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India’s rural-urban income disparity narrows significantly as the country’s poverty rate drops: SBI Report

<p>According to a study by SBI Research of a Consumer Expenditure Survey published on Tuesday, there has been a notable decrease in both poverty and the income gap between rural and urban areas in India.</p>
<p><img decoding=”async” class=”alignnone wp-image-452856″ src=”https://www.theindiaprint.com/wp-content/uploads/2024/02/theindiaprint.com-indias-rural-urban-income-disparity-narrows-significantly-as-the-countrys-poverty–750×500.jpg” alt=”theindiaprint.com indias rural urban income disparity narrows significantly as the countrys poverty” width=”993″ height=”663″ title=”India's rural-urban income disparity narrows significantly as the country's poverty rate drops: SBI Report 9″ srcset=”https://www.theindiaprint.com/wp-content/uploads/2024/02/theindiaprint.com-indias-rural-urban-income-disparity-narrows-significantly-as-the-countrys-poverty–750×500.jpg 750w, https://www.theindiaprint.com/wp-content/uploads/2024/02/theindiaprint.com-indias-rural-urban-income-disparity-narrows-significantly-as-the-countrys-poverty–1024×683.jpg 1024w, https://www.theindiaprint.com/wp-content/uploads/2024/02/theindiaprint.com-indias-rural-urban-income-disparity-narrows-significantly-as-the-countrys-poverty–768×512.jpg 768w, https://www.theindiaprint.com/wp-content/uploads/2024/02/theindiaprint.com-indias-rural-urban-income-disparity-narrows-significantly-as-the-countrys-poverty–150×100.jpg 150w, https://www.theindiaprint.com/wp-content/uploads/2024/02/theindiaprint.com-indias-rural-urban-income-disparity-narrows-significantly-as-the-countrys-poverty-.jpg 1200w” sizes=”(max-width: 993px) 100vw, 993px” /></p>
<p>According to the report, there has been a noteworthy decrease of 440 basis points in Rural Poverty and a 170-basis point decline in Urban Poverty since the pandemic. This indicates that the government’s efforts to promote the welfare of the bottom of the pyramid are significantly improving rural livelihood.</p>
<p>According to official figures, urban poverty is at 4.6% (or 13.7%) in 2011–12, while rural poverty is now at 7.2% (or 25.7%) in 2011–12.</p>
<p>According to the research, there is a growing aspirational trend in India, which is shown by the rising percentage of discretionary expenditure in both rural and urban regions. This includes spending on durable goods, entertainment, alcoholic drinks, and other items. In contrast to metropolitan regions, ambition moves more quickly in rural places.</p>
<p>According to the SBI research, the monthly per capita consumption expenditure (MPCE) gap between rural and urban areas has rapidly decreased, from 88.2 percent in 2009–10 to 71.2% now. The government’s actions in the form of DBT transfers, investments in the construction of rural infrastructure, and increasing farmer incomes account for around 30% of the Rural MPCE, all of which considerably improve rural livelihoods.</p>
<p>According to the SBI research, improved physical infrastructure is facilitating two-way rural-urban movement, which is the main cause of the gradually closing vertical income difference within rural income classes as well as the horizontal income gap between rural and urban environments.</p>
<p>The greatest improvement in the rural-urban divide is being seen in the states that were previously regarded as laggards. The paper also notes that states like Madhya Pradesh, Uttar Pradesh, and Bihar are demonstrating the effects of these variables more and more.</p>
<p>Nowadays, the consumption patterns of the lower half of the rural pyramid are mostly overlapping with those of the urban sector.</p>
<p>According to the research, the CPI computation’s updated MPCE weights may contribute to India’s real GDP growth exceeding 7.5% in FY24.</p>
<p>Additional highlights</p>
<p>*Across all groups, the average increase rate of consumption is almost equal for both rural and urban areas—2.66% for rural areas and 2.59% for urban areas. The horizontal consumption inequality between rural and urban areas across fractiles has decreased from 0.560 to 0.475 using the statistical equivalent of the Gini Coefficient.</p>
<p>*There is a downward tendency in the urban-rural difference as a proportion of rural consumption. From 90.8% in 2004–05 to 71.2% in 2022–23, it has decreased, and from what we understand, it is expected to drop even more to 65.1% in 2029–2030.</p>
<p>*In the lowest category, the difference between urban and rural consumption is just 46%. Urban consumption is only 68% different from rural consumption across all fractile groups, which is much less than the average for all of India. This suggests that MPCE trends are now mostly convergent to their urban counterparts in the lower half of the rural pyramid.</p>

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