# **2. The Expenditure Surveys**

The main source of data for estimating poverty in India is the expenditure survey conducted by the National Sample Survey Office. India is perhaps the only developing country that began conducting such surveys on a regular basis as early as 1950-51. The surveys have been conducted at least once a year since 1950-51 though the sample was too small to permit reliable estimates of poverty at the level of the state until 1973-74. A decision was made in the early 1970s to replace the smaller annual surveys by large-size expenditure (and employment-unemployment) surveys to be conducted every five years.

This decision led to the birth of “thick” quinquennial (five-yearly) surveys. Accordingly, the following eight rounds of large-size surveys have been conducted: 27 (1973-74), 32 (1978), 38 (1983), 43 (1987-88), 50 (1993-94), 55 (1999-2000), 61 (200405) , 66 (2009-10) and 68 (2011-12). Starting from the 42<sup>nd</sup> round in 1986-87, a smaller annual expenditure survey was reintroduced except in the years in which the quinquennial survey was to take place. Therefore, with the exception of the 65<sup>th</sup> and 67<sup>th</sup> rounds in 2008-09 and 2010-11, respectively, an expenditure survey exists for each year beginning in 1986-87.

While the NSSO collects the data and produces reports providing information on monthly per-capita expenditures and their distribution in rural and urban areas of different states and at the national level, it is the Planning Commission that computes the poverty lines and provides official estimates of poverty. The official estimates are strictly limited to quinquennial surveys and to rural, urban and total populations in different states and at the national level. The official estimates are not provided for specific social or religious groups. These can be calculated selectively for specific groups or specific years by researchers. With rare exceptions, discussions and debates on poverty have been framed around the quinquennial surveys even though the non-quinquennial survey samples are large enough to allow reliable estimates at the national level.

For each household interviewed, the survey collects data on the quantity of and expenditure on a large number of items purchased. For items such as education and health services for which the quantity cannot be meaningfully defined, only expenditure data are collected. The list of items is elaborate. For example, the 66<sup>th</sup> round collected data on 142 items of food, 15 items of energy, 28 items of clothing, bedding and footwear, 19 items of educational and medical expenses, 51 items of durable goods, and 89 other items.

It turns out that household responses vary systematically according to the length of the reference period to which the expenditures are related. For example, a household could be asked about its expenditures on durable goods during the preceding 30 days or the entire year. When the information provided in the first case is converted into annual expenditure, it is found to be systematically lower than when the survey directly asks households to report their annual expenditures. Therefore, estimates of poverty vary depending on the reference period chosen in the questionnaire.

Most quinquennial surveys have collected information on certain categories of relatively infrequently purchased items including clothing and consumer durables on the basis of both 30-days and 365-days reference periods. For other categories including all food and fuel and consumer services, they have used a 30-days reference period. The data allow us to estimate two alternative measures of monthly per-capita expenditures: 3