India’s household consumption survey doesn’t feed public policy all that well
Subscribe to enjoy similar stories. India’s government recently released the findings of its 2023-24 survey of household consumption expenditure and expressed satisfaction at the seeming narrowing of spending gaps in society at large and between rural and urban populations. Such changes would, of course, be desirable.
However, we must not set too much store by the monthly per capita consumption expenditure (MPCE) figures of this sample survey. The aggregate consumption computed from these estimates does not add up to the annual private consumption expenditure logged in national income accounts. The shortfall is around 50% of the national income data.
While the latter would cover groups excluded from household surveys, such as prisoners and armed forces, that cannot explain the large gap between the two sets of data. There is a simpler explanation. Those at lower income levels tend to be more transparent about their consumption patterns with people who come around with survey questions than people who struggle to find time to fill their Instagram feeds with the destination weddings they have attended or the difference they noticed between the club scenes of Bangkok and Berlin.
What the country’s well-off spend cannot be gleaned from the information they deign to give surveyors. The survey found that the top five percentiles of the MPCE distribution have an average MPCE of less than ₹21,000 in urban India and less than ₹11,000 in rural areas. With the top percentile’s data likely to be the least reliable, we should view these figures as underestimates, given the scale of spending visible at high-end shopping malls, fancy restaurants, jewellery stores, holiday spots, music concerts and other sites of self-indulgence.
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