To understand poverty and affluence in a country, researchers turn to the distribution of incomes of households within a country. The most direct way to examine household incomes would be to either use income tax assessment data, or by surveying households on their incomes. However in India, just 8% of the adult population files income tax returns.[1] Additionally, India's statistics ministry did not conduct a household income survey until 2026.[2] The largely informal nature of work in India, coupled with the seasonality of agricultural incomes, makes the accurate estimation of household incomes challenging.[3] In India and other such developing country contexts, economists use household consumption expenditure as a proxy or substitute for household income. Consumption expenditure plus household savings minus household debt broadly equals income.
Household spending is also a good measure of living standards in the population - richer households spend more and on a wider set of goods and services, than poorer households are able to.
India's National Statistics Office (NSO) has conducted household consumer expenditure surveys (HCES) from as early as 1950 to record the amount spent by households on goods and services that they consume for their domestic needs. Trained enumerators visit a representative sample of the population, carrying questionnaires with a long list of items, and record the quantity consumed and the money spent on these items.
The past and the present
Consumer expenditure surveys were conducted annually from 1950 to the early 1970s, and once every five years from 1972-73, although there have been deviations from the schedule a few times.[4] The latest surveys in the HCES surveys were conducted in 2022-23 and 2023-24, more than a decade after the previous official survey.[5]
The HCES 2024 was conducted between August 2023 and July 2024 in the entire country covering a sample size of more than 260,000 households (more than 150,000 in rural areas and close to 110,000 in urban areas) across all states in India.[6] The sample is designed to be representative of the country in terms of demographic and socioeconomic characteristics like region, social group, education and economic class.
Enumerators now use a tablet to collect data and have been trained in the Computer Assisted Personal Interviews (CAPI) method. The long questionnaire is divided into three parts, and administered over three visits to each household.
India's household consumption expenditure surveys record the value of consumption in rupees for over 400 goods and services typically consumed by a household. While canvassing, enumerators usually list the item to the respondent and ask the respondent the quantity consumed and amount spent on that item during a fixed reference period. The final numbers presented are adjusted to estimate monthly expenditure.
Coverage of goods and services
The list of items covered in HCES 2024 includes both food and non-food categories. For food, respondents are asked about their consumption of all food items typically consumed in an Indian household, from salt and oil to meats and processed food. Non-food expenditure includes spending on goods like clothing and cosmetics, services like health and education, rent, major goods purchased during the year including ACs and washing machines, as well as relative luxuries like jewellery and entertainment. It also includes property taxes, utility charges and government fees.
Consumption expenditure includes the value of items produced in the household or the farm, as well as transfers from employers or the government. Enumerators assign value to food items produced at home by using the quantity and the price at the farm gate, and not the retail price. For others, including transfers in kind or any reimbursements from employers such as travel allowances meant for families, the prevailing local retail prices are used to calculate the value and record that in the data.
The list of items in the questionnaires do not include income tax, interest payments, insurance, purchase and construction of land and buildings, charity and gifts. While insurance premium is not a part of consumption expenditure, medical bills paid by insurance companies are included in the information collected. The questionnaires do not ask whether money being spent was earned through legal or illegal means.
Over the past decades, several items have been added to the list of items in the canvassing schedule of HCES, and several items have also been removed from the list, in order for it to accurately reflect changes in household spending habits over time. For instance, spending heads on online purchases of food and other household articles, spending on health supplements and sports equipment were added to the list in HCES 2023.
The enumerator asks one respondent per household - the designated head of the household or whoever is available at that time - for all of the information for the household. This data is later added up after the survey is completed to produce an estimate of monthly household expenditure. The HCES assumes that spending is equally distributed between all members of the household. Per capita expenditure, as a result, is the household's expenditure divided by the number of people in that household.
Reference periods
The HCES requires the respondent to recall the amount spent on/quantity consumed of a good or service she used during a specific recent period, called a reference period. All expenditures are then normalised to a 30-day period to get the monthly spending.
The HCES uses different reference periods for different types of goods and services. For instance, perishable goods like vegetables and milk have a seven-day reference period owing to their frequent purchases over a week. Cereals have a reference period of 30 days since households do not buy cereals and pulses that frequently, but they generally do on a monthly basis. Expenditures such as those on durable goods, education, and health are borne by households over longer periods, and have a reference period of 365 days.
The mix of reference periods used in HCES 2023 is called the Modified Mixed Reference Period and has been used as the sole reference period for the first time.
Methodological changes
The HCES 2023 and 2024 differ significantly from the previous versions of consumer expenditure surveys (2012 and before), but particularly in two ways - the sampling design and in the way the questionnaire was administered.
Sampling procedure
The HCES 2023 made several important changes in the sampling procedure.
The first stage of sampling demarcates the broad contours of regions to be selected for further stratification into smaller regional units, followed by selection of villages (in rural areas) and blocks (in urban areas).
