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  • 13.4 Private Final Consumption Expenditure

13.4 Private Final Consumption Expenditure

  • Brief Methodology of Compiling Private Final Consumption Expenditure
    • 13.4.1 Private final consumption expenditure (PFCE) includes final consumption expenditure of (a) households and (b) non-profit institutions serving households (NPISH) like temples, gurdwaras. The final consumption expenditure of households relates to outlays on new durable as well as non‑durable goods (except land) and on services. This consumption expenditure also includes the imputed gross rent of owner‑occupied dwellings, consumption of Own-account production evaluated at producers' prices and payments in kind of wages and salaries valued at cost, e.g., provision for food, shelter and clothing to the employees. The final consumption expenditure of non‑profit institutions serving households includes the value of goods and services produced for own use on current account i.e., the value of gross output reduced by the sum of the value of their commodity and non‑commodity sales. This would include transfers in kind of non‑durable goods and services from Government Administration, industries and rest of the world. The final consumption expenditure of households and non‑profit institutions serving households are estimated together and are not available separately. However, expenditures on second hand goods are not included.
    • 13.4.2 Estimates of PFCE are obtained by following the commodity flow method. The commodity - flow method of estimating PFCE on a given item group consists of subtracting intermediate consumption, Government final consumption, exports, changes in stocks and investment from net availability given by domestic production plus imports. The quantity of final consumption obtained from commodity balances is generally evaluated at market prices.
  • Sources of data in the compilation of Private Final Consumption Expenditure
    • 13.4.3 The basic data on output and prices are mostly the same as those utilised for the preparation of GDP estimates. The sources of data and the method used for the estimation of PFCE are indicated in the table given below:

      Table13.9: Sources of data used and method of estimation of PFCE

      Sl.
      No.

      Source
      data for the 1993-94 series

      Method
      of estimation and its share in  
      1993-94

      (a)
      food and non-food products (agricultural)

      Foodgrains

      Production

      -
      Same as for GDP

      Wastages

      -
      latest DMI Reports

      Marketable
      surplus ratios

      - 
      Ministry of Agriculture

      Inter
      Industry Consumption

       -
      Latest DMI and ASI reports.

      Imports
      and Exports

      -
      DGCI and S

      Allocation
      of partly capital goods

      -
      All-India Debt and Investment Survey (AIDIS), 1981-82

      Government
      consumption

       -
      Analysis of Government's annual budget documents.

      Trade
      and Transport Margins (TTM)

      -
      Data collected from co-operatives/ super markets

      Retail
      Prices - NSSO/DESMOA for rural / urban retail prices.

      The
      production data is adjusted for seed and feed to work out marketed
      surplus and quantity retained by producers. 
      The marketable surplus is further adjusted for stock, wastage,
      net imports, inter-industry consumption and Government consumption, to
      work out net marketable supplies, which are available for consumption. 
      The quantity retained by the producers and net marketable
      supplies are evaluated separately. 
      The ex-farm prices for evaluation of quantity retained by the
      producers are the same as used in the estimates of domestic retail
      prices and urban retail prices are used, to evaluate net market
      supplies.  The values of
      quantity retained and net market supplies available for consumption are
      added to obtain estimates.

      These
      items account for 15.2 % of PFCE and 10.2 % of GDP

      Bread
      and biscuits

      Same
      sources as mentioned against manufacturing sector, below.

       

      For
      registered manufacturing sector, value of output is taken from ASI. 
      For the unregistered manufacturing sector, GVA as available for
      manufacturing of food products at 2-digit level of NIC for domestic
      product is converted into value of output with the help of output to GVA
      ratio based on 50th round NSS survey results. 
      The value of output thus arrived at is bifurcated into 'bread
      and biscuits' and 'others' with the help of working force in these
      industries. The combined value of output from registered and
      unregistered sectors is marked up with TTM of these items to arrive at
      the value at market prices.

      These
      items account for 0.4 % of PFCE and 0.3 % of GDP.

      Sugarcane,
      gur, refined sugar and palm
      sugar

      Same
      sources as mentioned for the foodgrains and manufacturing sector.

       

      Same
      procedure as adopted for the foodgrains and manufactured products.

      These
      items account for 3.3 % of PFCE and 2.2 % of GDP.

