Household Consumption Survey Reveals Economic Inequality Decline

Why in the news?

The Ministry of Statistics and Programme Implementation released the 2023-24 Household Consumption Expenditure Survey, highlighting reduced urban-rural consumption gaps, declining Gini coefficients, and improved economic well-being across India, reflecting increased economic inclusivity and balanced development.

Household Consumption Survey Reveals Economic Inequality Decline

Urban-Rural Consumption Gap:

  • The urban-rural consumption disparity has declined across major states, indicating balanced economic growth.
  • Kerala shows the least disparity in Monthly Per Capita Consumption Expenditure (MPCE), followed by Punjab, Andhra Pradesh, and Bihar.
  • Improved consumption equality is observed in both urban and rural

Gini Coefficient and Inequality:

  • The Gini coefficient, measuring inequality, has declined significantly in 2023-24.
    • Rural areas: From 266 (2022-23) to 0.237.
    • Urban areas: From 314 (2022-23) to 0.284.
  • This reduction suggests a more equitable distribution of household consumption expenditure

Implications and Economic Well-Being:

  • Increased MPCE across all household types reflects improved economic well-being.
  • The survey data aids in updating the Consumer Price Index (CPI) basket and assessing poverty and inequality
  • Policymakers can use these insights to design strategies for inclusive economic growth.

About Household Consumption Expenditure Survey (HCES):

  • Conducted by: National Statistical Office (NSO) under MoSPI since 1951.
  • Purpose: Collects data on household spending patterns to assess living standards and consumption behavior.
  • Significance:
  • Basis for calculating Consumer Price Indices (CPI) and revising GDP base year.
  • Measures poverty, inequality, and social well-being.

Key Terms:

  • Monthly Per Capita Expenditure (MPCE): Average monthly spending per person on essentials like food, healthcare, and education.
  • Consumption Inequality: Unequal distribution of consumption expenditures among households.
  • Gini Coefficient: Measures consumption inequality (0 = perfect equality; 100 = perfect inequality).

Sources Referred:

PIB, The Hindu, Indian Express, Hindustan Times