Insights into Editorial: What is Consumer Expenditure Survey
Context:
Recently, the government announced that in view of “data quality issues” the Ministry of Statistics and Programme Implementation had decided not to release the results of the all-India Household Consumer Expenditure Survey conducted by the National Statistical Office (NSO) during 2017-2018.
It asserted that any findings from the survey that had been referred to in media reports were essentially “draft in nature”.
It also noted that these reports had concluded that the results had been withheld due to the ‘adverse’ findings in the survey which showed consumer spending was falling.
It also said it was “separately examining the feasibility of conducting the next Consumer Expenditure Survey (CES) in 2020-2021 and 2021-22 after incorporating all data quality refinements in the survey process”.
What is Consumer Expenditure Survey (CES)?
The CES is traditionally a quinquennial (recurring every five years) survey conducted by the government’s National Sample Survey Office (NSSO) that is designed to collect information on the consumption spending patterns of households across the country, both urban and rural.
The data gathered in this exercise reveals the average expenditure on goods (food and non-food) and services and helps generate estimates of household Monthly Per Capita Consumer Expenditure (MPCE) as well as the distribution of households and persons over the MPCE classes.
Need and Necessity of Consumer Expenditure Survey (CES):
- The estimates of monthly per capita consumption spending are vital in gauging the demand dynamics of the economy as well as for understanding the shifting priorities in terms of baskets of goods and services, and in assessing living standards and growth trends across multiple strata.
- From helping policymakers spot and address possible structural anomalies that may cause demand to shift in a particular manner in a specific socio-economic or regional cohort of the population.
- To providing pointers to producers of goods and providers of services, the CES is an invaluable analytical as well as forecasting tool.
- It is, in fact, used by the government in rebasing the GDP and other macro-economic indicators.
Previous 2011 Survey:
The survey showed that average urban MPCE (at Rs 2,630) was about 84% higher than average rural MPCE (Rs 1,430) for the country as a whole.
Food accounted for about 53% of the value of the average rural Indian household’s consumption during 2011-12, in the case of urban households it accounted for only 42.6% of the average consumption budget.
Average protein intake per capita per day was seen to rise steadily with MPCE levels in rural India from 43 g for the bottom 5% of population ranked by MPCE to 91 g for the top 5%, and in urban India from 44 g for the bottom 5% to about 87 g for the top 5%.
Education accounted for 3.5% of the rural household’s average spending, an urban household spent almost 7% of its monthly consumption budget on it.
What the government said:
- Results of the survey show significant divergence in consumption pattern and with administrative data sources.
- Survey lacks ability to capture consumption of social services by households, especially on health and education.
- The ministry will examine the feasibility of conducting the next consumer expenditure survey in 2020-21 and 2021-22.
Following better Macroeconomic statistics as the IMF guidelines:
As a subscriber to the International Monetary Fund’s Special Data Dissemination Standard (SDDS), India is obliged to follow good practices in four areas in disseminating macroeconomic statistics to the public.
These comprise the coverage, periodicity, and timeliness of data; public access to those data; data integrity; and data quality.
With the IMF’s ‘Annual Observance Report’ for 2018 already having flagged concerns about India’s delays in releasing economic data, the country risks falling afoul of its SDDS obligations.
Conclusion:
The results of the survey were examined and it was noted that there was a significant increase in the divergence in not only the levels in the consumption pattern but also the direction of the change when compared to the other administrative data sources like the actual production of goods and services
With the Advisory Committee on National Accounts Statistics also having separately recommended that 2017-18 would not be used as an appropriate year for rebasing of the GDP series, the very credibility of GDP data going forward could come under greater scrutiny.
The ministry said a committee examined the survey report and noted these “discrepancies” and came out with recommendations, including a refinement in the survey methodology and improving the data quality on a “concurrent basis.”
The recommendations of the committee are being examined for implementation in future surveys.
