The average monthly consumption expenditure of households in both urban and rural India has increased further in 2023-24 from 2022-23 with the trend of greater spending on non-food-items continuing. However, there continues to remain a sharp gap between the average consumption expenditure between the top 5% and the bottom 5% in both urban and rural India as well as average spending in the top 5% in urban and rural India.
As per the findings of the Household Consumer Expenditure Survey 2023-24 that was released on Friday, the average Monthly Per Capita Consumption Expenditure (MPCE) in rural and urban India in 2023-24 has been estimated to be Rs. 4,122 and Rs. 6,996, respectively without considering the values of items received free of cost by the households through various social welfare programmes.
This amounted to an increase by about 9% in rural areas and 8% in urban areas from the level of 2022-23 of Rs 3,773 and Rs 6,459 respectively.
Considering the imputed values of items received free of cost through various social welfare programmes, these estimates become Rs 4,247 and Rs 7,078 respectively, for rural and urban areas.
“Consistent with the trend observed in HCES:2022-23, non-food items remain the major contributor to the household’s average monthly expenditure in 2023-24 with about 53% and 60% share in MPCE in rural and urban areas respectively,” said an official release by the Ministry of Statistics and Programme Implementation.
This is the second round of household consumption expenditure survey in recent years and was carried out between August 2023 and July 2024. Prior to this, the HCES 2022-23 was carried out between August 2022 and July 2023. The data is expected to help the government update the baskets of the consumer price index, which is used to measure retail inflation in the country. It also gives a sense to policymakers and companies about the consumption patterns of households and their income levels.
“The survey provides data required to assess trends in economic well-being and to determine and update the basket of consumer goods and services and weights used for the calculation of the Consumer Price Index. Data collected in HCES is also used to measure poverty, inequality, and social exclusion,” said the release.
Major spending items:
The major contributors in the non-food expenditure of the households in 2023-24 have been conveyance, clothing, bedding and footwear, miscellaneous goods and entertainment and durable goods. “Rent with a share of around 7% is another major constituent of households’ non-food expenditure in urban India,” showed the data.
In food items, beverages and processed food continues to be the major contributor in total consumption expenditure of food items in 2023-24, followed by milk and milk products and vegetables. Households in both urban and rural India are spending marginally more on beverages and processed foods, vegetables and fruits, animal proteins including egg, meat and fish in 2023-24 from 2022-23.
Spending divide:
The data revealed that the bottom 5% of India’s rural population, ranked by MPCE, has an average MPCE of Rs 1,677, which is a 22% jump from 2022-23 when the MPCE for this segment was Rs 1,373. The MPCE for the bottom 5% of the urban population rose to Rs 2,376 in 2023-24, which is a 19% rise from Rs 2,001 in 2022-23.
The gap between monthly spending of the top 5% of urban households remains nearly double of the top 5% rural households. The top 5% of India’s rural and urban population, ranked by MPCE, has an average MPCE of Rs 10,137 and Rs. 20,310, respectively.
The urban-rural gap in MPCE has declined to 71% in 2022-23 from 84% in 2011-12, said the release, adding that it has further come down to 70% in 2023-24 that confirms sustained momentum of consumption growth in rural areas.
It further stated that consumption inequality, both in rural and urban areas has declined from the level of 2022-23. The Gini coefficient has declined to 0.237 in 2023-24 from 0.266 in 2022-23 for rural areas and to 0.284 in 2023-24 from 0.314 in 2022-23 for urban areas.