The Household Consumption Expenditure Survey (HCES) is designed to collect information on consumption of goods and services by the households. The information collected in HCES helps to understand the consumption and expenditure pattern, standard of living and well-being of the households.
Massive Surge in India’s Consumption Over the Decade
According to the “Household Consumption Expenditure Survey-2023-24,” the average MPCE (Monthly Per Capita Consumption Expenditure) is Rs. 4,122 in rural India and Rs. 6,996 in urban India, marking a rise of 188% and 166% respectively from 2011-12. The survey also highlighted that there is a positive trend of improvement in consumption expenditure over the last decade.
Some Pertinent Points from the Report
Positive Trend of Improvement in Consumption Expenditure over the Last Decade: Over the past decade, India’s economic landscape has witnessed a transformative surge in consumption patterns. The latest Household Consumption Expenditure Survey (2023-24) presents a clear picture of this transformation. Comparing with the HCES: 2011-12, the data highlights a remarkable trend: consumption levels at current prices have nearly tripled in both rural and urban areas. This significant rise reflects the economic empowerment and increased purchasing power of Indian households across the country.
A comparison of MPCE figures of 2023-24 with that of 2011-12 reveals that over a period of more than 10 years, at current prices, it has become nearly triple in rural as well as in urban India.
The growth of MPCE at current price in rural and urban India has been 188% and 166%, respectively during this period.
Urban-rural Gap Narrows down Further
The evolving consumption landscape of India over the past decade reveals a significant narrowing of the urban-rural divide, further emphasizing the country’s economic growth and improving quality of life across both regions. This narrowing gap is not just a statistical achievement but a reflection of India’s broader economic transformation, where rural India is no longer lagging behind but increasingly contributing to the nation’s overall consumption-driven growth.
The urban-rural gap in MPCE has declined to 70% in 2023-24 from 84% in 2011-12. This shows the decline of 16%. The urban-rural gap MPCE was 71% in 2022-23. This reflects a sustained momentum of consumption growth in rural areas.
The decline in India’s Gini coefficient, a key measure of income inequality, reflects a significant shift toward more equitable economic growth over the past decade. The HCES: 2023-24 highlights a notable reduction in the Gini coefficient for both rural and urban India, signalling a decrease in consumption inequality across the country. The reduction in consumption inequality is a direct reflection of the successful measures taken by the government over the past decade. Targeted welfare schemes, rural development programs, and policies aimed at improving access to education, healthcare, and financial inclusion have contributed to a more balanced distribution of wealth and consumption.
Comparison of the Gini coefficient from HCES: 2023-24 to those from 2011-12 shows a decline, from 0.283 in 2011-12 to 0.237 in 2023-24 for rural India and from 0.363 in 2011-12 to 0.284 in 2023-24 for urban India.
The report reveals a significant shift in spending patterns across India, which is moving beyond basic needs and increasingly allocating more towards non-food items. For the first time since independence, rural India crossed a significant threshold in its spending habits in 2022-23. The share of non-food expenses in household budgets surpassed 50% in 2022-23, marking a monumental shift from subsistence to aspiration-driven consumption. The latest report reaffirms this trend, showcasing that non-food expenditure continues to dominate rural spending patterns.
This shift in consumption patterns, particularly the growing focus on non-food items, is a direct reflection of the government’s successful policies and initiatives. Programs designed to boost rural incomes, improve access to credit, enhance infrastructure, and provide social security have all played a role in empowering rural households to move beyond just meeting basic needs.
As a result, rural India is now enjoying a higher standard of living, with greater purchasing power and improved access to a wider range of goods and services.
According to the HCES:2023-24, across India, the households are observed to spend more on non-food items with share of non-food items in average MPCE being 53% and 60% in rural and urban areas, respectively.
The comparison of HCES: 2023-24 to 2011-12 shows that the share of non-food items in the average monthly per capita expenditure (MPCE) has increased from 47.1% to 53% in rural areas and from 57.38% to 60% in urban areas.
Beverages, refreshments and processed food continues to have the major expenditure share in 2023-24 in the food items basket of the rural and urban households.
Conveyance, clothing, bedding & footwear, miscellaneous goods & entertainment and durable goods have major expenditure share in non-food expenditure of the households in both rural and urban areas. Rent consisting of house rent, garage rent and hotel accommodation charges with about 7% share is another major constituent of the urban households’ non-food expenditure.
(Courtesy: PIB)
