Dr. Tulika Devi
(tulika29thjan@gmail.com)
The Household Consumption Expenditure Survey (HCES) is designed to collect information on households’ consumption of goods and services, encompassing auxiliary details on household characteristics and demographic particulars. The HCES data serves as a crucial tool for understanding consumption and expenditure patterns, assessing the standard of living, and gauging the overall well-being of households. Additionally, the data from HCES provides budget shares of different commodity groups that are used for the preparation of the weighting diagram for the compilation of official Consumer Price Indices (CPIs).
The latest iteration, HCES: 2022–23, covered the entirety of the Indian Union, with the exception of a few inaccessible villages in the Andaman and Nicobar Islands. The extensive survey gathered information from 8,723 villages and 6,115 urban blocks, spanning the entire country and encompassing 2,61,746 households, of which 1,55,014 were in rural areas and 1,06,732 in urban areas. The survey was conducted from August 2022 to July 2023.
The survey results shed light on the economic disparity, with the bottom 5% of India’s rural population, based on Monthly Per Capita Expenditure (MPCE), having an average MPCE of Rs. 1,373, contrasting with Rs. 2,001 for the same category in urban areas. Conversely, the top 5% in both rural and urban populations, ranked by MPCE, exhibited significantly higher averages, reaching Rs. 10,501 and Rs. 20,824, respectively. The consumption survey by the Statistics Ministry highlights a striking discrepancy, showing that the Monthly Per Capita Expenditure (MPCE) of the top 5% of the population in India is nearly 10 times more than that of the lower 5% in urban areas. Statewise, the survey identifies Sikkim with the highest MPCE in rural areas (Rs. 7,787) and Chandigarh as leading in urban areas (Rs. 12,577). In contrast, Chhattisgarh records the lowest MPCE in both rural (Rs. 2,575) and urban (Rs. 4,557) areas. Assam, meanwhile, reports an average MPCE of Rs. 3,546 in rural areas and Rs. 6,210 in urban areas. For all of India, it is Rs. 3,860 in rural areas and Rs. 6,521 in urban areas. These insights underscore the diverse economic landscape across different states and territories in India.
The expenditure on food and non-food items reveals significant distinctions between rural and urban areas based on the Monthly Per Capita Expenditure (MPCE) data. In rural regions, the MPCE stands at Rs. 3,860, while in urban areas, it is Rs. 6,521. Notably, the expenditure ratio between food and non-food items shows a nearly equal split in rural India (47.47% on food and 52.53% on non-food). However, in urban areas, there is a more pronounced divide, with 39.7% allocated to food and 60.3% to non-food.
Examining rural food expenses, the predominant spending is on beverages, refreshments, and processed food, including purchased cooked meals. This is followed by allocations for milk and milk products, cereals, cereal substitutes, vegetables, eggs, fish, meat, fruits, edible oil, spices, pulses, and related products, along with gramme, sugar, and salt. Non-food expenditures in rural areas are primarily directed towards conveyance, medical expenses, durable goods, fuel and light, miscellaneous goods, entertainment, clothing, bedding, footwear, consumer services excluding conveyance, pan, tobacco, intoxicants, education, rent, taxes, and cesses.
In urban areas, the expenditure pattern on food items differs, with notable spending on beverages, refreshments, processed food (including purchased cooked meals), followed by milk and milk products, cereals, cereal substitutes, fruits, vegetables, eggs, fish, meat, edible oil, spices, pulses, their products, and sugar and salt. Conversely, non-food expenses in urban areas are predominantly focused on conveyance, durable goods, miscellaneous items, entertainment, rent, fuel and light, medical expenses, consumer services excluding conveyance, education, clothing, bedding, footwear, pan, tobacco, intoxicants, taxes, and cesses. These insights underscore the diverse spending habits of rural and urban populations in India.
Over the period from 1999–2000 to 2022–23, a notable shift in spending patterns was observed, indicating changing consumer preferences in both rural and urban areas of India. Specifically, there has been a decline in the share of spending on cereals in both areas. Simultaneously, expenditures on education and conveyance have witnessed an upward trend.
In rural areas, the percentage of spending on non-food items has seen a considerable increase, rising from 40.60% to 52.53% over the specified time frame. This suggests a shift towards allocating a larger portion of the budget to non-food categories, reflecting changing lifestyle choices and priorities in rural households. Similarly, urban areas have experienced a parallel trend, with the percentage of expenditure on non-food items rising from 51.94% to 60.30%. The data indicates an evolving spending pattern in urban households, where there is a growing emphasis on non-food items compared to the past. This shift in spending patterns reflects changing consumer behaviour and priorities over the years. The increased allocation towards non-food items, coupled with the reduced emphasis on cereal spending, suggests evolving lifestyle choices and a growing focus on sectors such as education and conveyance.