Rural-Urban Divide In Consumption Expenditure Narrows, Says SBI Research

The report indicates a notable improvement in rural poverty rates, which have plummeted to 7.2 per cent for the period of 2022-23, a stark contrast from 25.7 per cent recorded in 2011-12

In a report unveiled on Tuesday, SBI Research highlighted a significant decline in the rural-urban disparity in monthly per-capita consumption expenditure (MPCE), based on the latest findings from the Household Consumption Expenditure Survey (HCES). According to the report, this trend has been observed since 2009-10. The report indicates a notable improvement in rural poverty rates, which have plummeted to 7.2 per cent for the period of 2022-23, a stark contrast from 25.7 per cent recorded in 2011-12. Similarly, urban poverty rates have seen a decline to 4.6 per cent, down from 13.7 per cent in 2011-12.

SBI Research noted a substantial decrease in the disparity between rural and urban MPCE, with the rural MPCE now standing at 71.2 per cent of the urban MPCE, down from 88.2 per cent in 2009-10.

The report attributes around 30 per cent of rural MPCE to endogenous factors within the rural ecosystem, largely influenced by governmental initiatives such as Direct Benefit Transfer (DBT) schemes, investments in rural infrastructure, and measures aimed at enhancing farmers' income.

Furthermore, the report highlights the remarkable progress in states previously considered underperformers, such as Bihar, Uttar Pradesh, and Madhya Pradesh, which are now witnessing significant reductions in rural-urban gaps, largely driven by endogenous factors.

The urban-rural gap in consumption expenditure as a percentage of rural consumption has been on a downward trajectory, declining from 90.8 per cent in 2004-05 to 71.2 per cent in 2022-23, and is projected to further decrease to 65.1 per cent by 2029-30.

Moreover, the survey reveals that in the lowest decile, urban consumption is only 46 per cent more dissimilar than rural consumption. Across fractile classes, urban consumption is only 68 per cent more dissimilar than rural consumption, indicating a convergence of MPCE patterns between rural and urban counterparts.

The central government recently released the broad findings of the All India Household Consumption Expenditure Survey (HCES) conducted between August 2022 and July 2023, after an 11-year gap since the previous survey in 2011-12. The survey showcased a considerable rise in MPCE for both rural and urban households.

Meanwhile, BVR Subrahmanyam, CEO of NITI Aayog, announced a significant decline in India's poverty level to 5 per cent, based on the latest consumer expenditure survey conducted by the National Sample Survey Office (NSSO). This shift underscores a promising transformation in the country's economic landscape, with per capita monthly household expenditure more than doubling between 2011-12 and 2022-23.