Modi govt is changing rural India. They are spending differently from MGNREGA era

The highlight of Household Consumption Expenditure Survey 2022-23 is that the share of rural households' expenditure on cereals has fallen below 10% for the first time.

Illustration by Ramandeep Kaur, ThePrint

Rural India is witnessing a gradual change, at least at the top, as can be seen from consumer behaviour, travel habits, and access to basic amenities. A section of rural Indians—the more affluent ones, of course—is increasingly choosing to spend a larger share of their income on eating out and conveyance, including both cars and flights.

What’s more, there’s also an increasing availability of basic amenities like electricity and tap water.

Many of these improvements in the quality of living have happened in the 10 years since 2011-12, with the Narendra Modi government naturally able to claim the bulk of the credit for this, as it has been in power for the most time at the Centre since then. Some, like access to tap water and regional airports, can directly be attributed to it.

A large part of the insight into the lives of rural Indians comes from the data in the recently released and much-awaited Household Consumption Expenditure Survey 2022-23. The standout point from the survey, as has now been noted by various commentators, is the falling share of expenditure that rural households spend on food overall, and on staples like cereals and pulses in particular.

The seemingly obvious explanation here is that the Modi government has been giving large amounts of grain free of cost to 80 crore people, and so of course they would have more money to spend on other things. But the data keeps this in mind. The survey also includes data on expenditure after imputing the value of the items these households get for free.

Interestingly, even after including the value of the free food grains, the survey shows rural households spent a lower share on cereals in 2022-23 than they did in 2011-12. The periodicity of the data on the monthly per capita expenditure is uneven—available for 1990-91, 2004-05, 2009-10, 2011-12, and 2022-23—which means a statistical comparison won’t be robust.

But the main upshot is that rural households are now apportioning just about 7 per cent of their expenditure to cereals, the first time this number has fallen below 10 per cent. Pulses make up less than 2 per cent, again a first.

Overall expenditure on food, too, has been falling and made up less than 50 per cent of total expenditure by rural households for the first time since 1990. This is great news. The hallmark of the increasing development of the country is the falling share of staples in overall household expenditure. What this has also meant is that, while the share of spending on overall food has fallen for rural households, it has risen for the beverages, processed food, and cooked meals category.

What does this imply? It means that at least the more affluent rural households are choosing to spend a larger share of their money on processed and packaged food—largely sold by FMCG companies—and on cooked meals, likely either at dhabas or small restaurants. This is clear in the data.

The consumption expenditure survey provides an average for rural India. Statistically, an average rise in share of expenditure on processed and cooked food would either mean that those who could already afford such food are increasingly choosing it, or that the band of households that can afford it is growing wider.

We will likely get a clear answer when the government releases the second round of its survey next year, which will contain the granular data.

But if this indeed marks a somewhat wider shift away from having no option but to eat just dal, roti, and sabzi made on wood-fired chulhas, then it is a welcome one. This also gives the government some insight into how it can further fine-tune and better target the support it offers to help those at the very bottom.

This is not to say that everything is going well for rural Indians. There is still severe income distress for the majority of them, as can be seen by the high demand for income-support schemes like NREGA. But any change from this situation is worth taking note of.

From two wheels to four, and into the air

Then there’s the fact that the share of expenditure by rural households on conveyance has also shot up. Conveyance here means all modes of transport, but does not include fuel costs, lest people point to high petrol and diesel prices as the reason. Conveyance includes expenditure on vehicles, trains, flights, and other travel-related costs.

This finding is backed by the fact that the growth in passenger vehicle sales in rural India has outpaced the sales in urban India in each of the last six years since 2018-19. Of course, this is on a lower base, but a six-year streak is no aberration. Although still at a relatively nascent stage, rural and small-town Indians are increasingly switching from two-wheelers to four-wheelers, a departure from the typical image of a farmer astride his rickety two-wheeler.

Enough and more has been written about how more Indians are now choosing to fly, but less has been said about the composition of passengers skewing away from the bigger airports. Data with the Airports Authority of India shows that the share of the six metro airports in domestic passenger footfalls has fallen to 58 per cent in the April-January period of this financial year, from about 65 per cent during the same period in 2014-15.

What’s more, it has been reported that the top 10 airports in the country accounted for 69 per cent of the domestic footfalls in 2024, down from 75 per cent in 2014. What this means is that more people are taking off from and landing at the smaller airports, many of which have come up under the government’s UDAN scheme.

This is a sign that flights are no longer the sole domain of the urban rich. Sections of rural and semi-urban India are also taking to the air. In fact, ThePrint’s Krishan Murari discovered the transformation a new airport is effecting in Darbhanga in Bihar.

Water, water everywhere

Village women walking in the pre-dawn light to far-off wells, carrying pots on their heads, is one of the most enduring and popular images associated with rural India. The reality, however, should be different now. Government data shows that, just a few days ago, the Jal Jeevan Mission crossed the milestone of providing 75 per cent of rural households with tap water connections. When it was launched, in August 2019, just about 17 per cent of rural households were covered.

Now, even if you want to discount the official data and say the government is overstating its achievements, let’s assume that the number actually is 50 per cent and not 75 per cent. Even that means that one in two rural households has access to a tap.

Of course, one can question whether there is water flowing through these taps. But as Bengaluru has shown us over the past few days, a shortage of water is neither a rural nor a poor person’s problem alone.

Perhaps the most striking change in rural India was highlighted by economist Radhika Pandey in her weekly MacroSutra column for ThePrint. She pointed out that the urban-rural gap has shrunk more for the lower consumption groups. That is, the difference between the rural poor and urban poor in terms of how much they spend is declining.

This, as Pandey noted, is a sign that government policies have been effective in targeting and uplifting the rural poor.

Most of these data points have been reported before, but taken together they point to a gradual change in rural India, a fact that has something for everybody.

Policymakers need to make sure this change isn’t restricted to paper. They must also determine whether this change in consumer behaviour is concentrated among a slim band of affluent rural households, or if the band itself is becoming wider.

FMCG companies, too, will want to look into whether this represents a new and growing market.

Sharad Raghavan is Deputy Editor – Economy at ThePrint. He tweets @SharadRaghavan. Views are personal.

(Edited by Prashant)