Bharat Ko Gussa Kyon Aata Hai: What Is Fueling Rural Distress?

Rural consumption has grown unabated, while the income level has failed to keep pace resulting in a debt trap.

There is an increase in rural consumption without income growth

(Photo: Modified by Erum Gour/The Quint)

In August 2016, I was extremely happy to report on the growing convergence of consumption habits in rural and urban India. Here is a quick summary of what I had written then:

• Like their urban counterparts, the top three most consumed services for people living in rural areas were: eating out, transport services and communication, respectively. Yes, eating out was the most preferred option in rural India too.
• The consumption of beauty products had gone up manifold in the countryside and the appetite for fast moving consumer goods (FMCG) was much higher in the countryside. In fact, rural consumption of FMCG products had outpaced urban consumption for many years now and industry surveys have been bringing that out year after year.

• Quoting a 2016 NSSO report, I had reported that the “acquisition of transport equipment is at the top of the agenda, both for rural and urban consumers, followed by jewellery and ornaments, heating and cooling devices, and information technology and communication devices.” Yes, heating and cooling devices in rural India too.
• Social scientists call the new class of people rurbanites – rural in terms of habitat but urban in their orientation.

Upwardly Mobile Rural Households Splurging On Consumer Items

That remains the last all-India survey done by the National Sample Survey Organisation’s 72nd round till date, giving us a glimpse of the rural consumption trend as it existed in 2015.

The indicators presented here portray a picture of upwardly mobile rural households splurging on consumer items like never before.

Then why has rural distress become a recurring theme, dominating most discussions? What has gone wrong in the countryside in the last 3-4 years?

Farm Income, Wages Remain Two Major Sources of Income

To get a sense, we need to understand the major sources of income of the people living in rural areas. The 2011 Socio-Economic Caste Census gives a comprehensive picture on how people in rural areas earn. Here are some of the highlights:

• The primary source of income for as many as 51 percent of rural households is casual manual labour.
• The main source of income for about 30 percent of all the households is still cultivation.
• Only 10 percent households have at least one member in some jobs —government or private.
• Only 5 percent of all the households have at least one member in government jobs, perhaps ensuring a steady source of income.
• Nearly 75 percent households have average monthly income of less than Rs 5,000 irrespective of the size of the household.

If the two major sources of income – cultivation and casual labour – have not grown at all in the last four years, you know that what seemed to be a happy rural consumption story has gone sour. You need to read just a few lines of this report by The Indian Express to understand the gravity of the situation.

The report says that “the average annual increase in the wholesale price index has been only 2.75% for food articles and 0.76% for non-food agricultural articles. As against this, the same during the preceding five-year period of the UPA government amounted to 12.26% and 11.04%, respectively.”

The same report adds that there has been “a marked decline in rural wage growth for agricultural and non-agricultural occupations after 2014-15, with the average yearly increase working out to about 5.2% in nominal terms. That is slightly above the corresponding rise of 4.9% in the rural consumer price index, pointing to a virtual stagnation in real rural wages.”

To put it simply, farm income and rural wages have barely grown in the last four years.

Consumption Without Income Growth

The picture, therefore, is somewhat clear now. While consumption has grown unabated, income levels have failed to keep pace with the same because of stagnation in prices of farm produce and consequent sluggishness in rural wages.

This has perhaps forced rural households into some sort of debt traps. Hence, the growing chorus for farm loan waivers from across the country, and the growing propensity to punish the incumbents wherever they can.

We now have actual evidence, by way of voting behaviour, from at least four states –Gujarat, Madhya Pradesh, Rajasthan and Chhattisgarh – to make a case that restive ‘rurbanites’ are desperately looking for a change.

What has further aggravated the situation is the disappearance of the cushion of joint family. As per the 2011 census report, while the incidence of joint families has gone up in urban India, there has been marked preference for nuclear families in the countryside.

According to a report by The Times of India, “between 2001 and 2011, joint families in urban India grew by 29%, whereas in rural areas they rose only 2%.”

Let us recall that joint families used to work as insurance at a time of distress because of pooling of resources. Now that the safety is gone, rural prosperity index is more directly related to the economic activities in the countryside now than what was the case earlier.

There is a strong message for political parties here.

A restive ‘Bharat’ will be hard to placate through pompous tokenism. You will be judged on the basis of how effectively you have delivered on your promises. Your winnability will depend on how effective your policies have been when it comes to augmenting farm income and rural wages; and how decisive you have been on promises of income diversification.

Don’t get complacent by cracking caste equations. ‘Rurbanites’ have moved beyond primordial loyalties and you will have to perform to win their hearts, and eventually their votes. There is no shortcut here.