Behind the rise in rural consumption spending
The National Rural Livelihood Mission, better targeting and delivery of benefits, wider reach of digital public infrastructure have contributed to the spurt
The significant gains in Monthly Per Capita Expenditure (MPCE) in the 2022-23 Household Consumption Expenditure Survey (HCES) conducted by the National Statistical Office (NSO), compared to the level reported in 2011-12, have made headlines. The rate of increase for rural households (40.42%) is sharper than that for urban ones (33.5%) and, for the first time, non-food items account for more than 50% of the total consumption expenditure. Relatively poorer states such as Uttar Pradesh (UP), Madhya Pradesh (MP), and Bihar reported significant gains from 2011-12 levels, but continue to lag the southern states. Among the states, Kerala ( ₹ 5,924) has the highest average rural MPCE, followed by Punjab ( ₹ 5,315), Tamil Nadu ( ₹ 5,310) and Andhra Pradesh ( ₹ 4,870). What explains this performance? How can it be improved further?
First, the National Rural Livelihoods Mission was launched in 2011 to replicate the success of the southern states in creating women’s collectives for poverty eradication. From 25 million women in its fold in 2013-14, it has expanded to over 90 million women today under the renamed Deendayal Antyodaya Yojana — National Rural Livelihood Mission (DAYNRLM). These collectives have leveraged over ₹ 8 lakh crore as credit since inception, with non-performing assets (NPAs) of less than 1.6%. A large number of diversified livelihoods have been generated through access to credit. The challenge is in scaling up.
Animal resources and more intensive vegetable and horticulture cultivation in rain-fed areas on account of land development and water conservation in convergence with the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), has made a difference. The Intensive Participatory Planning Exercise in 2015 in 2,500 backward blocks brought DAYNRLM and MGNREGS closer to convergence. In particular, the focus on agriculture and allied activities in MGNREGS 2014 onwards, with a large-scale expansion of individual beneficiary schemes such as farm ponds, wells, animal sheds, vermicomposting, soak pits, 90 days’ support for Pradhan Mantri Awas Yojana Gramin (PMAYG), have all led to supplementary income for households. The rural economy is no longer just about agriculture as nearly half of the manufacturing and construction and over one-fifth of the services sector is actually a part of it. Even then, given the loss of income due to Covid-19, we needed to sustain higher allocations for public workfare programmes such as MGNREGS longer to enable an even faster consumption recovery.
Second, the identification of the deprived households through objectively verifiable deprivation indicators under the Socio-Economic Caste Census (SECC 2011) and its adoption across programmes such as the PMAYG, Ujjwala Yojana for gas, Saubhagya for free electricity connection, Pradhan Mantri Jan Arogya Yojana (PMJAY), 2015 onwards, created the labharthi varg (beneficiary class). SECC 2011 was released in July 2015 without caste data and became the basis for the identification of the deprived. This enabled more focused attention to the poor. It created a constituency of the deprived. Many field-based means were adopted to make the list truly inclusive.
Third, the extensive use of the digital public infrastructure and unique identity through Aadhaar across programmes made it possible to transfer funds directly to beneficiary accounts. IT/DBT (direct benefits transfer) cleaned up payments just as SECC-use settled the question of identifying the deprived household. With the creation of community cadres such as Banking Correspondent Sakhis, Community Resource Persons, campaign-mode enlisting of all beneficiaries for Aadhaar-linked bank accounts, and geo-tagging of assets, a framework for a transparent delivery system was created.
Fourth, large-scale thrust on rural roads, housing, electricity connection, bank accounts, accident and life insurance, immunisation, and distribution of LED bulbs, created interfaces with deprived households. Roads opened up employment opportunities. Campaigns such as the Gram Swaraj Abhiyan in two phases in 2018, helped in reaching pro-poor public welfare to the identified 63,974 villages (10% of total villages) with a very high population of deprived households. Untied funds to panchayats through the Finance Commission also facilitated local public infrastructure. The Gram Panchayat Development Plan process also led to a greater local-led thrust for transformation, using the annual Mission Antyodaya Panchayat Survey data.
Fifth, the use of SECC-based deprivation in the selection of beneficiaries addressed both social and regional inequalities. States with a larger percentage and absolute number of deprived households got more pro-poor public welfare coverage, irrespective of caste, creed or religion. The United Nations Development Programme (UNDP) 2022 report also highlights how multi-dimensional poverty declined quite significantly in hitherto deprived regions as well. Uttar Pradesh recording the highest increase in per capita consumption expenditure is in line with it. The bare necessities must have universal coverage with no one left behind.
Sixth, human capital is important for a faster improvement in per capita consumption. States such as Kerala and Tamil Nadu fare very well in consumption. Clearly, this is one area that needs faster thrust to be able to improve the incomes of deprived households even faster. Though significant, the gains in per capita consumption are still modest, given our ambition to be a developed nation. The World Bank has different indicators for poverty in developed economies. Assessed against those standards and in terms of securing a life of dignity and opportunities for every Indian to develop their fullest human potential, we still have a long way to go. Moving up the skilling ladder is needed on priority.
Seventh, states with greater decentralised management of public programmes make faster progress on human development. The Reserve Bank of India’s 2023 report on panchayats makes the point on the basis of evidence.
