NEW DELHI: The recent Household Consumption Expenditure Survey (HCES) report threw up a significant metric on high rural-urban inequality in consumption expenditure. However, this inequality has reduced since the past decade, when it was 83.9%. Overall, the urban expenditure across the country is 71.2% more than that in rural India.
Among the major states, Gujarat tops the list where the rural monthly per capita expenditures (MPCE) are way behind urban while the rural-urban skew is the lowest in Kerala and Punjab.
The MPCE of the rural population in Gujarat as compared to their urban counterparts is a whopping 74%, followed by Karnataka (70%), Telangana (66%), Maharashtra (64%) and Haryana (62%). These major states are performing well on the economic development front.
However, among all states, Meghalaya (83%) followed by Chhattisgarh (82%) has the highest rural-urban difference in average MPCE. The comparable data for other major states are Jharkhand (77%), Odisha (74%), Madhya Pradesh and West Bengal (59%), UP (56%), Uttarakhand (49%) and Bihar (40%). P C Mohanan, India’s former Chief Statistician, attributed the sharp difference due to lower price variation in rural and urban areas.
“Price of food and conveyance are cheaper in rural areas compared to urban areas,” says Mohanan.
He further suggests that it is better to look at the consumption pattern of the lowest 5% MPCE with the top 5% MPCE to measure inequality. However, a detailed report of HCES is yet to be released. The bottom 5% of rural households' consumption expenditure is expected to lag by 8-10 times compared to the top 5%. However, other experts are not in agreement with the high range of consumption differences due to price differences in rural and urban areas.
Prof Vikas Rawal, who teaches Economics at Jawaharlal Nehru University, said the huge difference only shows the increasing rural-urban economic divide that led to such wide variations.
“If it is due to price differences then it should also be reflected in Consumer Price Index-Agriculture Labour and CPI-Industrial Workers,” points out Prof Rawal.
“If the survey data is to be believed, it only shows rural and urban inequality,” Prof Rawal added.
Agriculture labour (AL) income indicates the rural pattern of consumption expenditure while industrial workers' (IW) consumption expenditure pattern captures that in urban areas. Dr G C Manna, former Director of CSO and NSSO, also agreed that such a level of divergence in rural and urban areas is not being reflected in any other government indexes.
“Practically, there are not many differences in CPI-AL and CPI-IW as is reflected in HCES,” said Manna.