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Mumbai: For the first
time since economic reforms began two decades ago, consumption in
rural India is growing faster than in urban areas, a survey by
ratings and research firm CRISIL revealed Wednesday.
Given the large size of India's rural population, the value of
goods and services consumed has always been greater in rural
India, but urban India had narrowed the differential during most
of the last decade by growing at a faster pace.
Between 2009-10 and 2011-12, additional spending by rural India
was Rs.3,750 billion, significantly higher than Rs.2,994 billion
by urbanites.
"Underpinning this growth in rural consumption is a strong
increase in rural incomes due to rising non-farm employment
opportunities and the government's rural focus through employment
generation schemes," Roopa Kudva, managing director of CRISIL,
said in a research report.
Growth in rural consumption was fuelled by a rise in household
incomes due to greater non-farm job opportunities and government
initiated employment generation schemes.
National Sample Survey Organisation (NSSO) data shows that during
2004-05 to 2009-10 rural construction jobs rose by 88 percent,
while the number of people employed in agriculture fell from 249
million to 229 million.
In addition, migrants from villages to urban areas who benefitted
from job opportunities in infrastructure and construction projects
increased remittances to their families in rural India, which
boosted consumption.
A notable phenomenon in rural consumption is a shift from
necessities to discretionary goods, the study report said.
About one in every two rural households now has a mobile phone.
Even in India's poor states such as Bihar and Orissa, one in three
rural households has a mobile phone.
Nearly 42 percent of rural households owned a television in
2009-10, up from 26 percent five years earlier.
Similarly, 14 percent of rural households had a two-wheeler in
2009-10, twice that in 2004-05. For India, a young population,
rising income and low penetration of many consumer durables means
that rural consumption has the potential to remain an important
source of demand.
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