Amarjeet Sinha is former secretary, department of rural development, GoI. The views expressed are personal
The significant gains in Monthly Per Capita Expenditure (MPCE) in the 2022-23 Household Consumption Expenditure Survey (HCES) conducted by the National Statistical Office (NSO), compared to the level reported in 2011-12, have made headlines. The rate of increase for rural households (40.42%) is sharper than that for urban ones (33.5%) and, for the first time, non-food items account for more than 50% of the total consumption expenditure. Relatively poorer states such as Uttar Pradesh (UP), Madhya Pradesh (MP), and Bihar reported significant gains from 2011-12 levels, but continue to lag the southern states. Among the states, Kerala ( ₹ 5,924) has the highest average rural MPCE, followed by Punjab ( ₹ 5,315), Tamil Nadu ( ₹ 5,310) and Andhra Pradesh ( ₹ 4,870). What explains this performance? How can it be improved further?
First, the National Rural Livelihoods Mission was launched in 2011 to replicate the success of the southern states in creating women’s collectives for poverty eradication. From 25 million women in its fold in 2013-14, it has expanded to over 90 million women today under the renamed Deendayal Antyodaya Yojana — National Rural Livelihood Mission (DAYNRLM). These collectives have leveraged over ₹ 8 lakh crore as credit since inception, with non-performing assets (NPAs) of less than 1.6%. A large number of diversified livelihoods have been generated through access to credit. The challenge is in scaling up.
Animal resources and more intensive vegetable and horticulture cultivation in rain-fed areas on account of land development and water conservation in convergence with the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), has made a difference. The Intensive Participatory Planning Exercise in 2015 in 2,500 backward blocks brought DAYNRLM and MGNREGS closer to convergence. In particular, the focus on agriculture and allied activities in MGNREGS 2014 onwards, with a large-scale expansion of individual beneficiary schemes such as farm ponds, wells, animal sheds, vermicomposting, soak pits, 90 days’ support for Pradhan Mantri Awas Yojana Gramin (PMAYG), have all led to supplementary income for households. The rural economy is no longer just about agriculture as nearly half of the manufacturing and construction and over one-fifth of the services sector is actually a part of it. Even then, given the loss of income due to Covid-19, we needed to sustain higher allocations for public workfare programmes such as MGNREGS longer to enable an even faster consumption recovery.
Second, the identification of the deprived households through objectively verifiable deprivation indicators under the Socio-Economic Caste Census (SECC 2011) and its adoption across programmes such as the PMAYG, Ujjwala Yojana for gas, Saubhagya for free electricity connection, Pradhan Mantri Jan Arogya Yojana (PMJAY), 2015 onwards, created the labharthi varg (beneficiary class). SECC 2011 was released in July 2015 without caste data and became the basis for the identification of the deprived. This enabled more focused attention to the poor. It created a constituency of the deprived. Many field-based means were adopted to make the list truly inclusive.
Third, the extensive use of the digital public infrastructure and unique identity through Aadhaar across programmes made it possible to transfer funds directly to beneficiary accounts. IT/DBT (direct benefits transfer) cleaned up payments just as SECC-use settled the question of identifying the deprived household. With the creation of community cadres such as Banking Correspondent Sakhis, Community Resource Persons, campaign-mode enlisting of all beneficiaries for Aadhaar-linked bank accounts, and geo-tagging of assets, a framework for a transparent delivery system was created.
Fourth, large-scale thrust on rural roads, housing, electricity connection, bank accounts, accident and life insurance, immunisation, and distribution of LED bulbs, created interfaces with deprived households. Roads opened up employment opportunities. Campaigns such as the Gram Swaraj Abhiyan in two phases in 2018, helped in reaching pro-poor public welfare to the identified 63,974 villages (10% of total villages) with a very high population of deprived households. Untied funds to panchayats through the Finance Commission also facilitated local public infrastructure. The Gram Panchayat Development Plan process also led to a greater local-led thrust for transformation, using the annual Mission Antyodaya Panchayat Survey data.
Fifth, the use of SECC-based deprivation in the selection of beneficiaries addressed both social and regional inequalities. States with a larger percentage and absolute number of deprived households got more pro-poor public welfare coverage, irrespective of caste, creed or religion. The United Nations Development Programme (UNDP) 2022 report also highlights how multi-dimensional poverty declined quite significantly in hitherto deprived regions as well. Uttar Pradesh recording the highest increase in per capita consumption expenditure is in line with it. The bare necessities must have universal coverage with no one left behind.
Sixth, human capital is important for a faster improvement in per capita consumption. States such as Kerala and Tamil Nadu fare very well in consumption. Clearly, this is one area that needs faster thrust to be able to improve the incomes of deprived households even faster. Though significant, the gains in per capita consumption are still modest, given our ambition to be a developed nation. The World Bank has different indicators for poverty in developed economies. Assessed against those standards and in terms of securing a life of dignity and opportunities for every Indian to develop their fullest human potential, we still have a long way to go. Moving up the skilling ladder is needed on priority.
Seventh, states with greater decentralised management of public programmes make faster progress on human development. The Reserve Bank of India’s 2023 report on panchayats makes the point on the basis of evidence.
Amarjeet Sinha is former secretary, department of rural development, GoI. The views expressed are personal
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