India’s household consumption expenditure in 2023–24 saw a marked increase in both urban and rural areas, reflecting ongoing economic recovery and changing spending patterns. Released by the Ministry of Statistics and Programme Implementation, the 2023–24 Household Consumer Expenditure Survey presents vital data on consumption trends across urban and rural India, showing that while overall expenditure is on the rise, income inequality remains a critical issue.
Growth in Monthly Per Capita Consumption Expenditure (MPCE)
According to the findings of the 2023-24 Household Consumption Expenditure Survey, the Monthly Per Capita Consumption Expenditure (MPCE) in rural areas increased by 9%, reaching Rs. 4,122, compared to Rs. 3,773 in 2022-23. In urban India, the MPCE rose by 8%, reaching Rs. 6,996, up from Rs. 6,459 last year. These increases indicate a general improvement in the economic well-being of Indian households.
When including the value of items provided free of charge via social welfare schemes, the MPCE for rural and urban India is slightly higher—Rs. 4,247 and Rs. 7,078, respectively. This data is essential for updating the Consumer Price Index (CPI), which is used to measure retail inflation, and provides policymakers with insights into household consumption patterns.
Non-Food Expenditure: A Major Contributor to Household Spending
The survey highlights a continuing trend in Household Consumption Expenditure 2023-24, with non-food items accounting for a significant portion of total spending. In urban areas, 60% of the MPCE is allocated to non-food items, while in rural areas, the figure stands at 53%. The growing preference for non-food expenditures is an indicator of rising disposable incomes, especially in urban centers.
Key categories in non-food expenditure include:
- Conveyance
- Clothing, bedding, and footwear
- Miscellaneous goods
- Entertainment and durable goods
In urban areas, rent is also a major component of non-food expenditure, contributing approximately 7% to the average monthly expenditure.
Food Expenditure: Increased Spending on Beverages, Processed Foods, and Proteins
The survey also reveals a noticeable increase in spending on food, particularly beverages, processed foods, and animal proteins such as meat, fish, and eggs. The trend reflects changes in dietary preferences, with a growing consumption of protein-rich and processed food items, especially in urban households.
In both rural and urban areas, milk and milk products and vegetables continue to account for significant portions of food expenditure. Households in rural areas, in particular, are spending slightly more on vegetables and fruits, reflecting changes in food habits as the standard of living rises.
Inequality in Household Consumption Expenditure
Despite the overall increase in consumption expenditure, inequality remains a critical issue in India’s economy. The gap between the top 5% and bottom 5% of households in both rural and urban India is substantial.
- Rural Bottom 5%: The average MPCE for the bottom 5% in rural areas is Rs 1,677, a 22% increase from Rs 1,373 in 2022-23.
- Urban Bottom 5%: In urban areas, the MPCE for the bottom 5% has increased by 19%, reaching Rs 2,376 compared to Rs 2,001 last year.
- Rural Top 5%: The top 5% in rural areas have an MPCE of Rs 10,137.
- Urban Top 5%: The top 5% in urban India have a much higher MPCE, reaching Rs 20,310.
This disparity highlights the deep economic inequality in both urban and rural India. The gap between the top 5% of households in urban areas and their rural counterparts remains nearly double, which underscores the uneven distribution of wealth in the country.
Declining Urban-Rural Consumption Gap
The survey also reveals that the urban-rural consumption gap has been narrowing over the years. The gap in MPCE between urban and rural India has decreased from 84% in 2011-12 to 70% in 2023-24. This reduction reflects the increasing economic development and rising income levels in rural areas.
Decline in Consumption Inequality
Another significant finding of the Household Consumption Expenditure 2023-24 is the decline in consumption inequality. The Gini coefficient, a measure of income inequality, has decreased in both rural and urban India. In rural areas, the Gini coefficient dropped from 0.266 in 2022-23 to 0.237 in 2023-24, while in urban areas, it fell from 0.314 to 0.284.
These figures suggest that while inequality still exists, there has been a gradual improvement in the distribution of consumption expenditure across households.
Implications for Policymakers and Economic Growth
The data from the 2023-24 Household Consumption Expenditure Survey provides valuable insights for policymakers as they continue to tackle challenges related to income inequality and economic disparity. As the rural-urban gap narrows and consumption patterns evolve, there is a need for targeted policies that focus on improving economic opportunities, especially in rural areas.
Furthermore, with increasing expenditure on non-food items and a growing middle class, there is potential for businesses to tap into new markets, both in rural and urban regions. The government should also ensure that the benefits of social welfare programmes continue to reach the most vulnerable sections of the population.
Conclusion
In conclusion, India’s Household Consumption Expenditure 2023-24 data reflects positive growth in both rural and urban India. However, significant inequality remains, especially between the wealthiest and the poorest households. Moving forward, it will be crucial to implement policies that address these disparities while continuing to foster overall economic growth. By focusing on inclusive growth and reducing inequality, India can ensure that the benefits of its economic progress are shared more equally across its population.
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