New Delhi [India], January 3 : India is witnessing a significant decline in consumption inequality across rural and urban regions, according to a report by the State Bank of India (SBI).
The report noted that the gap in monthly per capita consumption expenditure (MPCE) between rural and urban areas has reduced notably. The difference, expressed as a percentage of rural MPCE, has fallen to 69.7 per cent from 88.2 per cent in 2009-10.
This improvement is largely attributed to the government's initiatives, including direct benefit transfers (DBTs), enhanced rural infrastructure, efforts to boost farmers' income, and overall improvements in rural livelihoods.
It said, "The difference between rural and urban monthly per capita consumption expenditure/MPCE to rural MPCE is now at 69.7 per cent, a rapid decline from 88.2 per cent in 2009-10...mostly due to the initiatives the Government has taken in terms of DBT transfers."
The report delves into vertical consumption inequality, which measures disparities within rural and urban areas across different income classes.
The findings reveal that inequality in rural areas (measured using a Gini coefficient equivalent) has decreased from 0.365 to 0.306. This indicates a more equitable distribution of income in rural India.
Similarly, in urban areas, inequality has dropped from 0.457 to 0.365, suggesting progress toward balanced consumption patterns.
Moreover, horizontal consumption inequality between rural and urban regions, calculated across various income classes, has also seen a sharp decline as per the report. The Gini-equivalent figure has reduced from 0.560 to 0.414, showing convergence in consumption patterns across the two areas.
Notably, the report also added that states historically considered lagging in development, such as Bihar and Rajasthan, are exhibiting remarkable progress in narrowing the rural-urban consumption gap. This reflects the growing impact of factors intrinsic to rural ecosystems.
The report also points out that consumption patterns at the lower end of the spectrum have become more uniform. Over 60 per cent of individuals in the lower distribution of both rural and urban areas have consumption levels below the all-India average for their respective categories.
Furthermore, urban and rural consumption is increasingly similar for more than half of the population at the lower end of the distribution.
These trends highlight the reduction of economic disparities in the country and the fostering of inclusive growth across all regions.
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