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A leaked report by the National Statistical Office (NSO), based on a consumption expenditure survey conducted by the organisation between July 2017 and June 2018, has shown a drop in consumer spending for the first time in more than four decades on weak rural demand, Business Standard reported on Friday, 15 November.
However, hours after the newspaper report, the government said that the 2017-18 consumer spending survey won't be released due to "data quality issues.” It added that the government will release the next report in two years.
A copy of the report, accessed by Business Standard, shows that the monthly per capita consumption expenditure (MPCE), which stood at Rs 1,501 in 2011-12, fell by 3.7 percent in 2017-18 to stand at Rs 1,446.
These figures have been adjusted for inflation, with 2009-10 as the base year.
Business Standard reports that according to experts, a fall in consumption expenditure, as seen above, indicates increasing prevalence of poverty and low demand in the economy, driven by the rural market.
The findings of the report show that in 2017-18, consumer spending in villages fell by 8.8 percent, while in cities, it rose by 2 percent over six years.
The report, post the survey by NSO, was supposed to be released in June 2019, but has reportedly been held back because of its adverse findings, Business Standard stated, quoting four people familiar with the development.
It is a point to be noted that the period in which the survey was conducted was during the implementation of goods and services tax (GST) and was preceded by the Modi government's demonetisation move in November 2016.
Poverty Levels Increased Significantly: Experts
Speaking to Business Standard, Himanshu, associate professor at Jawaharlal Nehru University's Centre for Economic Studies and Planning said that since 1972-73, when there was a global oil crisis, real consumption expenditure had never shown a decline.
According to him, this shows that poverty levels would have gone up significantly, by at least 10 percentage points.
Experts told Business Standard that the most worrying point in the report is that it indicates a dip in food consumption for the first time in decades, which shows that malnutrition has increased in the country. In 2017-18, on an average, rural people spent Rs 580 monthly on food, showing a decrease of almost 10 percent from Rs 643 in 2011-12.
The trend amongst urban people, which fell from Rs 946 each to Rs 943 over the same time period showed muted growth, according to these experts.
Former Planning Commission Member Abhijit Sen agreed that malnutrition had agreed and that poverty must have seen a significant increase.
Sen added that since there is a gap of six years between NSO data, it is unclear when the fall in consumption began.
According to the report, people across India slashed expenses on essential cooking items such as edible oil, salt, sugar and spices. While rural areas saw people reduce expenditure on all food items except dairy, the spending on non-food items saw a decline by 7.6 percent in 2017-18, as compared to 2011-12. Meanwhile, in urban areas, spending saw an increase by 3.8 percent, compared to 2011-12.
Business Standard further reported that the NSO's consumer expenditure survey was approved by a working group five months ago. The government had also formed a sub-committee to look into the data shown by the survey report after concerns were raised, but no defect was found.
(With inputs from Business Standard.)