As per the report from the National Sample Survey Office (NSSO), there has been a reduction in inequality in both rural and urban areas of India between 2011-12 and 2022-23, and these are significant.
NSSO’s HCE Report
The report stated that “The HCE report provides detailed information on consumption expenditure trends after more than a decade, with the last report released in 2011-12. A 2017-18 survey and report were prepared but junked by the government after media leaks suggested a fall in average spending between 2011-12 and 2017-18. The latest survey was delayed due to the pandemic”.
As compared to other estimates or anecdotal evidence of high-income households’ spending patterns, the report suggests that the average monthly per capita expenditure figures for the top 5% of rural and urban households indeed appear relatively low.
With a relatively high per capita consumption expenditure of ₹5,924 per month, the richest state in rural areas is Kerala.
On the other hand, with the per capita consumption expenditure of ₹8,158 per month, the richest state in urban areas is Telangana. The ₹8,158/month expenditure correctly reflects the state’s urbanization & economic development trajectory.
A crucial step in understanding the dynamics of India’s economy, NSSO’s release of the HCE report provides detailed insights into consumption expenditure trends over a decade.
Notably, there has been a delay in the latest survey which was mainly due to the pandemic, which further highlights how external factors also have an impact on the data collection and analysis.
In addition to this, there has also been the scrapping of 2017-18 survey by the government following media leaks suggests the sensitivity surrounding economic data and its implications.
Insights into Consumption Expenditures and Inequality Dynamics
There are valuable insights being offered by the report when it comes to the consumption expenditures for major states which further offers valuable insights into regional variations in economic well-being as well as consumption patterns within India.
There has been a decrease in share of consumption expenditure accounted for by the top 10% of households, which also overlaps with an increase in the share held by the bottom 50%, which reflects the fact that the consumption gap between different income groups has narrowed.
Notably, the observation that the inequality has decreased less in rural areas compared to urban areas underscores the nuanced nature of economic development and distributional dynamics across regions.
In addition to above, the observation that NSSO surveys may underestimate consumption inequality due to the potential undercounting of the rich is significant.
