Editorial2: Filling in details
Context
Government's decision to conduct a household income survey is welcome. It should learn from past exercises and experiences of other countries.
Steps to plug gaps
- In the past few years, the government has taken several steps to plug gaps in data availability.
- Recently, it announced the dates for carrying out the Census. This week, it took another step towards making information robust — a household income survey has been tentatively scheduled for 2026.
- An expert committee has been formed to guide the statistics office in this endeavour.
A household income survey
- The government has attempted to collect household income data in the past as well. But these exercises have not yielded the desired results.
- For instance, data on household receipts and disbursements was collected as part of the Integrated Household Surveys during July 1964-June 1965 and July 1969-June 1970.
- But the estimates of income were lower than the estimates of consumption and savings put together.
- Such underestimation is not confined to survey estimates of household income. The household consumption expenditure surveys have also been criticised for underestimating consumption when compared to the expenditure estimates in the National Accounts.
- Some other surveys do collect information on income, but their scope is limited. For instance, the periodic labour force surveys collect data on wages and salaries of casual labour and regular wage/salaried employment.
- The Situation Assessment of Agricultural Households also provides estimates of income, though only for a segment of the population.
- The 2019 survey collected information on income from wages, from leasing out land, from crop production (net), farming of animals, and from non-farm business.
- In the absence of an official all-India survey of household incomes, expenditure data from the consumption surveys tends to be used as a proxy.
- This data is used to estimate both poverty and inequality. However, independent surveys such as the India Human Development Survey show that inequality based on household income is higher than that based on consumption.
The issues
- There will be several issues to contend with. Households may not accurately report their incomes, with some preferring not to disclose all their avenues of income.
- Some jobs — and thus the incomes that accrue — are seasonal in nature. Respondent recall may not be accurate.
- The extent of underestimation could be greater among households at the higher end of the distribution.
- However, granular data on incomes in society, collected regularly over a period of time, will not only provide a wealth of information about households, but also greatly assist in understanding changes in the economy and society.
Way forward
- Long-running surveys like the University of Michigan’s Panel Study of Income Dynamics, which track individuals and their descendants across multiple parameters, offer valuable insights into the evolving dynamics of the economy and society, making them powerful tools for informed policymaking across generations.