Consumption Expenditure by Social Groups: Findings from India’s Household Consumption Expenditure Survey, 2022-23

Summary

Which social groups consume the least in India? In which states do these social groups reside? Who comprises the bottom of India’s pyramid? This paper attempts to answer these questions using the recently published Household Consumption Expenditure (2022-23) survey data. The study finds that scheduled tribes in Chhattisgarh, Jharkhand, and Odisha are at the bottom of India’s consumption pyramid. While the scheduled tribes are relatively the lowest consumers in most states, the scheduled castes are the second lowest. Short-term and long-term policy and programmatic action are required to boost the consumption of scheduled tribes and scheduled castes in the states that fall below the national average of consumption expenditure. This would require human capital development and increased access and productivity of economic assets for these social groups. Given the long gestation periods of human and economic development interventions, short-term focused and conditional cash transfers could be considered to enhance the living standards of the scheduled tribes and scheduled castes at the bottom of India’s consumption pyramid in specific geographical areas where poverty is concentrated.

Introduction

National Sample Survey Office conducted the Household Consumption Expenditure Survey (HCES) between August 2022 and July 2023. The HCES, 2022-23 sampled 155,014 households in rural and 106,732 in urban areas to estimate the consumption patterns in India. The last large-scale consumption expenditure survey for which data was available was conducted in 2011-12^1. 

Past surveys have established variations in consumption expenditure by social groups. This study, with its updated variations in social groups by state/union territories (UTs), holds the potential to fine-tune policy and programmatic responses to address inequalities. The study aims to identify those states and social subgroups with the lowest consumption expenditure, a key indicator of relative well-being and poverty. The paper suggests policy recommendations to address the inequalities in consumption expenditure by identifying the social groups within particular states with relatively depressed consumption. 

HCES 2022-23 recorded social groups as scheduled tribes, scheduled castes, other backward castes, and others. Household consumption expenditure was collected on food items, consumables and service items, and durable goods. After adjusting with appropriate weights, monthly per capita expenditure (MPCE) was derived by dividing household monthly expenditure by household size. 

Findings

All India scenario.  India’s average MPCE is INR 4,534, with INR 3,733 in the rural- and INR 6,459 in the urban areas. Figure 1 shows the percentile-wise distribution of MPCE in India, by rural and urban areas. In rural areas, the 10th percentile consumption is INR 1,911, 31% of the INR 6,043 MPCE reported by the 90th percentile. In urban areas, the consumption expenditure in the 10th percentile is INR 2,810, which is 25% of the INR 11,084 MPCE reported by the 90th percentile. Overall, including rural and urban areas, the 10th percentile expenditure is INR 2,042, 26% of INR 7,730 reported by the 90th percentile. In both rural and urban, the bottom 10th percentile consumes less than a third of what the 90th percentile consumes. 

Figure 1: Distribution by deciles of India’s MPCE by rural, urban and combined

Pk (for k=10, 20, 30 …, 80, 90) is the kth percentile of the distribution of persons by MPCE, that is, the MPCE level below which k% of the population lies.

States with the lowest consumption expenditures? Figure 2 gives state/UT-wise MPCE by social groups. Table 1 shows a heat map of state and social group consumption expenditure. The state with the lowest consumption expenditure in India is Chhattisgarh, with an average MPCE of INR 2,854, followed by Jharkhand (Rs 3,166) and Odisha (INR 3,275). Bihar (INR 3,447), Uttar Pradesh (INR 3,564), Madhya Pradesh (INR 3,582), Assam (INR 3,720), West Bengal (INR 3,803), Meghalaya (INR 3,937), Ladakh (INR 4,323), and Manipur (INR 4,501) fall below India’s average MPCE of INR 4,534. 

India’s poor consumption expenditures are clustered mainly in the Eastern and Eastern parts of the North. Indian states with less than the average MPCE of India (INR 4534) are primarily in East India and Eastern parts of north and central India. Odisha, Chhattisgarh, Jharkhand, Assam, West Bengal, Meghalaya, and Manipur are in the East. States in the Eastern part of North and Central India include Bihar, Uttar Pradesh, and Madya Pradesh.

Rajasthan has moved above India’s average consumption. Many decades have passed since the BIMARU acronym was coined in the mid-1980s to highlight states with particular characteristics including consumption below India’s average (Bihar, Madhya Pradesh, Rajasthan, and Uttar Pradesh). HCES 2022-23 findings show remarkable progress in Rajasthan, which has an MPCE of INR 4,655, above India’s average of INR 4,534. Odissa must be part of any discourse about India’s poorest states along with Chhattisgarh and Jharkhand. 