      Oils,
      vanaspati, mustard, coconut, gingelly, groundnut, linseed, castor, other
      edible oils, imported oils and oilseeds, sesamum, linseed,
      rapeseeds/mustards and others

      Same
      sources as mentioned for the foodgrains and Manufacturing sector.

       

      same
      procedure as adopted for the foodgrains and manufactured products

      These
      items account for 3.8 % of PFCE and 2.6 % of GDP.

      Fruits
      and vegetables, banana, mango, grapes, citrus fruits, cashew kernels,
      onion, other fruits and vegetables, groundnuts, fruits and vegetable
      products, coconut, copra, potato, sweet potato, tapioca, milk and milk
      products.

      Same
      as above.

      Same
      as above.

      These
      items account for 19.5 % of PFCE and 13.1 % of GDP.

      Beef,
      pork, mutton, goat meat, buffalo meat, other meat products, ducks fowls,
      chicken, and eggs and fish and fish products.

      Same
      as above.

      Same
      as above.

      These
      items account for 3.7 % of PFCE and 2.5 % of GDP.

      Coffee,
      tea, cocoa, spices, salt, and sugar confectionery and other food
      products.

      Same
      as above, except for spices and salt, for which the source of data is
      the NSS Consumer Expenditure Survey.

      Same
      as above, except for spices and salt, which are prepared using the value
      of per capita consumption.

      These
      items account for 2.9 % of PFCE and 1.9 % of GDP.

      Non-alcoholic
      and alcoholic beverages.

      Same
      as for manufacturing sector.

       

      Same
      as for cereals

      These
      items account for 0.4 % of PFCE and 0.2 % of GDP.

      Pan,
      arecanut, opium, other ingredients of pan.

      Same
      as above, except for pan, for which the source of data is the NSS
      Consumer Expenditure Survey.

      Estimates
      prepared using the value of per capita consumption

      These
      items account for 0.5 % of PFCE and 0.3 % of GDP

      Tobacco
      raw, cigarettes, biris, snuff, cigars and cheroots and other tobacco
      products.

      Same
      sources as those used for foodgrains in the case of raw tobacco

      Same
      sources as those used for manufacturing sector for others

      Same
      method as that used for foodgrains in the case of raw tobacco. 
      Same sources as that used for manufacturing sector for other
      items.

      These
      items account for 2.7 % of PFCE and 1.8 % of GDP.

      (b)
      Manufactured products

      Cotton,
      silk, woolen and miscellaneous textiles, carpets, coir, wooden
      furniture, paper, footwear, leather products, tyres, tubes and other
      rubber products, plastics, toilet articles, fireworks, glass products,
      earthenware, non-metallic products, steel furniture, metal utensils,
      other metal products, refrigerators, office machinery, non-electric
      machinery, batteries, electric appliances, radio and TV sets, motor
      vehicle parts, motor cycles, scooters, photographic equipment and
      optical, watches and clocks, jewellery, sports goods, musical
      instruments, stationery articles and miscellaneous personal goods.

      GDP
      and output by-products:-  Same
      as for GDP

      Share
      of consumable goods:

      Registered: 
      Detailed ASI results at commodity level.

      Unregistered: 
      Surveys conducted by the NSSO .                               

      Excise
      and Import duty: DGCI&S

      Imports
      and Exports: DGCI&S

      Government
      consumption:  Budget
      documents

      Partly
      capital goods: AIDIS, 1981-82.

      Non
      households / inter-industry consumption:

      DMI
      and ASI reports.

      Trade
      and Transport Margins: data collected from cooperatives / super markets

      Change
      in stocks:

      Registered: 
      ASI

      Unregistered:
      surveys conducted by the NSSO.

                                             

       

       

       Database
      for the preparation of estimates for a majority of manufactured items is
      the same as those utilised for estimation of domestic product. Since the
      commodity wise details of value of products and by-products for
      consumable goods are not available in ASI ' summary results' for
      factory sector; Detailed ASI results of production available for the
      latest year (1993-94) at commodity level are utilised to develop ratios
      for working out the share of items consumed by the households to the
      total production. Applying these ratios to the products and by-products
      of summary results (3-digit level of NIC code) of ASI, the relevant
      output of commodity products are estimated.

