A comparison of estimates of private consumption expenditure available from household surveyand national accounts – study based on NSSO consumption expenditure survey (68th round) 2011–12

The estimates of final consumption expenditure of households including Non-profit Institutions Serving Households (NPISHs) are compiled by CSO using commodity flow approach and is called the Private Final Consumption expenditure (PFCE). In the commodity flow approach, value of different commodities and services flowing finally into the consumption process of households and NPISHs during the accounting year are worked out as a residual. This is done by first working out the total availability by adjusting for imports and exports in the total domestic production and then deducting intermediate consumption, capital formation, government consumption and change in stocks. The domestic production and intermediate consumption are the same as those compiled for estimating GVA for a financial year. As the Final Consumption Expenditure of NPISH is not estimated separately, they are included as a part of PFCE. The NSSO estimates are based on Household Consumption Expenditure Surveys (HCES). In this sample survey, the consumption expenditure of a random sample of households is ascertained directly by canvassing a well-designed schedule of enquiry whose coverage is broad enough to include almost every item of household consumption expenditure. The HCES provides estimates of average monthly per capita expenditure (MPCE). The NSS estimates of average per capita consumption expenditure, in conjunction with the estimated total population of the country also provides an aggregate estimate of the consumption expenditure of the households. There are a number of studies comparing the two sets of estimates which reveal that the gap between the two sets of estimates and has raised issues of validity as this data has been used extensively by policy makers and researchers for their studies on poverty and inequality. In this paper an attempt has been made to examine in detail the two sets of estimates using unit level data on item-level estimates from the Consumption Expenditure Survey of NSSO (68th Round) 2011–12. Besides examining in detail the difference in the NSS and NAS estimates for some specific item groups, rates and ratios have been worked out for these items using the unit level data which could be adopted for compiling annual PFCE estimates.