Interesting variation in North-East India. The general perception of the North-East is that of relative backwardness, much attributed to remoteness and logistic costs. The HCES 2022-23 findings show interesting diversity among the North East states.  North East states have interesting diversity in consumption. The states with low consumption expenditure in the Northeast include Assam (INR 3,720), Meghalaya (INR 3,837) and Manipur (INR 4,501). Sikkim (INR 8,926), Mizoram (INR 6,295), and Arunachal Pradesh (INR 5,901) have relatively higher MPCE.

Table 1: Heat map of state-wise monthly per capita expenditure by social groups (states sorted by poorest to richest by MPCE)

Source: Household consumption and expenditure survey 2022-23, Ministry of Statistics and Program Implementation. The author calculates it from the microdata.

Figure 2: State/UT-wise per capita monthly expenditure by social groups

Source: Household consumption and expenditure survey 2022-23, Ministry of Statistics and Program Implementation.

MCPE by social groups. Across India, the scheduled tribes consume less, except in urban areas, where they consume slightly more than the scheduled castes, followed by other backward groups. The ‘Other’ social group category consumes the most in rural and urban areas (Figure 3). Across India, the MPCE of scheduled tribes is INR 3,260, 58% of the ‘Other’ category.  MPCE of scheduled castes is slightly higher at INR 3,859. In rural areas, the MPCE of scheduled tribes and scheduled cases is INR 3,016 and INR 3,472, respectively.  

Figure 3: Monthly per capita expenditure by social groups: overall, rural and urban

Source: Household consumption and expenditure survey 2022-23, Ministry of Statistics and Program Implementation.

Central and East India tribes are the poorest consumers in India. Further analysis of MPCE by social groups reveals even deeper pockets of poverty of consumption, as depicted in Figure 2. The scheduled tribes in India’s central and eastern parts are the poorest. The scheduled tribes living in Jharkhand (INR 2,346), Chhattisgarh (INR 2,364), and Odisha (INR 2,472) are at the bottom of India’s pyramid. Closely following them are the scheduled tribes living in Madhya Pradesh (INR 2,775), West Bengal (INR 2,823), Uttar Pradesh (INR 2,541) and Bihar (INR 2,956). Scheduled tribes living in a more advanced state like Maharashtra (INR 3,162) also fall in the poorer consumption category.

Tribes are generally the poorest consumers in most states. Except for some states with low tribal populations (Uttarakhand, Punjab, Puducherry, Goa, Chandigarh) and a few exceptions (Ladakh, Nagaland, Himachal Pradesh, Arunachal Pradesh, Haryana, Delhi, Sikkim), the tribes are the poorest in all the remaining states and UTs. 

Scheduled castes in North and East India are also relatively poorer consumers.  Next in the hierarchy of poverty of consumption are the scheduled castes from Bihar (INR 3,016), Jharkhand (INR 3,020), Odisha (INR 3,096), Uttar Pradesh (INR 3,119), Madhya Pradesh (INR 3,320), and West Bengal (INR 3,449).  Scheduled castes are also the poorest social groups in the following states: Uttarakhand, Punjab, Himachal Pradesh, Haryana, Puducherry, Andaman and Nicobar Islands, Sikkim and Chandigarh. 

Scheduled castes are generally the second poorest social group after scheduled tribes in most states. They are also the second poorest consumers in most states (except Manipur, Jammu and Kashmir, Nagaland, and Arunachal Pradesh). In West Bengal, the scheduled castes and other backward classes are at the same level of consumption. 

Other backward classes in some states are also relatively poor. The poorest OBCs live in Chhattisgarh (INR 2,931), Jharkhand (INR 3,304), West Bengal (INR 3,448), Uttar Pradesh (INR 3,472), Odisha (INR 3,503) and Bihar (INR 3,570).

The ‘Other’ category is generally the richest in all the states. The ‘Other’ category (those not scheduled castes, scheduled tribes, or other backward groups) is the richest in all states except Ladakh, Nagaland, Himachal Pradesh, Arunachal Pradesh, and the Andaman and Nicobar Islands.

Variation in poverty by social groups. The difference between the poorest, mostly scheduled tribes and the richest, primarily ‘Other’ categories, is significant. The variation is relatively lesser in some states, such as Bihar and Assam. A more substantial gap can be seen in Maharashtra, where even though the average consumption is higher, the scheduled tribes consume much less, which can be comparable to the poorest living in Chhattisgarh and Jharkhand. 

