Why is it in the News?

The per capita monthly household expenditure more than doubled in 2022-23 as compared to 2011-12, according to the latest study by the National Sample Survey Office (NSSO).

Context:

• As per the 2022-23 report, rising inequality between the top and bottom of the pyramid.
• Urban and rural households register higher expenditure, spending less on food items.
• New methodology and questionnaire used in Household Consumption Expenditure Survey (HCES) 2022-23.

About the National Sample Survey Office (NSSO):

• The National Sample Survey Office (NSSO) comes under the Ministry of Statistics and Program Implementation headed by a Director General.
• It is responsible for the conduct of large-scale sample surveys in diverse fields on an All-India basis.
• Primarily data are collected through nationwide household surveys on various socio-economic subjects, Annual Survey of Industries (ASI), etc.
• Besides these surveys, NSSO collects data on rural and urban prices and plays a significant role in the improvement of crop statistics through supervision of the area enumeration and crop estimation surveys of the State agencies.
• It also maintains a frame of urban area units for use in sample surveys in urban areas.

The NSSO has four Divisions:

• Survey Design and Research Division (SDRD): This Division, located at Kolkata, is responsible for the technical planning of surveys, formulation of concepts and definitions, sampling design, designing of inquiry schedules, drawing up of tabulation plans, and analysis and presentation of survey results.
• Field Operations Division (FOD): The Division, with its headquarters at Delhi/Faridabad, is responsible for the collection of primary data for the surveys undertaken by NSS.
• Data Processing Division (DPD): The Division, with its headquarters at Kolkata is responsible for sample selection, software development, processing, validation and tabulation of the data collected through surveys.
• Survey Coordination Division (SCD): This Division, located in New Delhi, coordinates all the activities of different Divisions of NSS.
  • It also brings out the bi-annual journal of NSS, titled “Sarvekshana”, and organizes National Seminars on the results of various Socio-economic surveys undertaken by NSS.

Key Insights From the 2022-23 Survey:

• Evolution of Food Expenditure: Over the past two decades, there has been a notable shift in spending patterns on food in India.
  • Between 1999-2000 and 2022-23, both urban and rural households witnessed a gradual decline in the share of expenditure allocated to food.
  • This period marks the first instance where food expenditure has dropped to below 50% in rural India and below 40% in urban India.
• Changing Dietary Preferences: The composition of food consumption has also undergone significant changes.
  • Cereals and pulses have seen a reduction in their share of overall food consumption expenditure, while spending on milk has surged, surpassing that on cereals and pulses combined.
  • In a noteworthy shift, the average Indian now spends more on fruits and vegetables than on food grains.
  • Furthermore, expenditure on animal proteins like eggs, fish, and meat has shown a growing trend, indicating a preference for animal-based proteins over plant-based ones.
• Rise in Processed Food Consumption: There has been an observed increase in the share of expenditure allocated to processed foods, beverages, and purchased cooked meals.
  • This trend aligns with the Engel Curve hypothesis, suggesting that as incomes rise, households allocate a smaller proportion of their spending to food and tend to prefer superior items over inferior ones.
• Closing Rural-Urban Consumption Gap: Consumption growth in rural areas has outpaced that in urban areas, leading to a narrowing of the rural-urban consumption divide.
  • If this trend continues, it could potentially lead to parity in urban and rural incomes and consumption patterns in the future.
• Challenges in Inflation Calculation: The findings of the latest Household Consumption Expenditure (HCE) Survey underscore the need to review the inflation basket.
  • The current Consumer Price Index (CPI)-based inflation calculation, established in 2012, may not accurately reflect contemporary consumption patterns.
  • For instance, the disparity between the weightage assigned to cereals in the CPI basket and actual expenditure on cereals by rural households highlights the need for recalibration.
• Insights on Poverty Reduction: According to NITI Aayog CEO B V R Subrahmanyam, the latest survey indicates a reduction in poverty to five per cent nationwide.
  • Both rural and urban areas are witnessing increased prosperity, as evidenced by rising per capita monthly expenditure.
• Demand for Legal Guarantee to MSP: While there is a demand for a legal guarantee to Minimum Support Price (MSP) for 23 crops, including food grains and sugarcane, the survey data suggests that the growth in the farm sector is being primarily driven by livestock, fisheries, and horticulture crops.
  • This poses a pertinent question regarding the promotion of production: should the focus be on crops outside the MSP purview, such as milk, fish, poultry products, fruits, and vegetables, given their growing consumption trends?