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Rural India consumption growth outpaces urban areas: Study

New Delhi: For the first time since economic reforms began two decades ago, consumption in rural India is growing faster than in cities fuelled by rise in household incomes due to more non-farm job opportunities, says a study.

Between 2009-10 and 2011-12, additional spending by rural India was Rs 3.75 lakh crore, significantly higher than Rs 2.9 lakh crore by urbanites, according to the study by credit ratings agency Crisil.

"Underpinning this growth in rural consumption is a strong increase in rural incomes due to rising non-farm employment opportunities and the government`s rural focus through employment generation schemes," it said.

For sustaining the rural boom, it is critical to substitute short-term income boosters such as government sponsored employment guarantee schemes with durable job opportunities in rural areas, the study noted.

NSSO data shows that from 2004-05 to 2009-10 rural construction jobs rose by 88 per cent, while the number of people employed in agriculture fell from 24.9 crore to 22.9 crore, Crisil said.

Besides, it added, migrants from villages to urban areas, who benefitted from job opportunities in infrastructure and construction projects, increased remittances to their families in rural India, boosting consumption.

The study said a notable phenomenon in rural consumption is a shift from necessities to discretionary goods.

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