India’s latest Household Consumption Expenditure Survey (HCES) for 2023-24 reveals a notable decline in consumption inequality across both rural and urban areas compared to the previous year. The detailed results, released by theMinistry of Statistics and Programme Implementation (MoSPI), highlight significant improvements in economic well-being, particularly for the lower income segments of the population.

Survey Methodology and Purpose

To assess household consumption trends post-Covid-19, MoSPI conducted two consecutive surveys in 2022-23 and 2023-24. The first survey (August 2022July 2023) had its summary results released in February 2024, with detailed findings published in June 2024. The fieldwork for the second survey spanned August 2023July 2024. HCES collects data on household expenditures on goods and services, aiding in poverty measurement, inequality analysis, and Consumer Price Index calculations. The primary indicator used for analysis is the Monthly Per Capita Consumption Expenditure (MPCE).

Key Findings on Consumption and Inequality

The survey indicates a decline in consumption inequality in both rural and urban India. The Gini coefficient, which measures inequality (0 indicating perfect equality and 1 indicating perfect inequality), has dropped from 0.266 in 2022-23 to 0.237 in 2023-24 for rural areas and from 0.314 in 2022-23 to 0.284 in 2023-24 for urban areas.

The average MPCE has increased across all 18 major states, reflecting overall economic growth. Rural MPCE stands at Rs. 4,122 (without considering social welfare benefits), while urban MPCE is Rs. 6,996. Considering imputed values of free items, these figures rise to Rs. 4,247 (rural) and Rs. 7,078 (urban). In nominal terms, MPCE grew by 9% in rural areas and 8% in urban areas from 2022-23 levels.

Regional and Demographic Variations

The bottom 5% of Indias rural population saw a 22% increase in MPCE, while their urban counterparts experienced a 19% rise. The highest growth in MPCE was observed in Odisha (14% increase in rural areas) and Punjab (13% increase in urban areas), while Maharashtra and Karnataka recorded the least increase (3% in rural and 5% in urban areas, respectively). Among states, the highest MPCE was recorded in Sikkim (Rural Rs. 9,377; Urban Rs. 13,927), whereas the lowest was in Chhattisgarh (Rural Rs. 2,739; Urban Rs. 4,927).

Among Union Territories, Chandigarh recorded the highest MPCE (Rural Rs. 8,857; Urban Rs. 13,425). The rural-urban MPCE gap remains significant, highest in Meghalaya (104%), followed by Jharkhand (83%) and Chhattisgarh (80%). Nine out of the 18 major states have MPCE levels above the all-India average in both rural and urban areas.

Expenditure Trends

Non-food expenditure remains the dominant category, with 53% of MPCE in rural areas and 60% in urban areas. Key expenditure categories include food items such as beverages, refreshments, and processed foods, and non-food items such as conveyance, clothing, footwear, durable goods, entertainment, and rent (7% of urban MPCE).

Policy Implications and Economic Outlook

The 2023-24 HCES findings indicate a sustained momentum of consumption growth in rural India, as evidenced by the urban-rural gap in MPCE reducing from 84% in 2011-12 to 71% in 2022-23 and further down to 70% in 2023-24. The data suggests a broad-based economic improvement, with lower-income segments benefiting the most.