      For
      the unregistered manufacturing sector, the basic data are the same as
      those utilised for estimation of domestic product. These estimates of
      domestic product are converted into values of output and by-products on
      the basis of product-GVA ratios as available from the results of
      Enterprise Survey of NSSO, 1994-95. The above value of the products
      available at a 2-digit level of NIC are
      further split up at 3-digit level of NIC Code on the basis of working
      force (1993-94). The commodity-wise norms of the proportion of total
      value of products and by-products to the value of consumable goods have
      been arrived at, on the basis of special tabulations carried out on the
      data collected in the NSS survey on Unregistered manufacturing. The
      estimates of distributive margins for the manufacturing sector are built
      up on the basis of data on wholesale and retail prices of representative
      items received from the various cooperative stores/super bazaars. The
      distributive margins for certain commodities are also supplemented by
      collecting data for comparable specifications featuring in the WPI and
      DESMOA's weekly bulletin of urban retail prices of essential
      commodities and NSSO rural retail prices at All - India level. The
      difference between retail price and corresponding wholesale price
      expressed as a percentage of the distributive margins so arrived at are
      suitably adjusted for margins between ex-factory and wholesale prices.
      These distributive margins are applied to the imports also. 
      Import Duties and excise duties are added to the value of output
      of different commodities before applying the distributive margins.

      These
      items account for 11.9 % of PFCE and 8.0 % of GDP

      (c)
      Services

      Purchase
      of transport services

      -
      Rail, air, buses including tramways,
      taxis auto-rickshaws and
      organised water transport.

      Railway
      Board

      Ministry
      of Surface Transport

      Enterprise
      Surveys of NSSO/CSO

      Air
      India and Indian Airlines - annual reports.

       

      The
      estimates of PFCE in respect of mechanised road transport (buses and
      tramways, taxis and auto-rickshwa), rail transport, air transport and
      organised water transports are based on the total passenger earnings in
      these services.  For
      railways, air transport and organised shipping 80 %, 5 % and 75 % of the
      earnings are taken as PFCE.

      These
      items account for 5.8 % of PFCE and 3.9 % of GDP.

      Non-mechanised
      road transports, unorganised river and canal transport and unorganised
      sea/ocean transport.

      Same
      sources as those used for the GDP estimates.

       

       

       

      For
      non-mechanised road transport as also for Un-organised inland water
      transport, the output to value added ratios are applied to the estimates
      of GVA as available separately for rural and urban areas, to obtain the
      estimates of value of output. Of this 95
      % is taken as the private consumption expenditure. In the case of
      coastal and ocean-going sailing vessels, the estimates of GDP from
      passenger services are converted to output by using the proportion of
      domestic product to gross passenger earnings in organised shipping and 5
      percent of this is taken as private consumption expenditure. These items
      account for 0.4 % of PFCE and 0.2 % of GDP.

      Services
      incidental to transport

      Same
      sources as those used for the GDP estimates.

      The
      estimates of private consumption expenditure for services incidental to
      transport are based on gross agency earnings, which are available from
      the same sources from where gross earnings of the various transport
      services are obtained. 5 % of the agency earnings are taken as PFCE.

      These
      items account for 0.002 % of PFCE and 0.001 % of GDP.

      Communication

       

      Department
      of Telecommunications

      Department
      of Posts.

      40
      % of the total earnings from postal articles, money orders, telephone
      and telegraph is assumed to be the share of PFCE.

      These
      items account for 0.7 % of PFCE and 0.5 % of GDP

      Recreation,
      Education and

      Cultural
      services

      Ministry
      of HRD

      RBI

      For
      recreation and entertainment, the estimates of PFCE are built up on the
      basis of rates of entertainment taxes and revenues of State Governments.
      The estimates under educational services are prepared for such services
      as purchased by the households. The estimates of recurring expenditure
      by recognised educational institutions are obtained from ministry of
      Human Resource Development and 4.5 % of this is assumed to be the
      expenditure by Un-recognised institutions. Expenditure on private
      tuition is estimated on the basis of consumer expenditure survey results
      of NSSO. Government expenditure on education obtained through purpose
      classification of expenditure contained in general Government budgets
      have been deducted to arrive at the PFCE.

