The Process of Valuing Freebies

• Previously, the Consumer Expenditure Survey (CES) included queries regarding the freebies that households received.
• However, this marks the first occasion where the Ministry of Statistics and Program Implementation (MOSPI) aims to estimate the imputed value of freebies and subsidies offered by the government at various levels.
• The necessity to calculate the imputed value of freebies was emphasized in a meeting between the Finance Ministry and the Ministry of Statistics and Program Implementation officials.
• The government intends to determine the value of freebies on a state-wise basis as the freebies offered by each state vary.
• The data gathered from this exercise will provide significant insights into household consumption and poverty levels.
• The government also plans to divide the data into two categories - one with the imputed value of freebies and the other without the imputed value of freebies.
• The data collected without the imputed value of freebies will be comparable to the previous data.
• To maintain consistency, the Ministry of Statistics and Program Implementation is also considering conducting a consecutive consumer expenditure survey.
• The primary uses of consumer expenditure surveys include determining the poverty line and assisting in constructing a consumer price index basket.
• The importance of the government's freebies and subsidies was underscored by a working paper from the International Monetary Fund (IMF), which calculated the poverty line and found a significant discrepancy when comparing poverty lines with and without freebies and subsidies.
• In response to the Covid-19 pandemic, the Union government previously announced a free food program during the lockdown which continued until December 2022. More recently, the government launched a free food grain program under the National Food Security Act.