Household Consumption Expenditure Survey (HCES): 2023-24

The Household Consumption Expenditure Survey (HCES) 2023-24 has been recently released by the Ministry of Statistics and Programme Implementation (MoSPI).

What is the Household Consumption Expenditure Survey (HCES)?

• The Household Consumption Expenditure Survey (HCES) is conducted by the Ministry of Statistics and Programme Implementation (MoSPI).
• The survey collects data on what households in India spend on goods and services.
• This data helps in understanding trends in economic well-being, updating the Consumer Price Index (CPI), and measuring poverty, inequality, and social exclusion.
• The survey also helps update the basket of goods and services used for calculating the CPI and tracks changes in the standard of living.
• HCES 2023-24: Ongoing from August 2023 to July 2024. The summary results for this year have been released in the form of a factsheet.

Key Findings of HCES: 2023-24

Average Monthly Per Capita Consumption Expenditure (MPCE)

• Without imputed values for free items:
  • Rural MPCE: Rs 4,122
  • Urban MPCE: Rs 6,996
• With imputed values for free items (like government benefits):
  • Rural MPCE: Rs 4,247
  • Urban MPCE: Rs 7,078

Comparison with Last Year (2022-23)

• Nominal increase in MPCE (compared to 2022-23):
  • Rural areas: +9%
  • Urban areas: +8%
• Rural-Urban Gap:
  • The gap in MPCE has narrowed:
    • In 2022-23: 84% higher in urban areas
    • In 2023-24: 70% higher in urban areas
  • This means that rural consumption is growing at a faster pace.

 Increase in Consumption for Bottom 5-10%

• The bottom 5-10% of the population (ranked by consumption) has seen the highest increase in MPCE, both in rural and urban areas, indicating more inclusive growth.

Key Expenditure Patterns

 Rural vs Urban Expenditure

• Rural Areas:
  • Non-food items make up 53% of rural MPCE.
  • Major non-food expenditures include:
    • Conveyance (e.g., transport costs)
    • Clothing, bedding, and footwear
    • Miscellaneous goods & entertainment
    • Durable goods (e.g., vehicles, household appliances)
  • Urban Areas:
    • Non-food items make up 60% of urban MPCE.
    • Major non-food expenditures in urban areas are similar to rural areas but include rent (7% share in urban areas).

Food Expenditures

• Major food items contributing to household spending:
  • Beverages, refreshments, and processed foods
  • Milk & milk products
  • Vegetables

Inequality in Consumption

• Consumption Inequality: The survey measures how evenly or unevenly consumption is distributed across different households using the Gini coefficient.
  • Rural Areas: The Gini coefficient dropped from 266 in 2022-23 to 0.237 in 2023-24, indicating a decline in inequality.
  • Urban Areas: The Gini coefficient dropped from 314 in 2022-23 to 0.284 in 2023-24, also showing reduced inequality.

Fractile Analysis of MPCE

• MPCE across different income groups: The survey also divides households into fractiles (income groups) to show how different income groups are doing.
  • Bottom 5%:
    • Rural: Rs 1,677
    • Urban:Rs 2,376
  • Top 5%:
    • Rural: Rs 10,137
    • Urban: Rs 20,310
  • Growth in MPCE (from 2022-23 to 2023-24):
    • Bottom 5% rural: Increase of 22%
    • Bottom 5% urban: Increase of 19%

State-wise Variation

• Top States in MPCE:
  • Rural MPCE: Highest in Sikkim (Rs 9,377) and lowest in Chhattisgarh (Rs 2,739).
  • Urban MPCE: Highest in Sikkim (Rs 13,927) and lowest in Chhattisgarh (Rs 4,927).
• Top UTs in MPCE:
  • Chandigarh has the highest MPCE in both rural (Rs 8,857) and urban (Rs 13,425) areas.
  • Dadra and Nagar Haveli and Daman and Diu have the lowest MPCE in rural areas (Rs 4,311), while Jammu & Kashmir has the lowest in urban areas (Rs 6,327).

Key Observations

• Non-food Items Dominate Expenditure: Both in rural and urban India, non-food items contribute more to total consumption, with categories like conveyance, clothing, durable goods, and entertainment being major contributors.
• Consumption Patterns: In both rural and urban India, beverages and processed foods contribute the most to food-related expenditure.
• Improvement in Inequality: There is a clear decline in income inequality between 2022-23 and 2023-24, both in rural and urban areas.