THE National Statistical Office has recently released the fact sheet of Household Consumption Expenditure Survey 2023-24. It is the second survey report of the annual series that begun in 2022-23 after a long gap since the 68th Round Consumption Expenditure Survey released by the government in 2011-12. The government seems to be comfortable to release this report this time as the Monthly Per Capita Consumption Expenditure (MPCE) has increased from Rs 3,773 in 2022-23 to Rs 4,122 in 2023-24 in rural India and from Rs 6,459 to Rs 6,996 in urban India respectively. These imply 9.25 and 8.31 per cent growth in consumption expenditure in rural and urban India respectively. Netting inflation rate of 6 per cent for general Consumer Price Index and 9 per cent plus food inflation such nominal growth shows hardly any increase in real consumption expenditure compared to the last year. The government also claims that the inequality measured by Gini Coefficient of total consumption expenditure has fallen from 0.226 in 2022-23 to 0.237 in 2023-24 for rural India and for urban India it has come down from 0.314 to 0.284 in case of urban India. This apparently contradicts the glaring fact that inequality in income has been rising sharply in case of India, while inequality in terms of consumption expenditure seems to have declined marginally.

The NSO divides the consumption expenditure distribution into 12 fractile classes. The bottom class represents the poorest 5 per cent of the consumption distribution and the topmost fractile represents the richest 5 per cent of Indian consumers. The distribution is divided with a range of 5 per cent for two top and bottom classes and the rest are divided with a range of 10 per cent for the eight fractile classes in between. In 2023-24 the average consumer in the top 5 per cent consumes more than six times what a poor person consumes on an average. This apparently seems to be modest compared to inequality in income and wealth because as income increases the share of consumption expenditure in total income of a person declines. As people grow richer, consumption expenditure grows slower than the growth in income or assets. On the other hand, larger proportion of increased income is spent by poorer people in consumption and inequality in terms of consumption is expected to be much lower than inequality in income or wealth.

FOOD AND NON-FOOD SHARE

One important trend in consumption expenditure that has been noticed in the past decades is the declining share of food in average MPCE both in rural and urban areas. On an average the share of food in consumption expenditure has come down from 52.9 in 2011-12 to 47.04 per cent in 2023-24 in rural India and from 42.62 to 39.68 in urban India respectively. One argument could be, as per capita income increases the share of food in total consumption expenditure declines and within the food group the share of cereals declines. As incomes grow, people spend increasing share of their income on non-food and within food spend more on oil, vegetables, egg, fish, meat and fruits while consumption of cereals as proportion to total food expenditure declines. This dietary change also occurs because of change in the labour process, as both in urban and rural production activities, with increased mechanisation less physical energy is required compared to the past. The share of food as part of consumption expenditure may fall even if the real consumption of food might have increased in absolute terms but the expenditure on non-food might have grown much faster. For the poorest class, the share of expenditure on food out of total consumption expenditure is more than 60 per cent while in the case of the richest class, it turns out to be close to 20 per cent only. In other words, the gap between expenditure on food and non-food increases faster in the case of richer classes. What seems interesting in the recently released report is a reversal of this long period trend, that is the share of food in total consumption expenditure on an average has increased compared to the last year. It has marginally increased from 46.38 to 47.04 per cent in case of rural consumers and from 39.17 to 39.68 in the case of urban consumers. This may not indicate that the people on average are consuming more food compared to previous year, but it might be because food inflation in most part of the year had been higher than the inflation recorded for other consumer goods. In that case as food prices rise in higher proportions compared to other commodities and since people hardly cut down food consumption, the share of food in total consumption expenditure records a rise.

CHANGE ACROSS CLASSES

The consumption expenditure surveys over the years also underline some crucial trends in the distribution of consumption of non-food items. There has been considerable increase in expenditure on education and medical services in the past decades. This might be a combined effect of two processes. One is increased awareness about health care and the necessity of education, and the other factor is of course the growing commercialisation of both health care and education which was largely accessible by the poor and the middle class earlier through public provisioning. Expenditure on medicine has sky-rocketed in the past decade and consumption based on EMI has increased manifold. Increased financialisation of consumption has impacted expenditure patterns across classes. Rise in fuel prices also impact consumption expenditure of different classes. Expenditure on cooking fuel has increased significantly in the past decades. Also, studies show there had been very high expenditure on tuition fees incurred by both rural and urban households for their children and the incidence is expectedly higher for the poorer classes. The most significant increase in non-food expenditure on an average in the past decade had been on communication. Use of cell phones has increased across classes and in many cases, this has become almost unavoidable for many private and public transactions. Increased digitalisation further makes use of cell phones almost non-discretionary. Internet use is also on the rise but the gap in expenditure between the rich and the poor continues to be high.

What is important in these changing scenarios of consumption expenditure is the redrawing of the boundary between discretionary and non-discretionary consumption expenditure across classes. Expenditures which are discretionary are in some sense avoidable if needed like those on entertainment or on eating out and those which are unavoidable such as expenses on food, medical care, rent or EMI for housing and so on. It is evident from the emerging patterns of consumption expenditure in the past few decades that many items of consumption which were earlier considered to be discretionary have become non-discretionary across classes. The consumption needs of the working people also undergo change, and this is determined by change in the labour process, cultural processes and the changing distribution of public and private domains of consumption. For the poorest class, rise in food prices may reduce consumption of food leading to nutritional deficit but for the other lower and middle classes, availability of health care, education and communication have emerged to be important components of consumption demand. Therefore, movements for better living for the working people need to focus on these important elements that constitute changing necessaries of working-class lives.