       
      The imputed service charge is measured as excess of property
      income (which is essentially interest received by those institutions
      from loans and other investments made from the deposits they held over
      the interest they pay out to the depositors.

      These
      items account for 1.9 % of PFCE and 1.3 % of GDP

      Medical
      care and  Health Services

       

      NSSO
      Consumer Expenditure Survey, 1993-94

       

      In
      the case of expenditure on medical care and health services, household
      expenditure on medicine and services is estimated on the basis of value
      of per capita consumption expenditure available in various reports of
      NSSO consumer expenditure surveys. The receipts by Central Government on
      account of Central Government Health Scheme compiled from the Central
      Government budget is also taken as an item of household consumption.

      These
      items account for 3.3 % of PFCE and 2.3 % of GDP

      Personal
      care and effects (barber and beauty shops, religious, other personal,
      sanitary, domestic, laundry, and general insurance services, 
      petrol and diesel, repair charges including insurance, road tax,
      services n.e.c., tailoring services and TV and Radio services and 
      other miscellaneous services namely, banking charges, legal,
      business  services and life
      ins.

      Same
      sources as those used for the GDP estimates

      The
      estimates for religious and other community services and other personal
      services like domestic services, laundry, barber and beauty shops and
      sanitary services are domestic product based. 
      The total output in the case of religious and domestic services
      is treated as household consumption while for laundry services and
      barber and beauty shops 90 % and 98 %, respectively, of output are
      taken.   For business
      services, 10 % of output is assumed to be household expenditure while
      for legal services it is 75 %.  
      For sanitary and other personal services the share for household
      consumption is 50 % while for services n.e.c. It is 30 %. The PFCE on
      banking and insurance charges is estimated as imputed charges.

      These
      items account for 8.5 % of PFCE and 5.7 % of GDP.

      Gross 
      rent and  water
      charges

      Same
      as above.

       

       

       

       

       

       

      The
      expenditure on house rent (including repair and maintenance) is
      estimated to include rented dwellings and imputed rent of owner occupied
      dwellings.  Water charges
      are only for urban areas only, at 3% GVA.

      These
      items account for 8.4 % of PFCE and 5.6 % of GDP.

      Hotels
      and restaurants

       

      Same
      as above.

      The
      estimates of GVA are converted into the value of output on the basis of
      the corresponding relationship observed for similar public limited
      companies. Of the total expenditure, 33% is taken as PFCE.

      These
      items account for 1.0 % of PFCE and 0.7 % of GDP.

      Fuel
      and power namely, electricity, LPG, kerosene, coal, soft coke, firewood,
      vegetable waste, dung cake, lignite, gas coke, bagasse, charcoal and
      gobar gas.

      Central
      Electricity Authority

      Ministry
      of Petroleum and Natural Gas

      KVIC.

      Same
      sources as used for GDP estimates.

       

      Data
      on electricity sold to domestic consumers and prices is obtained from
      the Central Electricity Authority. For LPG domestic consumption and
      retail prices are obtained from the Ministry of Petroleum and Natural
      Gas. For kerosene oil, while the data on domestic consumption is from
      the Ministry of Petroleum and Natural Gas, 
      the prices are obtained as weighted average of retail prices of
      rural (NSSO) and urban (DESMOA) with weights as per capita consumption
      of kerosene based on NSSO consumer expenditure surveys. In case of
      firewood, production is the same as used for estimation of value of
      output in the forestry sector. Urban production is assumed to be 10 % of
      the total production and the same is evaluated at the urban retail
      price. The remaining production in the rural areas is evaluated at the
      price used for estimation of value of output of the total value of rural
      and urban areas thus estimated, 96 % is taken as PFCE. Gobar gas
      consumption is taken from the annual report of the KVIC

