This paper analyses Indian NSS household budget data with a view to examining the effect of the reference period used for data collection on the estimates of engel elasticities. NSS generally uses the 'last month' reference period, and so seasonal and other short-run factors may bias the estimates obtained from such data. Analysis of data from different NSS rounds showed that the elasticities for clothing and several other items decline dramatically when available 'last year' data for these items are used in place of corresponding 'last month' data. These results highlight the need of special methods of estimating engel elasticities from budget data relating to short reference periods like 'last month' or 'last week'.