Rural Indians outpace urbanites in spending growth

Rural spending outpaced urban consumption in the two years up to 2011-12, the first time in nearly 25 years.

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, according to a study by Crisil.

Between 2009-10 and 2011-12, additional spending by rural India was Rs 3,75,000 crore, significantly higher than Rs 2,99,400 crore by urbanites, it said.

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.

''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,'' Crisil managing director and chief executive offficer Roopa Kudva said.

For sustaining the rural boom, it is critical to substitute short-term income boosters such as government-sponsored employment guarantee schemes with durable job opportunities in rural areas, the statement added.