      These
      items account for 5.8 % of PFCE and 3.9 % of GDP.
  • Data Gaps in the Estimation of PFCE
    • 13.4.4 As explained earlier, the PFCE includes the consumption expenditure of (a) households, and (b) NPISHs. Whereas the consumption expenditure of households is available from the NSS quinquennial household consumer expenditure surveys, the same is not available from the NPISHs. Therefore, consumption expenditure of the NPISHs is the major data gap in the direct estimation of PFCE. The other important data gap is the absence of annual consumer expenditure surveys. Some information is available from the annual thin sample surveys of the NSSO but the same can not be used for estimating the PFCE due to the non-availability of the detailed commodity wise consumption. For NPISHs, in the absence of a frame for these bodies, it has not been possible to launch any sample surveys. Due to these reasons, the commodity flow approach is followed in the NAS for estimating the PFCE.
    • 13.4.5 In the commodity flow approach adopted for the private consumption expenditure, the basic data on output and prices are mostly the same as those utilised for the preparation of GDP estimates and as such, shortcomings in the GDP estimates would be reflected in the measurement of private consumption as well. The recommendations made in the GDP section would also have an effect on the improvement of the quality of PFCE estimates. Besides these, the wastage ratios for most of the commodities used in the PFCE are based on the Directorate of Marketing and Inspection (DMI) reports, which are very old. Also, the trade and transport margins (TTM) used for various commodities are based on data obtained from co-operative stores and super bazar in the 1980s. The shortcomings in wastage ratios, TTMs and retail prices would also be inherent in the estimates of PFCE. In the estimation of PFCE, mostly assumed rates and ratios are used, in the absence of direct estimates.
  • Rates, Ratios and share used in the estimation of PFCE
    • 13.4.6 In the compilation of PFCE rates and ratios used, are indicated below:
      • Share of PFCE in services incidental to transport to total earnings.
      • Share in PFCE of the total output of economic activities packing, crating and travel booking and other travel services for land, water and air transport.
      • Share of private consumption to total earnings of taxi, auto rickshaw, bus, railways and air transport.
      • Share of private consumption of repair of vehicles to total repair cost.
      • Ratio of PFCE to total earnings of postal articles, money orders telephones and telegrams.
      • Ratio of PFCE to GDP of other services such as Business Services, Religious services (NIC-940), Legal services (NIC-830), Domestic Services (NIC-960), Laundry services (NIC-961), Barber and beauty shops (NIC-962), Sanitary Services (NIC-910), other personal services (NIC-969), Services n.e.c. (NIC-990).
      • Share of PFCE to total GDP of hotels and restaurants.
      • Ratio of PFCE to total sales of kerosene.
      • Ratio of PFCE to total disposable supplies for consumption of coal.
      • Ratio of PFCE to total disposable supplies in respect of soft coke.
      • Ratio of PFCE to output of firewood.
      • Ratio of PFCE to production of vegetable wastes.
      • Ratio of PFCE to the production of bagasse.
      • Ratio of PFCE to production of dung cake.
      • Ratio of PFCE to available supplies of lignite.
      • Ratio of PFCE to disposable supplies of Gas coke.
      • Ratio of PFCE to output of charcoal.
  • Variation between PFCE and NSS Estimates of Household Consumption Expenditure
    • 13.4.7 The major reasons for the difference in the estimates of PFCE given in the NAS with those of the Consumption Expenditure Surveys (CES) of the NSSO are (a) inclusion of the consumption expenditure of NPISHs in the PFCE, whereas the same are out of the purview of CES, (b) exclusion of houseless and the institutional population like the inhabitants of orphanages, prison and hospitals, in the CES, while the consumption of these persons are included in PFCE, c) inclusion of imputed rentals of owner-occupies dwellings in the PFCE, whereas the CES includes only the rent on dwellings actually paid. The other reasons for the variation between the two sets of estimates are the differences in the coverage of items, the reference period (PFCE refers to the financial year, while the CES generally to agriculture year), and the approaches of estimation (PFCE is mostly through commodity flow approach and the CES is from household surveys).
    • 13.4.8 The CSO and the NSSO have jointly conducted a study, “Cross-Validation Study of Estimates of Private Consumption Expenditure Available from Household Survey and National Accounts”, for the Study Group on Non-sampling Errors and prepared a report. This report extensively deals with the differences between the two sets of estimates, at detailed item level. The recommendations contained in this report are:
