It’s reassuring that the government is acting on multiple fronts to bolster the assorted macro- and socioeconomic data sets, and dispel any misgivings about their inadequacy or reliability as inputs for policy-making. Revisions of the base years of the gross domestic product and the Index of Industrial Production are underway. The Consumer Price Index (CPI) basket and the relative weights of each item in the index are set to undergo revisions too, in keeping with the change in consumption pattern captured under the Household Consumer Expenditure Survey (HCES) 2023-24. The new CPI series, to be released from early 2026, would hopefully address concerns about the incongruity between the evolving consumption scenario and the index, the go-to source for the Reserve Bank of India for its inflation-targetting framework.
While all these should be taken as customary and designed to comply with data update protocols, two other recent initiatives are pioneering in the Indian context. Conventionally, India’s statistical system has been bereft of the benefits of employment/labour participation data with the required level of frequency and credibility. Also, not just population-wise income surveys, but even robust sample surveys of household income have been absent in the country. In a welcome change, the Periodic Labour Force Survey has now become a monthly feature—the first bulletin for April 2025 was published in May. Moreover, the ministry of statistics and programme implementation (MoSPI) has announced a plan to conduct the first-ever household income survey in 2026.
Though the need for a sample survey of household income was highlighted way back in 2001 by the Rangarajan Commission, attempts to hold such an exercise haven’t been fruitful. Income data gathered were found to be lower than the estimates of consumption and savings put together. So, inputs from consumption surveys continue to be used as proxy for income status and distribution trends at the household level. From the national income data, per capita income was computed. In effect, the monthly per capita consumption expenditure (MPCE), derived from HCES, has become the bedrock for estimating poverty, inequality, and other socioeconomic variables, with a modicum of support from All India Debt and Investment Survey and income-tax series data etc.
Since the Tendulkar Committee (2009), India ceased to compute and announce a poverty line that corresponds to income. A shift was made subsequently to multidimensional poverty index. The rationale for this is that the deprivations in three equally weighted dimensions of health, education and living standards are emblematic of real poverty. The government contends that multiple endowment funds and other benefits transferred from the state to the citizens must also be factored in while estimating household financial status and well-being or poverty and inequality. But data sets put out by different agencies don’t converge.
Take for instance India’s deteriorating position in the global hunger index and its apparent divergence with the estimates of drastic reduction in poverty by the NITI Aayog and the World Bank, both relying on MPCE. At the other end of the scale, while just over 32 million Indians pay income tax, high-value purchases far outweigh what’s feasible from the taxable income reported. Glaring instances of the well-heeled availing themselves of the bounties meant for the poor often come to the fore. The Surjit Bhalla-led expert group would do well to make the right prescriptions to improve data integrity even as it draws up the hodology for the new income survey.