New Household Consumption Expenditure Survey Reveals Shifting Spending Patterns in India

New Household Consumption Expenditure Survey Reveals Shifting Spending Patterns in India

MUMBAI - A recent government report on household consumption expenditure in India has unveiled notable shifts in spending patterns among Indian consumers. The survey, which provides insights into rural and urban spending habits, indicates a significant increase in discretionary spending and a decline in expenditure on staples like rice and wheat.

According to the Household Consumption Expenditure Survey, conducted over the 12 months through July, average monthly consumer spending in rural areas has surged to 3,773 rupees per person, up from 1,430 rupees recorded in the previous survey conducted in 2011-2012. Similarly, urban spending has seen a substantial rise, reaching 6,459 rupees per month per person, compared to 2,630 rupees in the previous survey.

The decision by Prime Minister Narendra Modi's government not to release the 2017-2018 survey due to "data quality issues" has sparked controversy, with some speculating whether the administration was withholding unfavorable economic data. However, government officials have refuted these claims, asserting that the decision was not motivated by concealing weak consumption trends.

Key findings from the survey indicate a decrease in the proportion of monthly consumption allocated to food, dropping to 46% for rural consumers and 39% for urban consumers. Notably, expenditure on staples like cereals and pulses has declined, while spending on processed food, beverages, and refreshments has witnessed an uptick.

Furthermore, the survey highlights a growing inclination towards non-food items, with consumers allocating more resources to conveyance, consumer services, and durable goods such as televisions and refrigerators.

These findings come amidst India's upcoming general election, scheduled to take place by May, where Prime Minister Modi is vying for a rare third term. Despite the optimistic economic growth forecast of 7.3% for the current fiscal year and 7% for the next, challenges persist for large segments of the rural population, characterized by stagnant incomes and persistent inflationary pressures.

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