      • The available estimates of average prices, whether peak-season or wholesale or retail are based on the data collected in the regular price collection schemes. Commodities transacted in the market vary in quality over a wide range. But, for each commodity, prices of only a fixed set specified qualities are collected in the price collection schemes, notwithstanding the changes in the market shares of different qualities that take place over time. The NSS implicit prices, on the other hand, represent the average price of the commodities appropriately weighted by the actual shares of different qualities in the current consumption basket. Apart from the price data available from the regular price collection system, the CSO uses price data from various other sources while deriving the NAS value estimates. For example, the data source like CEA is used for price of electricity, Ministry of Petroleum and Natural Gas for price of L.P.G. and kerosene and the NHB for prices of non-forecast fruit crops. Often, just a marking-up rate (for example, for the price of dal obtained from ‘retained’ grains) is applied on the price of a product to estimate the price of its derivatives. Thus, the prices used for NAS estimates may often be inappropriate for evaluating the value of consumption. Instead, use of NSS implicit prices for deriving NAS value estimates would be more appropriate, whenever the NSS quantity estimates appear to be reasonably accurate. For this purpose, the NSS implicit prices can be generated from the data collected in the CES, separately for consumption out of home-grown stock and that out of quantity purchased. The feasibility of deriving NAS value estimates using NSS implicit prices requires a comprehensive study.
      • A simple average of prices of atta, maida and suji is used at present in the NAS to represent the price of all wheat products, instead of working out the values of the products individually. The procedure needs to be corrected in this respect.
      • The accuracy of the NAS estimates, being derived by the commodity flow approach, depends heavily on the accuracy of rates, ratios and norms applied on the production estimates for netting out the amounts used for further production in the form of seeds, feeds and inter-industry consumption. The NAS estimates also depend on the estimated ratio of marketable surplus. The rates used for allocating the production of durables to the households and industry are largely based on subjective judgements. For example, the ratios assumed for estimating private consumption of rail and bus services is based entirely on subjective judgements. These need to be replaced by proper estimates based on objective studies. On the other hand, the NSS estimates of travelling expenses, i.e. rail, air and bus fares, incurred by the households appear to suffer from gross under reporting. A study is required to be undertaken to explore alternative means of collecting data particularly on rail and bus fares paid by the households.
      • The data on change in stock used at present in PFCE are not appropriate on two counts. First it relates to nonconformity of the time frames. While the reference time-frames of production data for all agricultural produce is the agricultural year, the data on change in stock for the public sector are based on the data on the stocks at the beginning and end of the financial year available from the budget documents and annual reports. Use of quarterly data on stock of food-grains in the public sector may help reduce this non-conformity inherent in the present methods of estimating change in stock and production. Second, there is hardly any data on change in stock for the household sector. So far, the enterprise surveys have failed to provide useable estimates of change in stock. Thus, special studies need to be undertaken to explore alternative ways of estimating the change in stock in the household sector.
      • At present, no provision out of the marketed surplus is made for intermediate consumption of food items like pulses, chickens, eggs, vanaspati, etc. in industries. In case of gur and sugar, only 5 per cent of the total production is assumed to go in further production as intermediate consumption. The inter-industry consumption rates of these food items, which appear to have been increasing in recent years, need to be estimated from the appropriate type studies. Under statement of inter-industry consumption results in double counting of production and over statement of private final consumption.
      • That the NSS underestimates the consumption of durable has been suggested by a number of scholars in the past. Minhas (1988) while commenting on the possibility of underestimation of durable consumption in the CES, noted that non-cooperation from the affluent households could be the main reason for the downward bias. Recently, Lal, Mohan and Natarajan (2001) have compared the NSS estimates of consumption of certain durables with the figures of their sales published in various newspapers and business magazines. They have observed that the NSS estimates of private consumption is as low as one-fourth of the production of durable like televisions, tape recorder, electric fan and two-wheelers. This calls for a further investigation for identifying the possible reasons for this discrepancy between the NAS and NSS estimates.
      • The inclusion of ‘repair services’ (activity-group 97 according to NIC 1987) in the NAS estimate for the item group “transport equipment and operational cost” leads to duplication of operational cost of owned transport equipment. The procedure needs to be corrected in this respect.
