Disparity between rural and urban consumption is less than what it looks like
₹3,773 and ₹6,459 in rural and urban areas respectively, as per the government’s recently released data on household consumption expenditure. Let us delve deeper into all the categories that lead to this gap in rural-urban consumption. First, consider ‘rent.’ Given that most families live in their own homes in rural areas, the average monthly rent spending is only ₹30.
In urban areas, it is ₹423. Second, let us consider ‘conveyance.’ In rural areas, it is ₹285, while in urban areas, it is ₹555. Third, a spending category that is related more to lifestyle than welfare: beverages and processed food.
The average rural spending was ₹363 and nearly double that in urban areas. Similarly, the rural-urban gap in spending on entertainment and other goods is also high. Now, let us look at the impact of government transfers that cushion consumer spending.
While the government provides subsidized food rations to the poor in rural and urban areas, the average transfers are higher in rural areas, as seen in the survey results. Also, a wide gap in education and healthcare spending in rural and urban areas could reduce further once we account for government subsidies. Subsidized or free healthcare services provided under Pradhan Mantri Jan Arogya Yojana and other state-specific schemes have not been accounted for, given the complexity of imputation calculations.
Also, education subsidies like reimbursements or waivers of school or college fees have not been considered. The transfers on these accounts may be higher in rural areas than in urban. In no way do such transfers imply that the quality of health or education services would be the same in rural and urban areas; consumption data does not lend itself to an examination of those
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