Consumer Spending decline for the first time in 40 years as per media reports|Government stalls release due to data quality issues

The consumption expenditure survey was conducted by National Statistical Office (NSO) between July, 2017 to June, 2018. The report was supposed to be released by July, 2019. Business Standard (BS) has reported certain findings of the survey on 15th November. As per the media reports, there is a decline in Monthly per capita consumption expenditure in 2017-18 as compared to 2011-12.

Source: Business Standard

The MPCE stood at Rs 1501 in 2011-12. This has declined to Rs 1446. So there is a decline of 3.7%. In 2011-12, the MPCE has gone up by 13% over a two year span. All these figures are adjusted for inflation with 2009-10 as the base.

Source: Business Standard

The survey also suggests that this decline is mainly driven by rural India. There is a 8.8% decline in spending in rural India as compared to 2011-12. During the same time there is a 2% increase in urban spending. This corroborates with the recent trends of lack of rural demand, which is one of the main reasons behind the present slowdown in the Indian Economy.

The said survey further suggests a 10% decline in decline in food consumption in rural India with a fall from Rs 643 in 2011-12 to Rs 580 in 2017-18. During the same time period the non food expenditure in rural India also saw a 7.6% decline. Rural Indians brought less of all food items barring milk and milk related items. During same time the food consumption in Urban India remain almost same. It stood at Rs 946 in 2017-18 as compared to Rs 943 in 2011-12. The non food expenditure saw a 3.8% increase in Urban India during the same time span. Both in urban and rural India, there is a significant decline in essential food items like salt, sugar, oil and spices.

There has been many studies by eminent economists which sites that lack of micro nutrients like salt during the time of pregnancy for the mother can lead to lack of growth of the child leading to lower output from them and hence inter generational poverty. Hence this kind of decline is of utmost importance and needs to be studied to see what are the drivers behind this and policies needs to be taken to restrict such declines.

Just after the release of this article, the ministry of statistics and programme implementation (MOSPI) came out with a statement that in view of data quality issues, the ministry has decided not to release the Consumer Expenditure Survey results of 2017-18. According to the government, a new survey will be conducted in 2020-2021 and the new report will be released by 2022.

The ministry while examining the survey results found a rise in divergence in the consumption pattern levels when compared to other administrative data sources such as production of goods and services. Concerns were raised on the ability of this survey to capture expenditures in social sector mainly health and education.

Data quality issues in any survey can occur either due to problem in survey design or due to the data collection procedure. The survey design process for a survey to be conducted in July, 2017 has to start at least by 2016. Also once the data is collected the first thing to check is the data quality issues. The data collection process finished in June, 2018. The government has remained silent on this till the release of this report by Business Standard.

It is this survey on the basis of which the poverty estimates are constructed and basis the data future policies on poverty eradication is taken.Moreover this kind of survey entails a big cost and hence due diligence process are generally very strong for such surveys. This remains a concern that if there is a data quality issue why was it announced so late and why was no action taken to ensure that the process is maintained and the survey yields results.

A new survey will again entail huge cost. IPD sincerely hopes before conducting such surveys , Government appoints experts to evaluate the process and data from the existing survey and create a proper blueprint so that such data quality issue does not arise again. The government has got recommendations from a panel of experts on the discrepancies and is incorporating their suggestion in terms of the methodology.

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