India’s consumption story offers one of the clearest windows into how economic change is being experienced at the household level. The latest rounds of the Household Consumption Expenditure Survey (HCES) — 2022-23 and 2023-24 — released by the Ministry of Statistics and Programme Implementation, mark the first comprehensive update to consumption data in over a decade. Together, they provide a rare, granular view of how Indian households allocate every ₹100 they spend, across rural and urban India, and what this reveals about growth, welfare and inequality.
Why the Household Consumption Expenditure Survey matters
The HCES is conducted roughly every five years and is the backbone of India’s consumption statistics. It estimates Monthly Per Capita Expenditure (MPCE) across a wide range of goods and services, forming the empirical basis for poverty estimation, welfare targeting and social sector policy design.
After a long gap following the 2011-12 survey, the 2022-23 and 2023-24 rounds are especially significant. They capture post-pandemic consumption behaviour, structural shifts in demand, and the lived realities of a growing middle-income population navigating rising aspirations and costs.
The long arc of consumption change since 1999-2000
Looking at MPCE trends from 1999-2000 to 2023-24 reveals a steady transition away from subsistence-driven spending. In this analysis, MPCE is expressed as proportional expenditure — how much is spent on an item out of every ₹100 of total consumption — allowing meaningful comparison across time.
The most striking change is the decline in the share of food and beverages. Urban households reduced food spending from about ₹48 to ₹39 per ₹100, while rural households saw a sharper fall from roughly ₹59 to ₹47. This pattern reflects a well-established economic principle: as real incomes rise, the share of income spent on food declines, even when people eat better in absolute terms.
From cereals to diversity: what Indians are eating
Within food expenditure, the composition has changed as much as the share. Spending on cereals has fallen, while expenditure on fruits, eggs, fish and processed foods has risen. This signals a gradual move away from staple-heavy diets towards more diversified, protein-rich consumption.
However, the transition is uneven. Better-off households benefit more from dietary diversification, while poorer sections still remain constrained by affordability and access. Nutrition outcomes, therefore, continue to reflect income and regional disparities.
Intoxicants: low share, persistent concern
Spending on pan, tobacco and other intoxicants remains a relatively small part of household budgets, accounting for less than ₹3.8 per ₹100 of MPCE, even with marginal increases in rural areas. From a public health perspective, this suggests that while the expenditure share is low, targeted awareness and behavioural interventions in rural belts remain important to prevent long-term health costs.
Fuel, energy and the logic of substitution
Per capita spending on fuel and light has declined, reflecting important structural and policy shifts. Expanded rural electrification under schemes like Saubhagya and access to clean cooking fuel through Pradhan Mantri Ujjwala Yojana have reduced reliance on kerosene and biomass.
In urban areas, lower spending shares may also reflect the adoption of energy-efficient appliances and more reliable power supply. This is a classic case of expenditure substitution: households move to better-quality services while spending a smaller proportion of their total budget.
Clothing and footwear: from necessity to discretion
The share of spending on clothing, bedding and footwear has declined moderately across both rural and urban India. This aligns with a broader shift from need-based consumption to periodic, discretionary purchases. Increased competition, fast fashion, and falling textile prices have likely contributed.
Interestingly, rural spending in this category remains comparable or slightly higher, possibly reflecting seasonal demand and rising aspirational consumption as rural incomes diversify.
Housing rent and the urban squeeze
One of the sharpest urban changes is in housing rent. The urban rent share rose from about ₹4.46 to ₹6.58 per ₹100 of MPCE, reflecting rapid urbanisation, migration to metropolitan centres and growing rental stress. In contrast, rural rent remains negligible due to widespread self-owned housing, informal tenure arrangements and rent-free living.
This divergence highlights how urban growth increasingly comes with higher fixed costs, reshaping household vulnerability and savings behaviour.
The rise of “miscellaneous” spending and aspirations
The most telling shift is in the miscellaneous category, which includes health, education, conveyance and consumer services. Its share rose dramatically, especially in rural India — from ₹21.87 to ₹35.82 per ₹100 of MPCE. This indicates a broadening consumption basket and deeper integration into markets and services.
The trend reflects inclusive growth dynamics: better access to healthcare and education, rising mobility, digital penetration and expanding service delivery, both public and private.
What to note for Prelims?
- HCES and its role in poverty and welfare estimation
- Meaning and significance of MPCE
- Rural–urban differences in consumption patterns
- Impact of energy and housing policies on household spending
What to note for Mains?
- Consumption transition and structural change in the Indian economy
- Link between rising incomes, diet diversification and nutrition
- Urbanisation, housing stress and cost-of-living pressures
- Using consumption data to assess inclusiveness of growth
Taken together, the latest HCES data shows an economy in transition. Indian households are steadily moving away from survival-driven spending towards aspirational, service-oriented consumption. The challenge for policy is to ensure that this transition remains broad-based, affordable and resilient — so that rising aspirations do not translate into new forms of vulnerability.
