Rural communities spend more on food, while the margin with urban centers narrows.

India's rural consumption is increasing overall, while the urban-rural divide decreased from 84% in 2011–12 to 70% in 2023–24.

According to the Household Consumption Expenditure Survey (HCES) 2023-24 fact sheet released by the Ministry of Statistics and Programme Implementation (MoSPI) on Friday, the proportion of food expenditures in monthly household spending in both rural and urban areas increased in 2023–24, reversing a declining trend that had been in place for more than ten years.

Given that the numbers are in nominal terms, this most likely represents the impact of rising food costs. In rural households, the percentage of food in their consumption basket increased from 46.38 percent in 2022–2023 to 47.04 percent in 2023–2024.In contrast, that for urban families increased somewhat from 39.17% in 2023–2024 to 39.68% in 2023–2024.

The HCES data also revealed that the average monthly consumption expenditure gap between rural and urban households decreased to 69.7% in 2023–2024 from 71.2% in 2022–2023 and 83.9% in 2011–2012. This suggests that over the past year, rural consumption spending has increased more than urban consumption spending.

In MPCE, the urban-rural divide decreased from 84% in 2011–12 to 71% in 2022–2023. In 2023–2024, it further decreased to 70%, confirming the steady momentum of rural consumption development, the Ministry said in a statement.

The average monthly consumer expenditure per person in rural areas rose from Rs 3,773 in 2022–2023 to Rs 4,122 in 2023–2024, a 9.3% rise. In 2011–12, it was at Rs 1,430. Over the course of a year, rural spending climbed more than the average monthly consumer expenditure per person in cities, which rose from Rs 6,459 in 2022–2023 to Rs 6,996. In 2011–12, the average monthly consumer spend per person in the city was Rs 2,630.This seems to indicate that rural India is spending more quickly than its urban population, which appears to be consuming less.

A detailed examination of the fractile data shows that, in 2023–24, consumer expenditure decreased for the top 5% of the rural and urban population, but spending increased for all other population groups, including the bottom 5%.

Experts noted that this runs counter to data from other datasets that indicate expenditure by top segment has increased, particularly for luxury goods. "Consumption has increased across all fractile classes except the top fractiles, which is the opposite of the trend observed in other datasets,"An economist who wished to remain anonymous commented.

Pronab Sen, the former Chief Statistician of India, said that the shift in technique might be the cause of the anomalous trend in the top fractiles. Prior to the methodology modification, the household consumption surveys were carried out every five years. However, to determine whether the updated methodology is stable, back-to-back surveys were carried out. The approach change must be verified, or else it can provide inexplicable outcomes," he stated.

He told The Indian Express, "It's also possible that during the survey, the respondent is not the same during subsequent visits and it is no longer the same category of people from which you were receiving responses."

The top 5% of the rural and urban population's monthly per capita expenditure (MPCE) was Rs 10,137 and Rs 20,310, respectively, in 2023–2024—lower than Rs 10,501 and Rs 20,824 in 2022–2023. For both rural and urban populations, the MPCE of the bottom 5 percent rose from Rs 1,373 and Rs 2,001 in 2022–2023 to Rs 1,677 and Rs 2,376, respectively, in 2023–2024.

In actuality, the lowest 20% of people in rural and urban areas saw the largest increases in average monthly spending in 2023–24, rising by Rs 6,276 (19.2%) and Rs 9,156 (18.2%) respectively, compared to 2022–23.
 

The average monthly consumption expenditure per person, including the imputed prices of goods obtained for free through various social welfare programs, was Rs 4,247 in rural regions and Rs 7,078 in urban areas, compared to Rs 3,860 and Rs 6,521 in 2022–2023. The fractile data for imputed consumption that was published in the previous round was not included in the fact sheet. Details will be included in the complete study, according to officials, which is expected to be published early next year.

However, compared to 2022–2023, the Survey report noted that consumption inequality has decreased in both rural and urban areas.For both rural and urban areas, the Gini coefficient decreased from 0.266 in 2022–2023 to 0.237 in 2023–2024 and 0.314 in 2022–2023 to 0.284 in 2023–2024, respectively.

Cereals increased from 4.91 percent in 2022–2023 to 4.99 percent in 2023–2024 for rural households, while urban households saw an increase from 3.64 percent to 3.76 percent. The percentage of meat and egg fish in total MPCE increased slightly from 4.91 percent and 3.57 percent in rural and urban areas, respectively, to 3.92% and 3.56% in 2023–2024. drinks,Refreshments and processed foods remained the largest expenditure categories in 2023–24, accounting for 9.84% and 11.09% of rural and urban households' consumption baskets, respectively, compared to 9.62% and 10.64% in 2022–23.

 

In 2023–24, the percentage of household spending on non-food products was 52.96 percent in rural households and 60.32 percent in urban households, compared to 53.62 percent and 60.83 percent in 2022–23. Transportation, healthcare, clothing, bedding, and footwear were the main drivers of consumption expenditure on non-food products in rural India. In urban India, transportation, entertainment, durable goods, and rent were the primary reasons for spending money on non-food items.

Additionally, statistics by state revealed a distinct trend in consumption patterns, with the eastern and central regions of India spending less and the western and northern areas spending more.. For example, in rural and urban parts of West Bengal, Bihar, Assam, Odisha, Uttar Pradesh, Madhya Pradesh, Jharkhand, and Chhattisgarh, the average spending per person was lower than the national average in 2023–2024. The states with higher per capita spending than the national average were Maharashtra, Punjab, Tamil Nadu, Telangana, Kerala, Karnataka, Haryana, Gujarat, and Andhra Pradesh. Rajasthan was unique in that its consumption spending was greater than the national average for rural areas but lower than the national average for urban areas.