'First time' since 1970s poverty up 10%, consumer spending down 4%: GoI survey

By Rajiv Shah 
In what may prove to be a major embarrassment for the Government of India (GoI), a new official survey, carried out in 2017-18, has reportedly said that average consumer spending in India fell by more than 4% the previous six years "primarily driven by slackening rural demand." The survey, "Key Indicators: Household Consumer Expenditure in India”, carried out by the National Statistical Office (NSO), says that money spent per person in a month fell by 3.7% from Rs 1,501 in 2011-12 to Rs 1,446 in 2017-18.
The exclusive report, based on the survey in "Business Standard", says, the figures for monthly per-capital consumer expenditure (MPCE) are in real terms, meaning these have been adjusted for inflation, keeping 2009-10 as the base year. In 2011-12, it adds, by sharp contrast, the real MPCE rose by 13% over a period of two years.

The GoI has refused to make the survey public, the report states. Someshwar Jha, author of the report, tweets, "The data, which was approved for release by a committee in June 2019, has been withheld by the government thereby meeting the same fate as the periodic labour force survey which had shown a 45-year high unemployment rate of 6.1% in 2017-18."

Jha says, "In villages, consumer spending declined by 8.8% over six years", pointing out that in rural areas, the MPCE for 2009-10 was Rs 1,054, which rose to Rs 1,217 in 2011-12, or by 15.5%, but thereafter fell to Rs 1,110 by whopping 8.8%. In the urban areas, the survey finds, while the MPCE in 2009-10 was Rs 1,984, which went up by 11.5% to reach Rs 2,212 in 2011-12, but the rise slowed down drastically by 2017-18 to a moderate 2% to Rs 2,256.

According to Jha, who has quoted sources who are in the know, "The survey was conducted by the NSO between July 2017 and June 2018. The report, which was approved for release by a committee on June 19, 2019, has been withheld by the NOS due to its 'adverse' findings."The survey results, shockingly, show that food consumption particularly declined very sharply, both in rural and urban areas. 

Thus, cereals and cereal substitutes declined by 20.4% in rural areas, and by 7.9% in urban areas; sugar, salt and spices experienced a decline of 16.6% in rural areas and 14.2% in urban areas; intake of pulses and their products -- which are the main source of protein for India's huge vegetarian population -- went down by 15.4% in rural areas, and by 16.3% in urban areas; and edible oil consumption went down by 14.6% in rural areas and 16.6% in urban areas.
Further, according to the survey, as for beverages, refreshments and processed food, their consumption went down by 11.2% in rural areas, but went up by 2.8% in urban areas; and the consumption of fruits went down by 1.5% in rural areas, while it went up by 18.2% in urban areas. Overall, while food consumption in rural areas went down by 9.8%, in urban areas it went up by 0.2%.

A calculation of the survey, conducted about the time when the GoI implemented goods and services tax (GST), and a few months after the controversial demonetisation move, "would suggest that the percentage of population in poverty would have gone up by at least 10 percentage points", says Prof Himanshu, a well-known development economist with the Jawaharlal Nehru University's Centre for Economic Studies and Planning.
Quoted by Jha, the senior economist says, the last time the NSO showed a fall in consumption in real terms was in 1972-73 due to global oil crisis. Before that, in the mid-1960s, consumption fell due to a domestic food crisis. The most worrying trend in the 2017-18 survey is the dip in food consumption for the first time in decades, implying "worsening malnutrition in the country."