Consumption inequality reduced further in 2023-24: HCES survey

Rural consumption picks up more than urban

Consumption inequality declined further in 2023-24 as household spending of poorest rose faster while that of richest section contracted from the previous year, results of the Household Consumption Expenditure Survey released on December 27 showed.

“Consumption inequality, both in rural and urban areas has declined from the level of 2022-23. The Gini coefficient has declined to 0.237 in 2023-24 from 0.266 in 2022-23 for rural areas and to 0.284 in 2023-24 from 0.314 in 2022-23 for urban areas,” factsheet released by the government stated.

In the case of rural areas, while consumption spending rose 22.1 percent for the lowest 0-5 percent of the households, incomes of the top 95 percent shrunk by 3.5 percent. The gap between rich and poor household spending was six times in 2023-24 compared with 7.6 times in 2022-23.

In the case of urban areas, consumption spending of poorest households rose 18.7 percent, while richest households witnessed a 2.5 percent decline in consumption.

Urban areas were also more unequal than rural counterparts, as the gap between richest and poorest household spending was 8.5 times.

Declining urban and rural gap

A faster rate of growth of consumption in rural areas also indicated a decline in urban-rural inequality.

Urban consumption was 1.697 times higher than rural consumption in 2023-24, compared with 1.712 times difference in 2022-23.

Rural consumption rose 9.2 percent over 2022-23, while urban consumption rose 8.3 percent, as rural households spent Rs 4,122 per month on consumption in 2023-24, and urban households spent Rs 6,996

In real prices, however, consumption remained unchanged. One reason for this could be a higher incidence of inflation in rural areas over the past year.

Data with imputation shows that benefits accrued more to rural areas than urban as consumption inequality declined further with social welfare programmes. Urban incomes were 1.67 times higher than rural ones, as these programmes added another 3 percent or Rs 125 in consumption for rural areas and 1 percent or Rs 82 to urban consumption spending.