Household Consumption Expenditure Survey (HCES)

The Household Consumption Expenditure Survey, or HCES, is a large national survey that asks lakhs of families how much they spend each month and on what: rice, milk, vegetables, rent, fuel, clothes, school fees, medicines, phones and more. It is conducted by the National Statistics Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI).

Its results tell us how Indians live, how much they consume, and how this differs between villages and cities and between rich and poor families. It is also the base on which India builds its price index, poverty estimates and parts of its GDP data.

Why does it exist?

India has no reliable data on the income of most families, because many people work in farms or small informal jobs without salary slips. But every family knows what it spends. So India measures living standards through spending, not income. This spending data answers big questions: How many people are poor? Is inequality rising or falling? What share of a family's budget goes to food? Without it, the government would be making policy in the dark.

Where did it come from?

The survey has a long history:

• 1950: The National Sample Survey (NSS) was set up, with the statistician P.C. Mahalanobis playing a leading role. Consumption surveys were part of its work from the start.
• From 1972-73, large "quinquennial" (once every five years) consumption surveys became the main source of poverty data.
• 2011-12 (68th round): The last full survey for more than a decade.
• 2017-18 (75th round): In November 2019, the government decided not to release the results, saying the data had quality problems. This left India without fresh consumption data for years.
• 2022-23: A new, redesigned survey was conducted from August 2022 to July 2023. Its factsheet was released on 24 February 2024.
• 2023-24: A second survey followed, from August 2023 to July 2024, with a factsheet in December 2024.
• 2019: Separately, the NSSO (which ran the survey) and the Central Statistics Office were merged to form today's National Statistics Office (NSO).

How does the survey work?

Trained field staff visit randomly chosen homes across all states and union territories.

• In the new design, each household is visited three times in three separate months within a quarter. Each visit uses a different questionnaire: one for food (FDQ), one for consumables and services (CSQ), and one for durable goods (DGQ). Earlier rounds used a single long questionnaire in one visit, which tired people out and led to errors.
• Families are asked about spending over different reference periods (recall periods), depending on how often an item is bought. Items bought often, such as milk, eggs and edible oil, are asked for the last 7 days. Other food and fuel are asked for the last 30 days. Rarely bought items such as clothes, education fees, hospital care and durable goods are asked for the last 365 days. This mix is called the Modified Mixed Reference Period (MMRP).
• The survey also records the value of free items families get from government schemes, such as free ration grain, laptops or bicycles. This lets MoSPI publish spending both with and without these free items.

The key result: MPCE

The main output is Monthly Per Capita Consumption Expenditure (MPCE): the average amount spent per person per month. To find it, the household's monthly spending is divided by the number of people in the household.

In 2023-24, MPCE including the value of free items was ₹4,247 (rural) and ₹7,078 (urban). The survey covered 2,61,953 households (1,54,357 rural and 1,07,596 urban).

What else does it show?

• Food share is falling. In 2023-24, food was 47.04% of rural spending and 39.68% of urban spending. Non-food items (transport, health, education, rent, phones) now take the larger share. As people get richer, food takes a smaller part of the budget. Economists call this Engel's law.
• Inequality in spending has fallen. The Gini coefficient of consumption fell from 0.266 to 0.237 in rural areas and from 0.314 to 0.284 in urban areas between 2022-23 and 2023-24.
• Diets are changing. Families spend relatively more on beverages, processed food, milk, eggs, fish and meat, and relatively less on cereals.

Why does HCES matter so much? Its four big uses

1. CPI weights: The new CPI series (base year 2024, launched February 2026) takes its weights from HCES 2023-24. If families now spend 37% of their budget on food, food gets about that weight in the price index. The old CPI used 2011-12 survey data, so it gave food too much weight for today's India.
2. Poverty estimates: India's poverty lines (Tendulkar method, 2009; Rangarajan method, 2014) are defined in terms of consumption spending. Without fresh HCES data, India cannot measure poverty properly.
3. GDP: Household consumption, called Private Final Consumption Expenditure, is the largest part of India's GDP. HCES data helps estimate it and revise the GDP base year.
4. Policy and welfare: It shows which states, regions and groups are falling behind, which helps target schemes.

Commonly confused concepts

• HCES vs PLFS: HCES measures what families spend. The Periodic Labour Force Survey (PLFS) measures jobs and unemployment. Both are run by the NSO.
• HCES vs NFHS: The National Family Health Survey (NFHS) measures health and nutrition (stunting, anaemia, vaccination). It is run by the Health Ministry through the International Institute for Population Sciences, not by the NSO.
• MPCE vs per capita income: MPCE is what a person spends in a month, based on a household survey. Per capita income is national income divided by population, based on GDP data, and includes savings and business income.
• Consumption vs income inequality: Inequality in spending is usually lower than inequality in income, because rich people save a big part of their income. So a falling consumption Gini does not automatically mean income inequality is falling.
• HCES (survey) vs CPI (price index): HCES tells us what families buy and in what share. CPI tracks how the prices of those items change. HCES provides the weights; CPI provides the monthly inflation number.

Issues, criticism and the way forward

• Comparability: The 2022-23 and 2023-24 surveys changed the method (three visits, separate questionnaires). Some economists say this makes direct comparison with 2011-12 risky, especially for poverty trends.
• Missing the rich: Very rich households often refuse to take part or under-report spending, so inequality may be underestimated.
• The 2017-18 gap: Holding back the 2017-18 results created a long data gap and raised questions about the transparency of official statistics.
• No official poverty line: India has not officially adopted a new poverty line using the new data. Different experts compute different poverty figures from the same survey.
• Way forward: Experts suggest releasing full unit-level data quickly, holding the survey at regular intervals, updating the CPI and GDP base years more often, and setting up a committee to fix a new official poverty line.

Concepts to Know

• Sample survey: Instead of asking every family in India, the government asks a carefully chosen random group of families. If the sample is chosen well, its results reflect the whole country.
• Reference period (recall period): The length of past time a family is asked to remember its spending for, such as "the last 7 days" or "the last 365 days".
• Durable goods: Things that last a long time, like a fridge, TV, scooter or furniture.
• Gini coefficient: A number between 0 and 1 that shows inequality. 0 means everyone has the same; 1 means one person has everything. A lower Gini means a more equal society.
• Engel's law: An economic idea that as a family's income rises, the share of its budget spent on food goes down, even if the amount spent on food rises.
• Weights (in a price index): How much importance each item gets in the index, based on how much families spend on it. Items families spend more on get a bigger weight.