46.4% in rural households and from 42.6% to 39.2% in urban households since 2011-12.
- Implications: Potential impact on retail inflation calculations due to reduced weightage of food prices.

Inclusion of Social Welfare Benefits:
- Separate calculation for items received through schemes like PM Garib Kalyan Ann Yojana.
- Items Included: Computers, mobile phones, bicycles, and clothing.

Adjusted Monthly Per Capita Expenditure:
- Rural: ₹2,054;
- Urban: ₹3,544 (excluding free education and healthcare sops).

Socio-Economic Disparities:
- Bottom 5%: Rural – ₹1,373; Urban – ₹2,001.
- Top 5%: Rural – ₹10,501; Urban – ₹20,824.

State-wise analysis:
- Sikkim: Highest MPCE – Rural: ₹7,731; Urban: ₹12,105.
- Chhattisgarh: Lowest MPCE – Rural: ₹2,466; Urban: ₹4,483.

Broad-based Growth:
- Rural-Urban Dynamics: B.V.R. Subrahmanyam, CEO of Niti Aayog, highlights that India’s growth story is “broad-based,” with rural incomes and expenditures outpacing those in urban areas.
- Narrowing Divide: The urban-rural consumption gap has decreased from 91% in 2004-05 to 71% in 2022-23, indicating diminishing inequality.

Shifts in Consumption Patterns:
- Food Expenditure: Rural households’ spending on food has fallen below 50% of their total expenditure for the first time. Lower spending on staples like pulses and cereals is accompanied by increased expenditure on consumer durables and services.
- Income Growth: Rising expenditures on items such as TVs, fridges, and mobile phones suggest improved incomes and evolving lifestyles.

Changing Poverty Metrics:
- Poverty Estimates: Based on MPCE averages, poverty levels are projected to be below 5%, according to Mr. Subrahmanyam. Informal estimates indicate a decline in poverty, with destitution nearly eradicated due to various welfare schemes.
- Inclusive Growth: Government initiatives such as Ayushman Bharat and free education have contributed to lifting millions out of poverty, reflecting a multi-dimensional approach to poverty alleviation.