Bhubaneswar: THE Household Monthly Consumer Expenditure (MPCE) of the country has been out. In 2022-23, the MPCE was out after a whopping 10 yrs wait. But the release of the MPCE data by NSSO consecutively documents the high food inflation impact in 2023-24 on Indian households.
The food inflation in country has been high for last some years. As per the 2023-24 Economic Survey report, the average food inflation in the country almost doubled from 3.8 per cent in FY22 to 6.6 per cent in FY23. It spiked further to 7.5 per cent in FY24.
Similarly, RBI in its inflation outlook had earlier highlighted the following.
“In February 2024, vegetable inflation was up at 30.3% year on year, while pulses inflation was up at 18.9% and spices at 13.5%. Cereal inflation had tempered down to 7.6% in February 2024.”
As the year 2023-24 had high vegetable, pulses and cereal inflation, the household MPCE documents a big trend.
CONSUMPTION SPENDING ON CEREALS RISE
The MPCE data shows a rise in share of consumption of food items in year 2023-24. The main reason behind is attributed to high prices of cereals during the year 2023-24. (See the table below).
A look at the table shows when in 2011-12 the inflation was on the higher side (core inflation in double digit), the share of food consumption was higher (almost consuming more than half of a household’s spending).
When inflation slowed down, the share of cereal and food items consumption declined gradually to reach 4.91% and 46.38% in rural areas, and 3.64% and 39.17% in urban areas in 2022-23.
But higher food inflation led to a spurt in food spending among India’s populace. The proportion rose to near 5% and 47% in rural and 3.76% and 39.68% (near 40%) in urban households.
The inflation impact is documented well when one takes a look at a fall in per capital cereal consumption. (see the table below)
ODISHA 3RD POOREST STATE IN COUNTRY
A glance at the household MPCE released is a measure on people propensity to purchase. It displays the spending power of the populace.
The data released displays a rise in purchasing power of the people in Odisha. But the State continue tp languish in the bottom three in the country since last decade.
Odisha GROWTH STORY is hardly visible when one gives a glance at the data released by NSSO. State joining the big league states is still aeons away.
- In 2022-23, Rural MPCE of Odisha was estimated at Rs 2,996.
- The figure for the Urban areas put at Rs5,223. ■
- FLASHBACK - AT 2011-12 MPCE DATA ■
- In 2011-12, the rural MPCE was Rs 904.78
- The number for urban Odisha was Rs 1830.33
- 2023-24 NUMBERS
- The average MPCE in Rural Odisha rose to Rs 3,509
- The same for the urban households stood at Rs 5,925
- During the last 10 yrs, the rural consumption expenditure for the State up by 3.8 times
- The jump for urban has been 3.2 times.
NATIONAL MAP
- In 2022-23, All India rural MPCE was Rs 3773
- The MPCE for urban India estimated at Rs 6459
- Looking back at 2011-12,
- The rural MPCE was Rs 1430, and
- Urban at Rs 2630.
- During the last 10 years, the average rural MPCE of the country up by 2.9 times, and
- The urban by 2.7 times.
INFERENCE:
A CURSORY COMPARISON shows Odisha households exhibited a sharpher rise in propensity to spend vis-a-vis the national average counterparts. But DEVIL STILL IN DETAILS
- Nationally, the inequality between rural and urban India has posted a sharp fall.
- The difference between urban rural as % of rural MPCE in 2023-24 stood at 66.6% down from 83.9 % in 2011-12
ODISHA SCENARIO
- In 2023-24, The inequality in Odisha higher than national scenario.
- The difference as percentage of rural MPCE in 2022-23 at 68.85% % as against 66.6 % nationally.
- But a flashback of 2011-12 reveals the value at over 102%
- The sharp fall, however, shows big drop in inequality between rural and urban Odisha, during the last 10 yrs.
- Odisha rural households fare very poor in the country
- Though urban households have higher spending power than Bihar, West Bengal, UP and MP, it is far below the nationla average.
- Moreover, this urban rise vs rural rise also display the high inequality in economic power vetween rural and urban households in the State.
SORE POINT IN GROWTH STORY
- DESPITE growth, Odisha is still 3rd POOREST in country, if MPCE values are any indication.
- The rural MPCE value of Rs 3,509, which is 3rd POOREST after Chhattisgarh and Jharkhand – two newly formed state and mostly tribal dominated.
- In MPCE indicator, Odisha remained poorer than Bihar, Utar Pradesh and Madhya Pradesh
- Andhra Pradesh maintains its tempo:
- Rural Andhra Pradesh people have the propensity to spend Rs 2030 more than their Odishacounterparts.
BOTTOM LINE: For the Odisha govt, the MPCE is a wakeup call. It shows a rise in spending power but the rise is no match to its neighbours, except the newly formed and tribal dominated states.
The significant observation here is during high inflation times, states with lowest per capita spending bears the brunt in cutting expenses on medical and education. Th eGovt has to bring up policy meausres to boot rural per capita income, and thereby rural per capita spending.
