HCES 2023-24: Rising Food Expenditure, Narrowing Urban-Rural Gap, and Declining Inequality Highlight India’s Shifting Consumption Trends

(Source: Indian Express; Section: Cover Page; Page: 01)

Analysis of News:   

About Household Consumption Expenditure Survey (HCES)

• Objective: It is designed to collect information on the consumption of goods and services by households.
• Conducted by: NSSO under the Ministry of Statistics and Programme Implementation (MoSPI) has been conducting HCES at regular intervals.
  • Initially, the NSSO was conducted HCES every year (starting 1950-51). However, since its 26th round, the survey has been conducted roughly every 5 years. (The 2017-18 Survey was discarded by the government citing ‘Data Quality’ issues.)
• Utility of HCES: The data is useful for understanding consumption and expenditure patterns, standard of living and well-being of households.
  • It can play a key role in reviewing critical economic indicators, including GDP, poverty levels, and Consumer Price Inflation.                                                                      

Rising Food Expenditure Trends

• The Household Consumption Expenditure Survey (HCES) 2023-24 reveals a reversal in the declining trend of food expenditure’s share in monthly consumption.
• Rural households allocated 47.04% of their expenditure to food in 2023-24, up from 46.38% in 2022-23, while urban households increased their share from 39.17% to 39.68%.
• This rise is likely driven by higher food prices, given the nominal figures.

Narrowing Urban-Rural Gap in Spending

• The gap in average monthly consumption expenditure between rural and urban households continued to shrink, reaching 69.7% in 2023-24, compared to 71.2% in 2022-23 and 83.9% in 2011-12.
• Rural per capita spending increased by 9.3% to ₹4,122, outpacing urban spending growth, which rose to ₹6,996.
• This reflects faster consumption growth in rural areas, contrasting with a moderation in urban consumption.

Consumption Patterns Across Income Groups

• Consumption spending rose across all income groups except the top 5% of rural and urban populations, whose spending declined.
• The bottom 20% recorded the highest percentage increase in spending, with rural spending rising by 19.2% and urban spending by 18%.
• Experts attribute these trends to potential methodological changes or variations in respondent data, necessitating further validation.

Reduced Consumption Inequality

• The Gini coefficient for consumption inequality declined significantly, from 0.266 to 0.237 in rural areas and from 0.314 to 0.284 in urban areas.
• This indicates a more equitable distribution of consumption growth across income groups, driven partly by social welfare programmes that bolstered spending among lower-income households.

Food and Non-Food Expenditure Breakdown

• The share of expenditure on cereals, beverages, and processed foods rose slightly in rural and urban households.
• Non-food expenditure accounted for 52.96% and 60.32% of spending in rural and urban areas, respectively, with key contributors including conveyance, medical expenses, and rent.

Regional Disparities in Spending

• State-wise data highlight disparities in consumption patterns, with higher per capita spending in western and southern states like Maharashtra, Kerala, and Gujarat, and lower spending in eastern and central states like Bihar, Odisha, and Uttar Pradesh.
• Rajasthan presented a unique case with higher rural spending but lower urban spending compared to the national average.

Conclusion: Insights from Consumption Trends

• The HCES 2023-24 underscores shifting consumption dynamics, with rural areas driving growth, declining inequality, and changing food and non-food expenditure patterns.
• While the data reflects positive trends in inclusivity, regional and income-based disparities warrant targeted policy interventions to ensure sustained and balanced growth.

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