A significant change in consumption has been observed in rural and urban areas during August 2023 to July 2024. According to the recently released Household Consumption Expenditure Survey (HCES), consumption levels in rural India have increased rapidly, leading to a reduction in consumption inequality.
The difference in consumption between rural and urban India has reduced compared to before. The Gini coefficient of rural areas decreased from 0.266 to 0.237, while in urban areas it decreased from 0.314 to 0.284. The Gini coefficient measures inequality of income or consumption in a society. The decline in this indicates that the distribution of consumption in both rural and urban areas has become more balanced.
Average monthly per capita expenditure (MPC) in rural areas to reach ₹4,122 in 2023-24, from ₹3,773 last year. Similarly, MPC in urban areas increased from ₹6,996 to ₹7,078. Consumption increased by 9% in rural areas and 8% in urban areas.
With the impact of social welfare schemes, this figure further increases to ₹4,247 in rural areas and ₹7,078 in urban areas. This increase reflects the improvement in the standard of living in rural areas and the success of government schemes.
Expenditure on non-food items has increased in both rural and urban areas. The share of non-food expenditure is 53% in rural areas and 60% in urban areas. Major items include clothing, shoes, durables, entertainment, and vehicles. Food spending has also increased, with beverages, snacks and processed foods accounting for the lion's share.
Regional disparities were clearly visible in the survey. Sikkim recorded the highest monthly expenditure (rural: ₹9,377; urban: ₹13,927), while Chhattisgarh recorded the lowest (rural: ₹2,739; urban: ₹4,927).
The rise in consumption in rural areas is a positive sign of economic development. Reduction in consumption inequality is indicative of the success of social schemes and increasing spending in rural India. However, regional disparities still remain a major challenge that needs to be addressed.
