HCES 2024 (Syllabus GS Paper 3 – Economy)

Context: Recently, an HCES analysis revealed that, bucking the national trend, consumption inequality in rural areas of 11 states increased as the Gini coefficient rose between 2011-12 and 2022-23.

The Household Consumption Expenditure Survey (HCES)

• About: It is designed to collect information on consumption of goods and services by the households.

oThe survey also collects some auxiliary information on household characteristics and demographic particulars of the households.

• Consumption Patterns: Information collected in HCES is useful for understanding the consumption and expenditure pattern, standard of living, and well-being of the households.
• Consumer Price Indices: The data of HCES provides budget shares of different commodity groups that is used for preparation of the weighting diagram for compilation of official Consumer Price Indices (CPIs).

oThe data collected in HCES is also utilized for deriving various other macroeconomic indicators.

• Categories of Consumption Items: Food items, Consumables and Services items and Durable goods.

Key Findings

• Rural Areas Gini Coefficient Trends: Gini coefficient in rural areas has increased in 11 states: Bihar, Chhattisgarh, Jharkhand, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Himachal Pradesh, and Rajasthan.
• Increases in Specific States: The sharpest rises occurred in Nagaland, Jharkhand, Maharashtra, Rajasthan, Meghalaya, and Chhattisgarh, with notable increases ranging from 0.192 to 0.291.
• Urban Areas Gini Coefficient Trends: Gini coefficient for consumption expenditure has risen in urban areas of Meghalaya, Himachal Pradesh, and Manipur.
• National Gini Coefficient Trends: At the national level, the Gini coefficient decreased in rural areas from 0.283 to 0.266 between 2011-12 and 2022-23.

oSimilarly, in urban areas, it decreased from 0.363 to 0.314 during the same period.

• Gini Coefficient Decline: The decline in the national Gini coefficient reflects a reduction in spending inequality across the country.