How every ₹100 is spent by Indian households, Pg7

Key Highlights:

• The Household Consumption Expenditure Survey (HCES) by MoS&PI reveals shifts in Indian household spending patterns.
• Conducted every five years, the HCES offers Monthly Per Capita Expenditure (MPCE) estimates for rural and urban areas.
• From 1999-2000 to 2023-24, the share of MPCE on food and beverages declined in both urban (₹48 to ₹39 per ₹100) and rural areas (₹59 to ₹47 per ₹100).
• Spending on cereals decreased, while expenditure on fruits, eggs, fish, and processed foods increased, indicating dietary diversification.
• Urban housing rent share rose significantly (₹4.46 to ₹6.58 per ₹100), aligning with urbanisation, rental stress, and migration.
• The miscellaneous category, including health, education, and conveyance, saw a rising share, especially in rural MPCE (₹21.87 to ₹35.82 per ₹100).

Detailed Insights:

• The decline in food and beverage expenditure confirms Engel’s Law, where the proportion of income spent on food decreases as income rises.
• Lower spending on cereals and increased spending on protein-rich foods indicate a shift towards more varied diets, though unequally distributed.
• Despite slight increases, spending on intoxicants remains low, necessitating targeted awareness programs in rural areas for public health.
• Reduced per capita fuel spending reflects the success of policies like Saubhagya and PM Ujjwala Yojana, along with increased use of energy-efficient appliances.
• Moderate decline in spending on clothing, bedding, and footwear aligns with a shift from need-based to discretionary spending, influenced by competition and lower prices.
• Rising urban housing rent share is consistent with urbanisation trends, rental stress, and migration to metropolitan areas, while rural rent remains minimal due to self-owned housing.
• The increasing share of miscellaneous expenses indicates a broadening consumption basket, reflecting inclusive growth and improved access to public and market-based services.
• Overall, consumption patterns are shifting from basic needs towards aspirational and service-oriented spending, indicating an economic transition.

Key Concepts Involved:

• MPCE (Monthly Per Capita Expenditure): Average expenditure incurred by a person in a month, used to assess living standards.
• Engel's Law: As income increases, the proportion of income spent on food decreases, even if the absolute expenditure on food rises.
• Urbanisation: The process of more people living in urban areas than rural ones, leading to changes in housing and consumption patterns.