Tamil Nadu: Bridging the Urban-Rural Spending Gap

Tamil Nadu has recently made remarkable progress in reducing the spending disparity between its urban and rural areas. This achievement not only reflects the state’s economic balance but also demonstrates how prosperity can be evenly distributed across the entire state.

Let’s uncover the real story behind this change and its impact.

What’s Happening?

Tamil Nadu has recently witnessed a significant change in its urban and rural spending statistics. The state government’s policies and plans, prioritising development in rural areas, have played a crucial role in this shift.

According to the recently released ‘Household Consumption Expenditure Survey (HCES): 2022-23’, Tamil Nadu is among the leading states in terms of per capita spending in both urban and rural areas. Typically, the cost of living in urban areas is higher compared to rural areas. However, the gap in Tamil Nadu is relatively narrow. The average urban expenditure is Rs 7,630, while in rural areas it is Rs 5,310, both figures significantly higher than the national average. Furthermore, Tamil Nadu’s urban-rural expenditure gap stands at 44%, compared to the national average of 71%, indicating widespread prosperity across both urban and rural regions.

How Did Tamil Nadu Reduce the Urban-Rural Spending Gap?

Why is consumption inequality in Tamil Nadu lower compared to the rest of India? Here are some reasons:

Rural Development Programs: The Tamil Nadu government has focused on education, healthcare, and basic infrastructure in rural areas. Several initiatives have been launched to provide quality education, expand access to healthcare services, and develop essential infrastructure.

Promotion of MSMEs: Tamil Nadu has implemented special schemes to promote micro, small, and medium enterprises (MSMEs) in rural areas, increasing employment opportunities and economic prosperity.

Lower Dependence on Agriculture: Unlike the national average of 48%, only 35% of the workforce in Tamil Nadu is engaged in agriculture.

Is This Happening Nationally?

The ‘Household Consumption Expenditure Survey (HCES): 2022-23’ survey indicates a narrowing spending gap between urban and rural areas across India. The average monthly per capita consumption expenditure (MPCE) in rural India is Rs 3,773, while in urban India it is Rs 6,459. Although urban areas spend 71% more than rural areas, this gap has decreased compared to previous surveys. For instance, in 2004-05, the urban-rural spending gap exceeded 90%.

This shows the average monthly per capita consumption expenditure of Indian states during 2022-23.

Despite this progress, spending capacity inequality remains, especially in urban areas, where the top 5% of earners spend 10.4 times more than the bottom 5%. In rural areas, this disparity is 7.6 times.

Changing Eating Habits in Rural India

Over the past two decades, there has been a significant shift in dietary habits in Indian villages. In 1999-2000, 22.16% of total rural expenditure was on grains (wheat, rice, etc.), but by 2022-23, this figure had dropped to just 6.90%.

Conversely, spending on vegetables, processed foods, fruits, and nuts has increased. Expenditure on vegetables decreased from 6.17% in 1999-2000 to 5.26% in 2022-23. Spending on fresh fruits increased from 1.42% to 2.48%, and on dry fruits from 0.30% to 1.15%. Spending on processed foods and beverages rose from 4.19% in 1999-2000 to 9.41% in 2022-23.

What’s Next?

Tamil Nadu’s approach serves as an example for other states to reduce economic disparity between urban and rural areas. In the future, we hope that other states will follow Tamil Nadu’s lead, investing in their rural areas and improving economic conditions there. This will not only contribute to the overall development of the state but also to the country.

Such initiatives will strengthen India’s economic growth, leading to balanced development across different regions of the country.

That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!

The article is for information purposes only. This is not an investment advice. Disclaimer: Teji Mandi Disclaimer