All-India income survey: Let’s not miss this opportunity to get it right

So, it’s heartening that the National Statistics Office (NSO), which functions under the statistics ministry, plans to carry out its first ever Household Income Survey (HIS) across the country.

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In the 1950s, the ministry tried to collect income data as part of its consumption expenditure survey. About a decade later, it attempted to gather data on receipts and disbursements as part of its Integrated Household Survey. But a reliable picture of what Indian homes earn eluded it. Official data on consumption and savings, into which income is split, was refusing to square with what respondents revealed. Efforts of the 1980s were let-downs too. Under-reported income was a big reason such surveys were given up. 

This explains why the Centre has long had to use consumption expenses as a proxy to track a crucial variable: India’s level of poverty. Our economy, however, is a far cry today from what it once was. This must have made space for official survey findings that can prove useful. 

Moreover, less well-funded organizations, like the National Council of Applied Economic Research, have been doing sample studies of income across strata for decades. Middle-class- focused businesses have benefited from these. If the NSO gets its HIS right, policymaking could begin to lean directly on income data.

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To ensure as much, the government has appointed an expert group led by economist Surjit S. Bhalla. This panel has data mavens with experience in tracking income levels and is expected to propose concepts and definitions, apart from the HIS’s design—complete with such details of methodology as its sampling process and tools. 

This is not a challenge to sniff at. As notions of ‘income’ vary, best practices from across the world would have to be placed in the context of diverse perceptions in a country where monthly salaries are relatively few and taxpayers are a small minority. Some informal sector workers and subsistence farmers, for example, could be clueless if asked to state their income. Even salaried earners may fail to count their earnings off assets.

Also Read: Himanshu: India needs official poverty data for effective policymaking

Yet, globally accepted definitions exist and could perhaps be refined to suit us. If the questionnaire clearly conveys what exactly it’s asking, scope for error can be minimized. Digital technology could help keep the quality of field inputs in check too. 

As for the masking of income, which is presumably a function of tax evasion, how secure people feel about parting with their personal data would be key. This may be a steeper task at the upper reaches of India’s pyramid. It also brings up another tricky aspect. For a sample to capture the country accurately, it must statistically represent every home—from the poorest to the wealthiest. How well this is achieved would shape the credibility of the survey’s findings. 

To tackle challenges, cues could be taken from The Canberra Group Handbook on Household Income Statistics, which was authored by a task force with experts from various parts of the world. All in all, policymaking should improve if we gain a comprehensive grasp of how hard-up or well-off households across India are. It’s clear that we need to make poverty history, but our official lenses lack clarity on how the country’s income pie is shared. Let’s set that right.