‘Efforts to boost agri, rural activities have not lifted consumption’ Indian Express 6th August 2012

Two facts stand out from the NSS 68th Round on Household Consumption Expenditure Survey. The first is that rural households continue to be worse off than their urban counterparts in terms of monthly per capita expenditure (MPCE) and the second is that the richest in rural areas fare relatively unfavourably compared with those in urban areas. This suggests that the rural population remains disadvantaged vis-à-vis the urban folk in terms of employment, income and consumption. It is also a reflection of the limited attention that has been paid to the development of our rural economy which has made migration to the urban areas more attractive. It is significant that over the last 7-8 years, rural population consumption standard is still marginally lower than the urban population in the period June 2004-June 2005 in real terms while there is an almost status quo situation at current prices. Clearly the efforts that have been put in to boost agriculture and other rural activity in the small scale and services sectors have not been able to uplift the consumption levels here. The picture is even starker when one looks at the inequality levels across different levels of income. The poorest 10 per cent of the rural population consume around 72 per cent of that in urban areas. The poor are better off hence in the urban surrounding. Within the richer sections, i.e. top 10 per cent, the rewards are relatively lower as their consumption is just 45 per cent of that in the urban areas. Therefore, looked at from both ends, there are disadvantages in living in the rural areas as consumption levels are better across the borders. There are three implications here. The first is that the government has to focus on uplifting rural economic activity to ensure sustainability of Indian agriculture in particular, as farming has already become a less attractive proposition given the vagaries of nature. The second is that in a positive sense, industry could seek to make further inroads into the rural territory for selling their products as the richer groups which have spending power could be provided access to them. Lastly, the fact that the status quo has not really changed puts the debate of NREGA in a different light. Critics have argued that this programme has led to increase in spending that has impacted the demand-supply matrix. Quite clearly, notwithstanding such expenditure, rural consumption has not really increased relatively, and therefore, we must stop blaming this programme for our inept handling of our agriculture.