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Informist, Tuesday, Apr. 29, 2025

 

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--Govt source: Next consumption expenditure survey likely in 2027-28
--Govt source: Consumption surveys recommended to be held after every 3 yrs
--Govt source: New CPI, IIP series to be released in Jan
--Govt source: Further advancement in CPI, IIP release unlikely as of now
--Govt source: MoSPI unlikely to accept requests to publish core CPI 

By Shubham Rana and Siddharth Upasani

 

NEW DELHI - India's statistics ministry will likely conduct the next Household Consumption Expenditure Survey in 2027-28 as an advisory group has recommended a fresh survey should be conducted after every three years, a senior government official said.

 

"We have done (the survey) in 2023-24. No decision has been taken, but that's the recommendation," a senior government official told Informist on the condition of anonymity. "After the third year...that would mean 2027-28. After three years are done, the fourth year we should have the (new survey)."

 

The Ministry of Statistics and Programme Implementation has so far conducted this survey every five years or so, although the recent back-to-back surveys done in 2022-23 (Aug-Jul) and 2023-24 (Aug-Jul) came more than a decade after the last one, done in 2011-12 (Jul-Jun), was made public. The survey conducted in 2017-18 (Jul-Jun) was junked by the government on the grounds that it suffered from data quality issues.

 

The increased frequency of the Household Consumption Expenditure Survey is crucial to updating the country's consumer price inflation data on a regular basis so that it does not become outdated, as is the case with the current set of numbers. The statistics ministry is currently in the process of updating the current CPI basket with the results of the 2022-23 survey and with a new base year 2024 for prices. The new series is expected to be released in January.   

 

The Household Consumption Expenditure Survey tabulates households' monthly consumption expenditure of Indians in rural and urban areas of the country. The items in the CPI basket and the weights assigned to them depend on their share in households' monthly consumption expenditure.

 

Conducting this survey regularly is key to capturing changing consumption patterns so that inflation is calculated accurately. This is vital to the formulation of domestic monetary policy, with the Reserve Bank of India mandated to keep CPI inflation at 4%, with a tolerance band of 2 percentage points on either side.

 

The latest Household Consumption Expenditure Survey for 2023-24 (Aug-Jul) saw data being collected from 261,953 households, with 59% of them based in rural areas and the remaining 41% in urban areas. All parts of the country were covered except for a few inaccessible villages in the Andaman and Nicobar Islands.

 

Six months prior to the release of the updated series for CPI and the Index of Industrial Production--which will be released in January--the statistics ministry will begin tallying both these sets of numbers for examination, the official said. 

 

In addition to updating the CPI series, the statistics ministry has also brought forward the publication of the CPI data by 90 minutes to 1600 IST on the scheduled release date of 12th of the subsequent month following requests from economists. The release of IIP data, on the other hand, has been brought forward by two weeks to the 28th of the subsequent month on account of advances in data collection and processing technologies. However, it is unlikely that these two indicators can be published any earlier.

 

"I don't think we can reduce CPI (time lag) to less than 12 days. We had done six months of work on IIP (for advancing its release). As of now, I don't think it can be reduced more," the official said. "National Accounts (GDP data), at the moment, is released after 60 days. Let's see what we can do about that. But there we are restricted by the corporate affairs (ministry) because they give 45 days for the publication of financial results. If they make it 30 days, maybe we can (cut the GDP data lag)...As of now, I don't see any area for further improvement immediately. But six months later, we might come up with something else given automation of internal processes."

 

Another repeated request from economists to the statistics ministry has been to publish the core CPI inflation number along with the headline figure. Core inflation, which is headline inflation minus food and fuel items whose prices can sometimes be volatile, can be calculated from the monthly CPI data.

 

As per an Informist calculation, core inflation edged up by 10 basis points in March to 4.1% even as headline retail inflation fell to a 67-month low of 3.34%. According to the ministry official, the statistics ministry is unlikely to independently calculate and publish core CPI inflation as it is globally not the convention for statistical agencies to do so.

 

"We are not going into new areas where conventionally NSOs (national statistical agencies) don't operate. Let's get our house into order, let's get technology in, let's be fully portal-based, cloud-based, minimal internal manual processing, everything on CAPI (Computer-Assisted Personal Interviewing), improve dissemination, etc.," the official added.

 

What makes matters tricky for the statistics ministry is that there is no universally-accepted definition of core inflation in terms of the precise items from the CPI basket that must be excluded to calculate it. For instance, while Informist excludes the broad 'food and beverages' and 'fuel and light' groups while calculating core inflation, some economists also exclude certain fuel items that are part of the ‘miscellaneous' group of the CPI that has consumption items related to health, education, and transport, among others. Some economists also prefer to exclude gold and silver which are included in the ‘miscellaneous' group. As such, there is no single definition for core inflation.

 

As part of its efforts to modernise official statistics, the statistics ministry has recently entered into several Memoranda of Understanding with academic institutions on common areas of research interests. One of these MoUs is with the Indian Institute of Technology-Kanpur to develop a software to seasonally adjust the CPI. According to the source, this particular MoU is "just a project" and may not necessarily lead to a "final product" for the government.

 

"There are a host of uses for this kind of data. The government does not use it...This is just a project. Whether it will lead to a final product or not...We said that we need to have an analysis done and then take a decision on whether it is useful or not useful," the official said.

 

Seasonal adjustment removes variations in time-series data such as the CPI that occur due to the period for which the data is. For example, kharif crop arrivals and expectations of good rabi output usually lead to a decline in food inflation in the winter. Removal of these seasonal effects can help improve comparisons of inflation data between consecutive months.  End

 

Edited by Vandana Hingorani

 

 

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