Maharashtra, Haryana saw biggest drop in rural consumer spending: NSO data

The steepest fall in consumer spending in rural areas happened in Maharashtra and Haryana, the National Statistical Office’s (NSO’s) consumer expenditure survey of 2017-18 showed.

Incidentally, the two states went to Assembly polls in October and the NSO’s survey was supposed to be officially released in public domain in June. The government has decided to junk the survey over ‘data quality’ issues.

The survey was conducted between July 2017 and June 2018, which coincided with the implementation of the goods and services tax and came a few months after the government’s demonetisation move.

The NSO’s survey ‘Key Indicators of Household Consumption Survey’ indicates that industrial states such as Haryana, Maharashtra, and Karnataka took the biggest hit in consumer spending. Business Standard has reviewed a copy of the report — approved by a committee in June 2019, but termed as a ‘draft’ by the Ministry of Statistics and Programme Implementation recently.

Rural parts of Haryana and Maharashtra saw an 18 per cent fall in consumer spending in 2017-18, compared to 2011-12, when the previous round of the NSO survey was conducted. Haryana saw the sharpest dip in both urban and rural areas.

“Demonetisation caused big distress in micro, small and medium enterprises (MSMEs). Haryana has a large share of MSMEs and in such states, we would expect 2017-18 to be a bad year,” Jayati Ghosh, professor of economics at Jawaharlal Nehru University, said.

Business Standard did an analysis of the monthly per capita consumption expenditure (MPCE) of 17 major states between 2011-12 and 2017-18. The MPCE was taken in real terms, meaning it was adjusted for inflation based on 2011-12 prices of (CPI) Consumer Price Index (rural) and CPI (urban).

The biggest fall in consumer spending in villages in 2017-18, after Haryana and Maharashtra, was seen in Karnataka (by 17.8 per cent), Jammu & Kashmir (16.8 per cent), Bihar (15.8 per cent), and Rajasthan (12.3 per cent), compared to 2011-12.

Uttar Pradesh (UP) was the only state where consumer spending went up in both cities and villages. In urban areas, it was up by 7.8 per cent and in rural areas by 1.2 per cent, in the six-year period till 2017-18. “The one element unusual about UP was that the Assembly elections were held in UP (in February-March 2017). A high expenditure by political parties during elections could have led to higher consumption,” said Ghosh.

Bihar, Jharkhand, and Chhattisgarh saw steep decline in villages, despite being the states with the lowest monthly expenditure.

Some states saw a divergent trend in villages and cities. For instance, while people in rural parts of Gujarat cut down on their spending by 9.5 per cent, their urban counterparts increased their expenditure by around 13 per cent.

The biggest jump in expenditure was seen by urban areas of Punjab by 17 per cent from 2011-12 to 2017-18, followed by Chhattisgarh (16 per cent), and Bihar (15.6 per cent).

Experts say a fall in consumer spending is an indicator of rising poverty. At an all-India level, consumer expenditure declined for the first time in over four decades in 2107-18.

In nominal terms, it fell by around 4 per cent in 2017-18, compared to 2011-12 (taking CPI for agricultural labourers and industrial workers with 2009-10 into account). If one considers CPI (rural) and CPI (urban), the consumption expenditure fell by around 3 per cent in this period.