RWAs a barrier, Government may let high-income households compile own spending data

In this method, households note down the information themselves, as and when the relevant activity occurs. In the case of the HCES, this would mean jotting down how much is spent in a month on different goods and services, ranging from food items to haircuts.

The most recent HCES, conducted from August 2023 to July 2024, saw 2.6 lakh households being surveyed from across the country, barring a few inaccessible villages in the Andaman and Nicobar Islands. The survey sought responses for a total of 405 goods and services.

While it is called “diary-ba­sed data collection”, households may not have to actually note down their expenses in a physical diary. The ministry, which now uses tablets to record responses to its surveys, may employ a system where such households can enter their consumption expenditure details on an online portal, sources said.

“This is at a planning stage, but the thought is to use the diary method only for richer households who live in gated societies on a pilot basis before the 2027-28 consumption expenditure survey begins,” said an official aware of the deliberations.

“It is an open secret that participation of richer households living in societies and RWAs in our surveys is reducing. The diary method is used in other countries, so maybe we can give it a try too,” the official said.

The overall urban non-response rate during the 2022-23 HCES jumped to 9.8%, from 2.8% in the 75th round of the National Sample Survey, conducted from July 2017 to June 2018. In rural areas, the non-response rate increased to 4.1% from 1.5% during the same period. For the most affluent urban and rural respondents, the non-response rate was 11% and 3.9%, respectively. In the 2011-12 survey, the corresponding figures were 3.3% and 1.3%.

‘Recall error’ problem

While a diary-based system is “always better”, the problem for MoSPI will be how two data sets compiled through different methods will be “stitched together”, said Pronab Sen, India’s first chief statistician.

Data collected through surveys suffer from what is called a “recall error” — people can make errors in remembering their expenditure details. The diary method minimises this problem as households can write down the information as and when they make the purchase.

With lower literacy rates in the low-income group, only higher-income households may be able to correctly follow the diary method. This segregation of methods creates a problem: data collected from the former group through door-to-door surveys would have higher recall errors than diary-based data supplied by the latter group.

This problem is not insignificant as India’s survey samples are dominated by the low-income group.

So, while the diary approach is “not a bad idea”, Sen warned that “you can’t wish away the recall error” which separates the two different sets of data.

Saying that the ministry is looking into the matter, a source said: “This is something we are thinking about —how the data compiled by the diary method can be integrated with the main survey”.

The HCES gives a measure of how much people spend on various goods and services, tracking the change in consumption patterns across different levels of consumers in rural and urban areas. It is key to understanding not just household consumption behaviour, but also standards of living, well-being and inequality.

The share of expenditure on different items is also used to update the Consumer Price Index (CPI) basket, which forms the basis of one of the most important economic indicators, the headline retail inflation.

It is this measure of change in prices that the Reserve Bank of India looks at while deciding on interest rates. The central bank’s CPI inflation target is 4% in a band of 2-6%.

In the past, the HCES was conducted every five years. However, after an overhaul of the methods, two back-to-back surveys were conducted in 2022-23 and 2023-24. Going forward, the ministry intends to conduct the HCES every three years or so.

MoSPI vs RWAs

Concerned by the falling participation of high-income households in its surveys, MoSPI held a “brainstorming session” with representatives from more than 75 organisations and housing societies from across the country in September 2024, hoping to find solutions to the issues it faced — from survey staff not being allowed to enter gated societies, to the lack of awareness on why these surveys are important for policy purposes, often leading to refusal to provide information.

With the government looking to make its policies increasingly data and evidence driven, a rise in non-response rates can lead to inappropriate conclusions being drawn and decisions not leading to desired results.

A rise in non-response rates can curtail the sample size of surveys. If these non-responses are from a certain segment, the final composition of the sample may be different from what was intended, leading to incorrect estimates from the exercise.

On the other hand, RWAs voiced concern on the sensitive and private nature of some questions, and the apprehension that the details may be shared with other government departments. MoSPI has assured that data privacy is of paramount importance, and the data is anonymised.

They also cited the inability to remember details, and the discomfort in answering certain questions in front of family members — like expenditure on alcohol and cigarette consumption. RWAs cited security issues as a reason for not permitting survey staff inside gated societies.

MoSPI’s field officers already follow an elaborate procedure to gain access to gated societies, including informing the district collector, local bodies, and the police station for necessary permission and support.

Sometimes, according to sources, residents just say that they don’t want to participate in a survey. For instance, residents of an affluent society in Gurugram refused to take part in MoSPI’s Time Use Survey. Similar incidents have also been reported from high-rises in Bengaluru, Kolkata, Udaipur, Mumbai and Bhopal, among others, over the years for various surveys, including the HCES, the government’s flagship Periodic Labour Force Survey, the Annual Survey of Unincorporated Sector Enterprises, and the Urban Framework Survey.

While the survey work was finally completed in some cases, the ministry had to “substitute” the original residential society with a similar one in other cases, said sources.