It has been recently argued by a Business Standard article on 15th November 2019, that there may be an increasing prevalence of poverty as there is slackening rural demand as rural consumer spending declined by 8.8 per cent in 2017-18 whereas that of cities increased by 2 per cent.
The argument is based on a supposedly unreleased consumption expenditure survey by National Statistical Office (NSO) conducted between July 2017 and June 2018. The report says Household Consumer Expenditure in India shows the average amount of money spent by a person in a month fell by 3.7 per cent to ₹ 1,446 in 2017-18 from ₹ 1,501 in 2011-12. It says that the food consumption in rural areas witnessed a fall in consumption of food items.
However, if we take a closer look at the other consumption indicators such as PDS procurement and offtake, consumption of oil, electricity and of air transportation, we observe a general trend in increase in consumption that is quite contrary to the NSO survey’s so-called findings.
Between 2011-12 and 2017-18, offtake of rice and wheat increased by 7.2 per cent and 2.3 per cent respectively with total offtake increased by 5.1 per cent. So, the reported NSO findings about food consumption are contradictory to actual trend of offtake.
In the same period, the number of air passengers increased by 95 per cent, oil consumption in barrels increased by 37.2 per cent, electricity consumption increased by 43.9 per cent, and mobile users increased by 44.3 per cent.
The NSO’s ‘leaked’ survey goes against all these indicators and trends and thus cannot be taken at face value.
Further, the estimate of Private Final Consumption Expenditure (PFCE) is generated from two sources. First, as a part of the National Accounts Statistics (NAS), the Central Statistics Office (CSO) compiles annually the estimates of private consumption.
Secondly, the Household Consumer Expenditure Surveys (HCES) of the National Sample Survey Office (NSSO) yields the estimates of household consumption expenditure. The Adhikari committee reported that a major cause of the divergence between the two estimates of consumption expenditure at the macro level comes mainly because of two reasons.
First, NAS includes the consumption expenditure of non-profit institutions serving households while this is excluded from the NSSO’s Consumption Expenditure Survey. The second is to do with inconsistency with respect to the estimation of service expenditures in the CES.
In fact, NSSO’s focused surveys often reveal a much higher expenditure on the same compared to its Consumption Expenditure Survey. Very likely, these are the factors responsible behind the NSSO’s finding of a dip in consumption levels.
Thus, to argue that NSO data can necessarily be concluded as rising prevalence of poverty and increasing malnutrition will be fallacious. Indeed, there are questions about the data quality collected by NSO.