Until 2023, consumer expenditure surveys used the district as the sampling unit. The rural areas in a district formed one division (called stratum) and the urban areas formed another. If the urban part of a district had towns with a population of more than 1 million, that town or city would be considered a separate stratum.
Since 2023, the HCES has used the state as the basic sampling unit. Within a state, it divides rural areas in two kinds of villages based on proximity to urban centres. Villages within 5 km from the district headquarters or a city form one sub-set (called sub-stratum), while the remaining villages form the second one.
The reasoning behind this change is to ensure that households belonging to different economic strata are represented to a better degree than before. For instance, the population in peri-urban areas or localities in rural areas adjacent to cities has grown rapidly in India. These areas generally represent households who are connected to agriculture on one hand, and have economic links in the city or town on the other hand. The urban proximity rule mentioned above ensures adequate representation to such a population.
In the urban sector, groups are made using population thresholds. Further sub-grouping in urban areas is done based on whether the block is affluent or not.[7]
The second stage of sampling involves the selection of households in the sampling units. In previous versions of HCES, the surveyors divided the rural unit in three parts in the second stage of sampling - the relatively affluent households in the village in the first group, those which earn primarily from non-agricultural activities in the second, and the remaining households in the third.
The HCES since 2023 makes land ownership a key factor in the sampling process. It creates three groups within a selected village based on land ownership in the following manner. The first group is of households that fall in the top 5% in terms of the size of owned land.[8] The second group is of households that appear between the 5th and the 20th percentile, and the third group is the remainder - or the bottom 80% of the households by land ownership size.
In urban areas, the older HCES divided blocks into three groups based on their Monthly Per Capita Consumption Expenditures while selecting sample households.[9] The first group of households covered the population falling in the top 10% by MPCE, the second group covering the middle 60% of the population, and the third group covering the bottom 30% by MPCE.
Since 2023, the HCES has created three groups to select urban sample households based on car ownership instead. The first group comprises the households that own a car or cars whose purchase price is more than Rs 1 million, the second group comprises those who own a car but whose price is less than Rs 1 million (representing entry level cars in India) and the third group is of the remaining households who do not own a car.[10]
The use of variables such as the size of land owned, or the purchase value of the car owned, are the changes brought in by the NSO that are meant to improve the identification of the affluent for the sample. Land records and car ownership are both easier to measure, and tend to be correlated with the relative economic status of the household. The NSO's reasoning is that stratification using sampling that looks for tangible assets reflects the actual socio-economic scenario in a better manner among the sample households.
Once the three-grouped stratification is made, the number of households selected from each group is in proportion to the population in that group.
Questionnaire administration
While the past surveys recorded the consumption spending on all services and goods in a single visit, the 2023 HCES began to record them in three visits over successive months. The NSO's reasoning here is that the single-visit method induced fatigue among respondents due to the length of the questionnaire and the time taken to canvas it.
The three separate questionnaires covered food, consumables and services, and durable goods, respectively.
The changes in both the sampling procedure and in the canvassing of the questionnaires makes the recent rounds of the HCES methodologically different from the previous rounds of consumer spending surveys. However, the NSO says that the new data is comparable with past data.[11]
[1] Data refers to the financial year 2024-25, and represents the number of people filing returns in that period. The official projections of population from the Office of the Registrar General and Census Commissioner of India estimate the adult population to be close to one billion in 2023.
[2] The National Statistics Office at the Ministry of Statistics and Programme Implementation is conducting the first National Household Income Survey between April 2026 and March 2027.
[3] The only other major national survey that estimates income is the India Human Development Survey conducted jointly by the National Council for Applied Economic Research and the University of Maryland. The latest survey results are expected in 2026.
[4] Household spending surveys from inception till the one conducted in 2011-12 were called Household Consumer Expenditure Surveys. The NSSO renamed the survey as Household Consumption Expenditure Survey from 2022-23. Raw data from the surveys conducted between 1950 and 1973 is not available in the public domain.
[5] The NSSO conducted an HCES in 2017-18, but its results were not published on account of what the government called data quality issues.
[6] The HCE survey of 2023-24 covered the whole of the Indian Union except a few inaccessible villages in the Andaman and Nicobar Islands.
[7] Affluence is measured in the Urban Frame Survey (UFS) conducted by the NSSO every few years. Field officials demarcate parts of the urban areas selected in the UFS as "affluent" using their own judgement or with consultation with people who have knowledge or expertise in that region. The UFS for the period 2022 to 2027 is currently being undertaken. No such survey exists for rural areas.
[8] Data from the results of a previously conducted survey are used here.
[9] Here too, the MPCE used was derived from the results of a previously conducted survey.
[10] The car is used as a household asset that determines the relative economic status of a household. This method is analogous to the wealth index used in the National Family Health Survey, which categorises sample households into five wealth buckets based on a score derived on the basis of the existence or the lack of basic household amenities, housing conditions, and durable assets.
[11] Survey on Household Consumption Expenditure: 2022-23, NSS Report No. 591, National Statistics Office.
