India's consumption puzzle: PFCE vs HCES, a data divide

The article below by Ashish Kumar and Payal Seth is a compelling read and requires further attention. I am surprised to see the decline in the food share in the Rural HH consumption in India. Is it because of a higher food inflation? While testing for the volatility of inflation in India, I have observed high volatility in food inflation compared to the non-food inflation between 2008 and 2020. Despite the inflation targeting regime implemented in 2016, the food prices has gone up. Read more in here: https://lnkd.in/gbU3JAdE However, I would like to know more about why the components of food, like cereals and pulses went down! Is it a reflection of change in dietary preferences? #consumptiondata #India #foodinflation #inflationtargeting

Household spending in India is shifting towards debt and education. According to a report by Worldpanel, average quarterly expenses have risen from ₹42,000 in 2022 to ₹56,000. Urban families spend the most, but rural households have seen a sharp surge in spending too.

📊 Household Expenditure Distribution in India (PLFS Data) Using the Periodic Labour Force Survey (PLFS) microdata, I examined monthly household expenditure. Findings: Mean expenditure: ₹ 13,567.08 Median spending: ₹ 11,642 Standard deviation: ₹ 8134.64 The fact that the mean is higher than the median indicates a positively skewed distribution. This means that while most households spend relatively modest amounts, a smaller share of households with high expenditure values contributes to the increase in the average. Such skewness is common in income and expenditure data, reflecting inequality in consumption patterns. 📌 Source: Periodic Labour Force Survey (PLFS), Ministry of Statistics and Programme Implementation (MoSPI), Government of India. 📌 Note: Analysis and visualisation are my own; these are not official MoSPI estimates. #DataAnalysis #Statistics #PLFS #India #Economics

📢 New Publication Alert I am pleased to share my latest article, “Is Consumption Inequality Declining? – What the 2022-23 NSSO Survey Tells Us”, published in the RBI Bulletin (September 2025). The article examines household consumption patterns across India using the 2022-23 NSSO Household Consumption Expenditure Survey – the first such release in over a decade. Key insights include: ✅ Evidence of convergence in consumption expenditure across rural–urban households, expenditure classes, and states. ✅ A notable decline in consumption inequality compared to 2011-12. ✅ Updated poverty estimates (using the Rangarajan Committee methodology), highlighting a significant fall in poverty incidence across states. These findings have important implications for understanding inequality, living standards, and inclusive growth in India.

We use the NSSO's household consumption expenditure survey to analyse how consumption inequality and poverty has changed over the past decade. Published in September's RBI bulletin.

I recently had this conversation with a friend and while this fact is widely known, most of us don’t fully grasp how serious it is. India’s per capita income is misleading. It’s an average that conceals extreme inequality. A small top fraction especially the richest 5% contributes a disproportionate share to the national income. Their wealth artificially inflates the average, giving a false sense of prosperity. If you remove these households, the per capita figure drops significantly, revealing the economic reality of the majority. The numbers speak volumes: The top 10% own 67% of national wealth The top 1% hold over 40% Meanwhile, millions survive on less than ₹10,000/month This isn’t just a statistical issue it shapes how most people live: Stagnant consumption Poor access to healthcare and education Limited social mobility "When the distribution is skewed, the average becomes meaningless." — Professor Debraj Ray, Economist We need to move beyond feel-good metrics like per capita income. Real progress demands we also track median income, wealth distribution, and access to basic services indicators that reflect the lived experience of the majority. Because growth that benefits only a few isn’t progress it’s a warning sign. #India #Economy #IncomeInequality #InclusiveGrowth #PerCapitaIncome #WealthGap #DataDrivenPolicy #SocialImpact #LinkedInCommunity

A Closer Look at Inequality in India Top 1% income and wealth shares (22.6% and 40.1%) in India are at their highest historical levels. In fact, India’s top 1% income share is among the very highest in the world.  According to the World Inequality Report 2022, India is among the most unequal countries in the world, with the top 10% and top 1% of the population holding 57% and 22% of the total national income respectively. The share of the bottom 50% has gone down to 13%. Around 74% of India’s population could not afford a healthy diet, and 39% fell short of a nutrient-adequate one. Child stunting prevalence is 35.5%; child wasting rate at 18.7% is amongst the highest in the world. The Indian income tax system appears to be regressive when viewed from the lens of net wealth. Approximately 64% of the total goods and services tax (GST) in the country came from the bottom 50% of the population, while only 4% came from the top 10%. The quality of economic data in India is notably poor and has seen a decline recently. It is therefore likely that these results represent a lower bound to actual inequality levels. There is a need for improved access to official data and greater transparency to enhance the study of inequality and enable evidence-based public debates. This has to be addressed if we have to meet the ambitious target of transforming India into a 'developed country' by 2047.

Official Inflation in India is 2.07%. But, school fee, rent, food etc all goes up at least by 10% So why this disparity? Inflation means rate of change of prices. A better question to ask is: for whom exactly? Technically: - Nearly 81.35 crore Indians (roughly 58% of the population) receive free food grains. - Around half of all school-going children are enrolled in government schools that offer free education. - And, around 86-87% of the population in India own their own house. The real inflation (10% or more) actually hits middle/upper-income urban Indians, who rely more on private schools, rental housing, and non-subsidized goods.

🔍 Inflation in India – Who Really Feels the Heat? While we often talk about inflation as a single number, the reality on the ground is very different. A deeper look reveals inflation disparity – and it begs the question: Inflation for whom exactly? 📊 Key insights: 🍚 58% of Indians receive free food grains from the government 🏫 50% of school-going children are in free government schools 🏠 86% of Indians actually own their homes So, who really bears the brunt of rising prices? ➡️ Those paying school fees in private institutions ➡️ Those renting homes instead of owning ➡️ Those relying on non-subsidized goods and services 💡 Inflation doesn’t impact everyone equally – and this matters when crafting policies, setting interest rates, or designing welfare programs. Let’s shift the conversation from “What is inflation?” to “Who is inflation hitting the hardest?” #Inflation #IndiaEconomy #PolicyMatters #FinancialInclusion #EconomicDisparity #LinkedInInsights

🔍 Inflation in India – Who Really Feels the Heat? While we often talk about inflation as a single number, the reality on the ground is very different. A deeper look reveals inflation disparity – and it begs the question: Inflation for whom exactly? 📊 Key insights: 🍚 58% of Indians receive free food grains from the government 🏫 50% of school-going children are in free government schools 🏠 86% of Indians actually own their homes So, who really bears the brunt of rising prices? ➡️ Those paying school fees in private institutions ➡️ Those renting homes instead of owning ➡️ Those relying on non-subsidized goods and services 💡 Inflation doesn’t impact everyone equally – and this matters when crafting policies, setting interest rates, or designing welfare programs. Let’s shift the conversation from “What is inflation?” to “Who is inflation hitting the hardest?” #Inflation #IndiaEconomy #PolicyMatters #FinancialInclusion #EconomicDisparity #LinkedInInsights