Our Consumption Study Doesn't Feed Policy Well

India's latest survey of household spending on consumption picks up significant trends but offers an unclear snapshot of upper-end expenses. Policy cues should be taken selectively

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India's government recently released the findings of its 2023-24 survey of household consumption expenditure and expressed satisfaction at the seeming narrowing of spending gaps in society at large and between rural and urban populations. Such changes would, of course, be desirable. However, we must not set too much store by the monthly per capita consumption expenditure (MPCE) figures of this sample survey. The aggregate consumption computed from these estimates does not add up to the annual private consumption expenditure logged in national income accounts. The shortfall is around 50% of the national income data. While the latter would cover groups excluded from household surveys, such as prisoners and armed forces, that cannot explain the large gap between the two sets of data. There is a simpler explanation. Those at lower income levels tend to be more transparent about their consumption patterns with people who come around with survey questions than people who struggle to find time to fill their Instagram feeds with the destination weddings