Living standards in 'model' Gujarat worse than major states: Govt of India document

Amidst raging controversy over whether the latest Government of India’s “Household Consumption Expenditure Survey 2022-23 Fact Sheet: August 2022-July 2023” suggests that India’s poverty levels are actually down to 4.5 to 5% during the decade-long Narendra Modi rule, a state-wise breakup in the 27-page document shows that “model” Gujarat’s average consumption expenditure is far below most of the so-called developed states.

Based on household consumer expenditure survey (HCES) in order to ascertain “living standards” across India, the state-wise estimation of average monthly per capita consumption expenditure (MPCE) suggests that Telangana, Himachal Pradesh, Haryana, Karnataka, Tamil Nadu, Kerala, Uttarakhand, Andhra Pradesh and Maharashtra – including two major smaller states, Delhi and Goa and several Union territories – have higher MPCE in urban areas.
Worse, while Gujarat’s urban MPCE – estimated at Rs 6,683 – is a little above the national average, Rs 6,521, the state’s rural MPCE, Rs 3,820, nearly half of the state’s urban MPCE, is below the national average (Rs 3,860). The states which have better rural MPCE than Gujarat’s are – Kerala, Himachal Pradesh, Tamil Nadu, Punjab, Andhra Pradesh, Telangana, Haryana, Uttarakhand, Karnataka, Rajasthan and Maharashtra, apart from other important smaller states like Delhi and Goa and several Union Territories (click here for full table).
Explaining the concept of per capita income or per capita (overall) expenditure which has been used, the top Government of India document says, it is “used for comparison of average living standards between countries, between regions, and between social or occupational groups.” It adds, “MPCE, therefore, is defined first at the household level: household monthly consumption expenditure, divided by household size. This measure serves as the indicator of the household’s level of living.”

“Next”, states the document, “Each individual’s MPCE is defined as the MPCE of the household to which the person belongs. This assigns to each person a number representing his or her level of living. The distribution of persons by their MPCE (i.e., their household MPCE) can then be built up, giving a picture of the population classified by economic level.”
Released by the Ministry of Statistics and Programme Implementation’s (MoSPI's) National Sample Survey Office (NSSO) last week, the household surveys were carried out between August 2022 and July 2023 in as many 1,55,014 rural and 1,06,732 urban households in order to ascertain living standards India. Of these, the surveyors – who were divided into 10 panels – visited Gujarat’s 5,726 rural and 5,560 urban households.

While estimating living standards, if the survey offers all-India estimates of MPCE across 10 different classes each for rural and urban areas across India, ironically, it does not offer state-wise MPCE of different classes, making it impossible to ascertain the average living standard of the poorest of poor sections versus those who are in the top stratum of society, for instance, in Gujarat. These are likely to be known in June 2024 only, i.e. after the Lok Sabha elections, when the full HCES report is likely to be released.

Meanwhile, allegations have been made that the Fact Sheet has been released alongside the Niti Aayog interpretation ahead of the Lok Sabha polls in order to take political mileage. Top economist Prof Arun Kumar says that, based on the Fact Sheet data officials have claimed that poverty in India has declined to less than 5% of the population is poor. However, the alleged fall in poverty is based on current prices, without taking taking into account inflation.
According to him, “At current prices, the increase in average consumption looks impressive. It increased 164% in rural areas to Rs 3,773 (from Rs 1,430 in 2011-12) and in urban areas by 146% to Rs 6,459 (from Rs 2,630 in 2011-12). But most of it is due to inflation. Adjusting for inflation, the real increase is 40% and 33.5% for rural and urban areas, respectively. This is in 11 years.”
Stating that the Fact Sheet does not make any reference to poverty eradication, nor is there suggestion of any poverty line given by the HCES, economists wonder, how is the value judgment made by Niti Aayog – that poverty has fallen? Asks Prof Arun Kumar, “What is the poverty line that is being used to claim that poverty has declined? Poverty has to be defined as ‘minimum social necessary consumption’. This is space and time specific. So, it keeps changing.”

Thus, he says, “The World Bank has changed its poverty line recently from $1.9 to $2.15 per person per day. This amounts to about Rs 26,000 per family of five per month. Even adjusting for nominal dollars, it would be about Rs 10,000 per family per month. If this poverty line is considered, then the number of poor would be much more than the 5% being quoted by officials.”
Offering a breakup suggesting the difference in standard of living between different classes, the Fact Sheet gives the following data, “The bottom 5% of India’s rural population, ranked by MPCE, has an average MPCE of Rs 1,441 while it is Rs 2,087 in the urban areas. The top 5% of India’s rural and urban population, ranked by MPCE, has an average MPCE of Rs. 10,581 and Rs 20,846, respectively.”
It further notes, “Among the states, MPCE is the highest in Sikkim for both rural and urban areas (rural – Rs 7,731 and urban – Rs. 12,105). It is the lowest in Chhattisgarh (rural – Rs 2,466 and urban – Rs 4,483). The rural-urban difference in average MPCE, among the states is the highest in Meghalaya (83%) followed by Chhattisgarh (82%). Among the Union Territories, MPCE is the highest in Chandigarh (rural – Rs 7,467 and urban – Rs 12,575), whereas, it is the lowest in Ladakh (Rs 4,035) and Lakshadweep (Rs 5,475) for rural and urban areas respectively.”

Meanwhile, a keen observer has noted that, besides the #GiftCity, the Gujarat model of growth has given another gift to the state. Data in the document shows that, taking into account all the states and Union Territories, it has "slipped to 26th rank in rural spending from 23rd and to 20th from 19th in urban consumer spending among 36 states and UTs in India since the last survey", he said. "MoSPI data crunchers take note."