National Human Development Report: 2001 - Indira Gandhi Institute ...

NATIONAL HUMAN DEVELOPMENT REPORT 2001 ECONOMIC ATTAINMENTS AND WELL-BEING 33To capture an individual’s command over resources, as well as theopportunities and attainments that it facilitates in other aspects of wellbeing,this Report uses per capita consumption expenditure instead of percapita income. The choice of this indicator is governed as much by theconsideration of having an indicator that is potentially available at State andsub-State levels of disaggregation, as by the conceptual requirement ofhaving an indicator, which is a direct and better measure of economic wellbeingfor the population. Moreover, for a population with low per capitaincome levels, a large segment of people living below a subsistence povertyline and with significant inter and intra-regional economic disparities,average consumption estimates at individual or household level are perhapsa better indicator of the economic well-being of people than incomeestimates for a number of reasons.The first one, purely functional, relates the stated level ofdisaggregation desired for this Report. Income estimates are not directlyavailable at sub-State level or for rural and urban areas. Though, in therecent past, attempts have been made, for instance, in case of the StateHuman Development Report of Madhya Pradesh, Karnataka (and also someother States) to estimate district level estimates of per capita income, theconceptual, as well as the methodological approach followed in these cases isopen to debate. Moreover, data on household consumption expenditurethrough the NSSO, is available at sub-regional level (at present at the levelof NSS regions) separately for rural and urban areas on a regular basis and canbe pooled potentially to generate more accurate district level estimates of percapita consumption expenditure.Secondly, as an indicator of an individual’s command over resources,per capita consumption expenditure has some advantages over per capitaincome in the context of developing countries like India. This includesconsiderations like:Average consumptionexpenditure is directand better measure ofeconomic well-beingthan per capita income.• the consumption data allows for smoothening of income fluctuations.This may be important when an overwhelming proportion of theworkforce is engaged in the agriculture sector or in the informal(unorganised) sector, where income levels may fluctuate almost on adaily/seasonal basis;• it allows inclusion of non-monetised transactions, which may have asignificant weightage in the economies of poor, backward rural areas;• inclusion of non-SNA (System of National Accounting) accountingtransactions such as those involving common property resources invillages or transactions which, though are outside the National Accountsframework, may nonetheless influence a person’s or household’sconsumption levels, and command over resources;• depending on the nature of the survey, the consumption data covers, tosome extent, the influence of social and public provisioning on anindividual’s availability of resources and economic attainments; and• given large-scale under-reporting of income data in developing countries,use of consumption data may capture an individual’s command overresources more accurately.