Conclusions

This note highlights the clustering of low consumption expenditures in states predominantly in East India. The scheduled tribes from the three contiguous states of Chhattisgarh, Jharkhand, and Odisha are at the bottom of India’s consumption pyramid. The scheduled tribes in most Indian states/UTs are relatively the poorest consumers in their respective states, followed by scheduled castes.

More research is needed to determine the reasons for low consumption by social groups in specific states. The scheduled tribes and scheduled castes in states with below-Indian-average consumption need special attention. Apart from Chhattisgarh, Jharkhand, and Odisha, these states include Bihar, Uttar Pradesh, Madhya Pradesh, Assam, West Bengal, Meghalaya, and Manipur. In some states with consumption above India’s average, scheduled tribes have low consumption and need special attention. These include Rajasthan, Jammu and Kashmir, Gujarat, and Maharashtra. 

India has made remarkable economic and social progress over the past several decades. As India aims to become a developed nation by 2047, one of the critical challenges it must address is bridging regional and social group inequalities. The paper identifies that relative consumption poverty is clustered in some states, predominantly in East India. Indian states are heterogeneous, with wide variation between districts and development blocks. A better understanding of the distribution of poverty by districts and development blocks is essential to do better targeted programmatic and policy interventions. We need more granular and frequent high-quality data sets to identify the reasons for the pockets of poverty and frame effective policies and programs targeted to these relatively poor areas. More frequent data sets are required to monitor and evaluate the effectiveness of policies and programs on poverty elevation. Think tanks and centres for operational research that specialise in these geographical areas need to be encouraged to build state capacities to harness data and research to enhance the effectiveness of public expenditure and galvanise private capital into these pockets. 

One of the most sustainable ways of increasing consumption is by enabling inclusive and higher economic growth. While much of the policy focuses on building more manufacturing and services-related jobs, East India also needs to boost agricultural productivity. India’s “green” and “white” revolution must expand to the Eastern parts of India, especially the poorest districts and blocks in the identified states. Animal husbandry, horticulture, and fisheries should also be prioritised as they can generate additional income and improve nutrition in these regions. Agriculture research focusing on making these regions more productive needs to be prioritised.  

Urbanisation needs to be accelerated in East India. The South has Chennai, Bangalore, and Hyderabad. The West has Ahmedabad, Mumbai, and Pune. The North has the National Capital Region, which benefits many states. Unfortunately, the East has one megacity, Kolkata, which is driving some growth. The East needs to prioritise proactive urbanisation to catch up with the rest of India and, in the process, alleviate poverty in some of the poorest areas of the states highlighted in this paper.

Building state capacities is especially critical at the district and block levels where poverty and consumption clusters exist. National programs tend to benefit the states that have higher capacity. Due to weak state capacities, the benefits of many centrally sponsored schemes, which depend on state government capacities for implementation, accrue less to some of the backward areas highlighted in the paper. It is difficult for states with weaker capacity to compete for funds from a national program that does not have internal checks to ensure proportionate funds are utilised by states with weaker capacity. While efforts should be made to build state capacity in the poorer states, it is also essential to re-examine the need for re-introducing programs specific to backward areas where funds are ring-fenced only for the most disadvantaged regions, along with funds specifically allocated to boost implementation capacity. 

Very focused programmatic interventions to improve human capital and productive capacities will be essential to accelerate the development of these social groups that lie at the bottom of India’s consumption pyramid. Improving human capital has to focus on improving the quality of education, and investments in student hostels. Further, scholarships to reduce dropouts at senior, senior secondary, and higher education levels are critical. Special purpose vehicles with focused and clear mandates for the accelerated development of these identified social groups will be required to build the capacity of the development agencies to deliver time-bound results. While most human capital and economic development initiatives will take time to deliver results, to achieve short-term tangible results, the governments could consider conditional cash transfers to the scheduled tribes and scheduled cases in select identified states. If not across the whole state due to fiscal constraints, the government could consider some of the most backward districts in these states for special cash transfers. 

^1 Refer to report for further details on data and sample: Ministry of Statistics and Programme Implementation. (2024). Survey on Household Consumption Expenditure: 2023-23. New Delhi. https://www.mospi.gov.in/sites/default/files/publication_reports/Report_591_HCES_2022-23.pdf