Consumption inequality between cities and villages reduced; SBI report claims, benefits from this scheme of the Center

There has been a major decline in the consumption inequality between cities and villages in the country. This has been confirmed in a report by the State Bank of India (SBI). According to the report, a significant decline in consumption inequality is being seen between rural and urban areas in India.

According to the report, the difference in monthly per capita consumption expenditure (MPCE) between rural and urban areas has reduced significantly. The difference expressed as a percentage of MPCE between rural and urban areas has decreased from 88.2 percent in 2009-10 to 69.7 percent.

This improvement is mainly due to government initiatives including direct benefit transfers (DBT), augmentation of rural infrastructure, efforts to increase farmers' incomes, and overall improvement in rural livelihoods. According to the report, "The gap between rural and urban monthly per capita consumption expenditure/MPCE and rural MPCE is now 69.7 percent, which has narrowed sharply from 88.2 percent in 2009-10... mainly due to DBT transfers.".

The findings indicate that, measured by the Gini coefficient equivalent, inequality in rural areas has fallen from 0.365 to 0.306, reflecting a more equitable distribution of incomes in rural India. In like manner, inequality in urban areas fell from 0.457 to 0.365, which signals a boost to balanced consumption.

It also states that the two states considered for a long period as historically backward in terms of development, that is, Bihar and Rajasthan, have been able to demonstrate reasonable progress on its reduction in their rural-urban gaps concerning consumption. Factors embedded in rural ecosystems are having growing influences.