      • The entire amount of output of NIC (1987) activity group of 201, i.e. manufacturing of dairy products, from the ASI is at present assumed to be milk products, whereas a large part (about 40per cent) of it is in fact liquid milk of different kinds. Though this does not affect the aggregate estimate for the item group ‘milk and milk products’, it understates the consumption of liquid milk. The estimates of milk products like butter and lassi are based on norms worked out in the past for the practices prevalent at that time. These too require revision, as the methods of disposal of milk produce have undergone vast changes in the recent past. Type studies in different regions of the country or a country-wide survey on methods of disposal of milk produced are required to be undertaken to generate the required estimates on milk used for further production in the household sector.
      • The NAS estimate on ‘medical and health care’, being based entirely on the NSS estimate, excludes the consumption of the NPISHs. The distribution of consumption expenditure of the NPISHs over all the food and non-food item-groups is not expected to be similar to that of the household consumption expenditure. In fact, NPISHs, being more active in the fields of health and education, are expected to have proportionately larger shares in these two item-groups. To estimate the magnitude and distribution of consumption expenditure of the NPISHs, it is necessary to take up a special study to start with, and carry out surveys on a continuing basis for a regular flow of data.
      • The exact definition of ‘firewood and chips’ used for the CES is not clear from the ‘Instructions to Field Staff, 50th Round’. The CSO uses the NSS estimate of consumption of ‘firewood and chips’ under the assumption that while it includes vegetable wastes like jute, cotton and arhar sticks, it excludes the wood used in the funerals. The exact definition of ‘firewood and chips’ is required to be specified clearly in the instructions for the future CESs.
      • A mechanism is to be devised in the CES for collecting the data on cooked meals received, as part of wages, by workers engaged in providing services for household consumption from the employer household, so that the necessary correction for the omission in the NSS estimate may be made. This cannot be derived from the data collected in CESs at present.
      • The NSS estimates of fruit consumption fall far short of the NAS estimates. Possibly, non-cooperation of the affluent is one of the reasons for underestimating fruit consumption in the CES. Besides, investigating for other possible reasons for underestimation in the CES, reconciliation of the difference between the estimates of fruits consumption requires a comprehensive study of the estimation procedure followed by the SHBs for obtaining area, production and productivity estimates of different fruits. Also required are studies for building wastage-to-marketed surplus ratios, as the ratios used at present are based on DMI studies, as old as of 1968-69.
      • Lastly, for quite a few item-groups belonging mostly to the service sector, the NAS estimates of gross value added (GVA) and private consumption are based on independent sources of data. The NAS estimate for consumption of road transport services by bus, taxi and auto-rickshaw as well as that of repair services of owned conveyance is derived using the data on number vehicles available from the Ministry of Surface Transport. For the item-group ‘medical and health services’, ‘salt’, ‘spices’ and ‘pan’, the NAS estimates are derived from the NSS estimates, since the latter are known to represent the household consumption better. Thus, for these item-groups, the estimates of output, which are required for PFCE estimates, are not expected to be necessarily consistent with the estimates of GVA. In other words, it is a possible source of statistical discrepancy in the NAS. It is therefore felt that the feasibility of using a common data set for both GVA and PFCE estimates for these item-groups needs to be explored further.
    • 13.4.9 Recommendations on estimation of PFCE
      • Existing weak areas in the estimation of Private Final Consumption Expenditure (PFCE) relate to outdated basis for (a) marketable surplus ratios and wastage ratio in agricultural crops, fruit and vegetables and meat and meat products, (b) trade and transport margins, and (c) various rates and ratios. It is recommended that periodical and geographically dispersed type studies/case studies be carried out for continual updation.
      • As part of the Study Group on non-Sampling Errors, Central Statistical Organisation (CSO) and National Sample Survey Organisation (NSSO) jointly carried out “Cross-Validation Study of Estimates of Private Consumption Expenditure Available from Household Survey and National Accounts” to bring out major sources of differences between Private Final Consumption Expenditure from National Accounts and Consumer Expenditure from National Sample Survey. It is therefore recommended that studies be carried out to correct the item-level weaknesses noted in the Cross Validation Studies in both the sources so that discrepancies in the two estimates would be minimised.
      • The weakest link in the estimation of Private Final Consumption Expenditure (PFCE) has been the indirect coverage of the Non-profit Institutions Serving Households (NPISHs). It is recommended that periodical surveys/type studies be conducted to collect income and expenditure of NPISHs.
      • The sampling design of the annual consumer expenditure surveys carried out by National Sample Survey Organisation (NSSO) be examined with a view to (a) reducing sampling error of the annual estimate and (b) assessing the feasibility of obtaining sub-round-wise estimates for quarterly estimation.
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