Privatisation Augments Share of Non-Food expenditure
Sanjay Roy
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THE ministry of statistics and programme implementation has recently released the findings of the Household Consumption Expenditure Survey (HCES) conducted during August 2022 to July 2023. Household consumption surveys earlier were conducted every five years but the last HCES was conducted in 2011-12. In between one HCES was conducted and the report was not made public as that showed a decline in consumption expenditure which could have been a cause of embarrassment for the existing government. Hence after more than a decade we are able to know the consumption patterns of average Indian households of rural and urban India.
Periodic consumption expenditure surveys show how Indian households consume food and non-food items and since poverty line is usually defined by minimum calorie intake and consumption of minimum non-food necessaries, HCES enables the estimate of the number of people below the poverty line. The current survey collects data from 2.6 lakh households and the sample covers both rural (1.5 lakh) and urban (1.1 lakh) households. The sampling techniques are well defined by the NSSO and define the stratum and sub-stratum of the sample as constructed in respective surveys. Findings from various surveys are comparable only when the construction of the sample remains same and poverty lines as well as distribution of households below and above the poverty line can also be compared across surveys when the sampling stratum remains same. This time the survey also includes imputed values of items received free of cost through social transfer schemes. The fact is during previous surveys even if many people received food or various non-food items such as health service or education as part of public provisioning were not imputed into household expenditure.
SAMPLE CONSTRUCTION AND COMPARABILITY
The NITI Aayog claims that the percentage of people below the poverty line has come down to 5 per cent according to the recent survey results. It is important to note that the sampling stratum and substratum has undergone change in the current survey in terms of defining rural and urban stratum. It categorises rural on the basis of distance from district headquarters rather than household status and activity and urban on the basis of population and affluence status rather than monthly per capita income. In terms of categorising rural households the parameter chosen is access and ownership of land which actually underrepresents the vast section of rural population who are landless and constitutes the majority of the rural population. In the urban segment, substratum has been defined by availability of four-wheeler cars for non-commercial use with price of more than Rs 10 lakhs and less than Rs 10 lakhs and households without cars. Only 8 per cent of the people of India own a car and hence categorisation of urban households having access to cars grossly underrepresents the vast majority of the poor urban population. In other words the sample unlike previous rounds of survey is biased towards the well-to-do and that influences the outcomes of the survey. It is therefore difficult to compare the findings of the current survey with the earlier ones. Secondly, consumption expenditure survey estimates expenditures on various items of food and non-categories and these do not remain same. It is true that average consumption baskets change overtime and the boundaries of discretionary and non-discretionary expenditures change as well. With the change in work patterns use of human energy in the work process also changes and hence the mix of necessities undergo change overtime. Undoubtedly there is a need to revise the list of items considered in food and non-food categories for the survey over time but then that also demands a redefining of the poverty line according to changing consumption patterns. This is precisely the reason why poverty estimates need to be revisited. The current survey, includes new items but uses the earlier poverty line and with a sample that is biased in favour of the relatively well to do households, infers that people below the poverty line has declined.
The average monthly per capita consumption in India according to HCES 2022-23 is Rs 3773 in rural India and Rs 6459 in urban India. For rural households the share of food in total expenditure is 46 per cent and that in non-food is 54 per cent. In the case of urban households share of food and non-food is 39 and 61 per cent respectively. The bottom 5 per cent of the rural population in terms of monthly consumption expenditure spend Rs 1373 per month while the richest 5 per cent in rural areas consume on an average worth Rs 10,501. Hence the top rich consumes 7.6 times what the poor consumes and this difference was 6.8 times in the previous HCES 2011-12. In the urban area the difference has marginally come down from 12.9 times to 10.4 times in the two successive surveys. Also it is important to note that this time we are comparing consumption expenditure with a gap of eleven years. The two previous rounds of HCES 2009-10 and 2011/12 also showed expectedly a rise in consumption expenditure. If we compute compound annual growth rate of consumption expenditure which gives the annual growth rates of consumption between two successive surveys then the annual growth of real consumption expenditure during the period 2009-10 to 2011-12 was 7.48 per cent and 5.59 per cent in rural and urban areas respectively which has come down to 3.13 per cent and 2.66 per cent during the period 2011-12 to 2022-23.
RISING NON-FOOD EXPENDITURE
The survey also highlights the changing pattern of consumption expenditure of Indian households over the years and that is rising share of non-food within the consumption basket and also of non-cereals within the food group of consumption expenditure. This decline has been a secular trend in previous rounds of survey and nothing so surprising as we see since 1993-94. As the per capita income increases, the share of food in total expenditure declines and also within food the consumption of cereals also tends to decline. More importantly dietary patterns change with income and over time the boundaries between necessaries and discretionary consumptions also undergoes change. The shares of food expenditure both in urban and rural areas as the survey suggests is marginally higher where transfer driven consumption is imputed for obvious reasons as it mainly adds to food consumption procured from schemes. But it is also important that increasing commodification of medical care, education and consumption of communication have also destabilised the boundaries of necessary and discretionary consumption. If people have to spend more on medical care and education or on mobile phones which is not discretionary anymore as it was three decades back, the sphere of non-food expenditure increases. It is a combined effect of changing needs and the contraction of pubic provisioning of many of the essential services. The difference in consumption expenditure by regions and class declines over time because consumption increases less than proportionately to income. The rich does not consume proportionately as their income increases while for the poor higher proportions of incomes are spent in consumption. In fact, rising inequality in income or wealth is never adequately reflected in inequality in consumption expenditure. In capitalism richness is manifested not by consuming more, even though the consumption expenditure of the rich in India is roughly ten times of that of the poor, rather it is reflected by accumulated exchange value in the form of money income and wealth as assets from which the rich derives power and control over market and society.
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