How consumption patterns narrowed in last 2 decades

The Central government last month released the consumption/consumer expenditure survey report after over a decade. The National Sample Survey Office (NSSO) has been conducting these surveys regularly and the 68th survey, the last one, was done in 2011-12. Due to the pandemic, the earlier scheduled survey couldn’t be completed as planned while the latest covers the 2022-23 period titled “Household Consumption Expenditure Survey”.

The comprehensive survey covered the whole country except a few inaccessible villages in Andaman and Nicobar Islands. The information in the survey was collected from 8,723 villages, 6,117 urban blocks over the entire country covering 2,61,746 households (1,55,014 in rural & 1,06,732 in urban areas). The consumption basket of items has been divided into three broad categories, viz, food items, consumables, services items and durable goods for the survey.

Three separate questionnaires covering the three categories have been designed and canvassed in the selected households in three separate monthly visits in a quarter. Another questionnaire has also been used to collect information on household characteristics and the demographic particulars of the members of the households. All possible sequencing of the three questionnaires has been used in the survey to eliminate any bias due to the adoption of any particular sequencing of the questionnaires. The average Monthly Per Capita Consumption Expenditure (MPCE) in 2022-23 has been Rs 3,773 in rural India, Rs 6,459 in urban India. The share of food is 46 per cent and 39 per cent respectively while non-food is 54 per cent and 61 per cent for rural and urban India. Interestingly, the dichotomy of the 5 per cent population at the bottom and top, has an average MPCE of Rs 1,373 and Rs 10,501 for rural India respectively, for urban India it is Rs 2,001 and Rs 20,834.

Among the States, Sikkim has the highest MPCE in both rural and urban areas with Rs 7,731 and Rs 12,105 respectively while Chhattisgarh has the least at Rs 2,466 and Rs 4,483. The rural-urban difference in average MPCE amongst the states is highest in Meghalaya at 83 per cent followed closely by Chhattisgarh at 82 per cent. Among the Union Territories, the highest is in Chandigarh (rural-Rs 7,467 & urban-Rs 12,575) and lowest in Ladakh (Rs 4,035).

From the trend in the level of consumption, the difference as a percentage of rural MPCE (for urban) narrowed in the last two decades to 71.2 per cent from the high of 2004-05 at 90.8 per cent. It’s not just the share of food in MPCE is coming down (from 59.4 per cent for rural in 1999-00 to 46.38 per cent in 22-23 and from 48.06 per cent to 39.17 per cent for urban) but the percentage share of cereals in average MPCE has also come down (for rural from 22.23 to 4.91 and 12.39 to 3.64 in urban)

Within the food items, there’s a stark difference in the percentile breakup of MPCE between rural and urban in egg, fish & meat at 4.91 and 3.57 respectively while in the non-food items category pan, tobacco & intoxicants stands at 3.79 and 2.43, medical at 7.13 and 5.91 respectively for rural and urban. The trend in percentage composition of MPCE for food items has negligible difference on cereal substitutes at 0.02 while the highest has been seen in beverage and processed food at 9.62 for rural India followed by milk and milk products at 8.33. In the non-food category the highest difference has been conveyance at 7.55 per cent followed by durables at 6.89 and fuel & light at 6.66 reflecting the growing consumption story.

Similar categories impact the urban in food category with beverages and processed food at 10.64 while milk and milk products at 7.22 per cent. In the non-food category conveyance is at 8.59, followed by durable goods at 7.17 and fuel and light at 6.26. However, rent occupies 6.26 per cent for urban consumers versus a mere 0.78 in the rural.

On an average the MPCE household type self-employed in agriculture is Rs 3,702 and in the non-agriculture it stands at Rs 4,074 as against Rs 6,067 in urban. Rural casual non-agriculture labor has average MPCE of Rs 3,315 vs Rs 4,379 in urban while that of regular wage/salaried of earnings in non-agriculture in rural is at Rs 4,533 vs Rs 7,146 in the urban areas.

(The author is a co-founder of “Wealocity”, a wealth management firm and

could be reached at knk

@wealocity.com)