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Consumption Growth and Inequalities in Rural and Urban India

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  • Vachaspati Shukla

Abstract

This article analyzes changes in monthly per capita consumption expenditure (MPCE) across Indian states between 2011–2012 and 2022–2023, using data from the National Sample Survey’s Household Consumption Expenditure Survey. During this period, rural MPCE grew by 40.4%, surpassing the 33.4% increase recorded in urban areas. Bihar posted the highest growth in both rural and urban segments. States with lower initial MPCE experienced faster growth, indicating a convergence in consumption levels across states in both rural and urban regions. The analysis highlights a persistent inverse relationship between total MPCE and the share of food expenditure. MPCE inequality remains more pronounced in urban areas and in non-food spending; however, it has declined over time, reflecting more inclusive growth—particularly for lower-income deciles. Overall, the findings suggest a broad-based rise in consumption, diversification of spending patterns and a gradual narrowing of well-being disparities, with food now accounting for less than 50% of total consumption. JEL Codes: D63, D31

Suggested Citation

  • Vachaspati Shukla, 2025. "Consumption Growth and Inequalities in Rural and Urban India," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 26(1), pages 115-131, March.
    • Handle: RePEc:sae:soueco:v:26:y:2025:i:1:p:115-131
    DOI: 10.1177/13915614251355337
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    References listed on IDEAS

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    1. Ravallion, Martin & Chen, Shaohua, 2003. "Measuring pro-poor growth," Economics Letters, Elsevier, vol. 78(1), pages 93-99, January.
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    Keywords

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    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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