Household Consumption Expenditure Survey (HCES) 2023-24

January 31, 2025

The Household Consumption Expenditure Survey (HCES) for 2023-24 reveals critical vital information about India’s economic landscape. The survey indicates shifts in spending patterns across rural and urban areas. These changes reflect broader economic transformations and evolving societal priorities.

Growth in Monthly Per Capita Consumption Expenditure

Over the past decade, the Monthly Per Capita Consumption Expenditure (MPCE) has seen substantial growth. Rural areas experienced a 45.4 per cent increase in real terms, rising from ₹1,430 in 2011-12 to ₹2,079 in 2023-24.
Urban areas also saw growth at 38.1 per cent, with MPCE climbing from ₹2,630 to ₹3,632.
This data signifies an improving rural-to-urban MPCE ratio, which rose from 54.4 per cent to 57.2 per cent, indicating narrowing consumption disparities.

Shift from Food to Non-Food Expenditure

A notable trend is the transition from food-dominated spending to non-food expenditures.
In 2023-24, rural households allocated 53 per cent of their total expenditure to non-food items.
Urban households spent 60 per cent on similar categories.
Key areas of spending include transportation, healthcare, clothing, and entertainment.
This reflects a shift towards lifestyle enhancements and an aspiration for improved living standards.

Decline in Consumption Inequality

The Gini coefficient, a measure of inequality, has shown a decline.
In rural areas, it fell from 0.283 in 2011-12 to 0.237 in 2023-24.
Urban areas experienced a reduction from 0.363 to 0.284.
Notably, the bottom 5 per cent and 20 per cent of households in both settings reported consumption growth.
Conversely, the top 5 per cent experienced a decline, suggesting a more equitable distribution of resources.

Persistent Income Inequality Challenges

Despite the positive consumption trends, income inequality remains a concern.
The income inequality coefficient was 0.421 in 2023-24, only slightly down from 0.426 in 2017-18.
Rural income inequality improved marginally, while urban income inequality stagnated.
This marks ongoing challenges in bridging the economic divide, particularly for lower-income households.

Impact of Inflation on Food Expenditure

After a decade of decline, the share of food expenditure in MPCE has risen.
In rural areas, it increased from 46.4 per cent to 47 per cent.
Urban areas saw a slight rise from 39.2 per cent to 38.7 per cent.
This trend is likely driven by rising food inflation, which strains household budgets and affects purchasing power.

Growth Disparities in Real Earnings

Real earnings have shown a mixed trajectory.
Lower-income households, primarily engaged in casual labour, saw modest growth in real earnings.
In contrast, middle- and high-income households reported declines in income growth.
This disparity reflects broader economic challenges, including stagnant incomes and slowing GDP growth, which stood at 6.4 per cent for 2023-24.

Policy Implications and Future Directions

As India approaches the Union Budget 2025, addressing consumption and income inequality is crucial. The government may need to enhance purchasing power for lower-income households and increase disposable income for the middle class. Potential interventions could include tax relief and support for small businesses. Encouraging private sector job creation is also vital for sustaining economic momentum.

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