Himanshu: What consumption data reveals of India’s economy

Subscribe to enjoy similar stories. Earlier this year, the National Statistical Office (NSO) released the report for the Household Consumption Expenditure Survey (HCES) for the period August 2023 to July 2024. This is the second in the series of HCES data after the HCES 2022-23, for which a fact sheet was released just before the announcement of general elections in 2024.

Its findings led to claims by the Niti Aayog that India had eliminated extreme poverty. Similar claims have been made after the release of HCES 2023-24. The two back-to-back surveys are important data sources, with the HCES being a necessary input for India’s statistical system.

Two of our most important indicators of economic activity—National Accounts and price indices—are revised using the HCES. However, the NSO, which produces the HCES data, has never released estimates of poverty. That responsibility always lay with the Planning Commission (and now Niti Aayog).

This body was also tasked with official releases of poverty lines to be used for estimating poverty. Unfortunately, India does not have an official poverty line that can be applied to HCES data. The last official poverty line was set by the Tendulkar committee, but it was meant to be applied to an estimate of consumption expenditure that is conceptually, statistically and methodologically different from what HCES 2022-23 and 2023-24 have given us.

The only poverty line that could be applied to the latest HCES data is the poverty line suggested by the Rangarajan committee in 2014, which was never accepted officially. But even with this poverty line, changes in sampling, data- collection methodology and coverage of items make HCES 2022-23 and 2023-24 non-comparable with earlier rounds. The