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Vehicles Surge Reflect Rural Consumption Rising
Vehicles Surge Reflect Rural Consumption Rising
Context: Recently , the findings of the EAC-PM report (2025) — showed rural India’s sharp rise in vehicle, mobile and other durable-goods ownership — arrive just as data from FADA indicates rural India driving a record surge in auto sales in October 2025.
How is rural India changing its consumption pattern?
- Shift Toward Durable Goods: The PM-EAC working paper “Changes in Durable Goods Ownership in India” (2025) shows a sharp rise in rural ownership of motor vehicles—from 19% (2011-12) to 59% (2023-24)—indicating convergence with urban households.
- Rural penetration of televisions (49% to 61%) and mobiles (78% to 96%) further reflects rising aspirations and technological adoption. This aligns with the NSS 2023-24 Consumption Survey, which reveals an expansion of spending on personal electronics and household appliances.
- Decline in Food Share, Rise in Non-Food Expenditure: For the first time, the rural share of food in MPCE fell below 50%, dropping to 47% in 2023-24. This classic Engel Curve pattern signals rising real incomes.
- Simultaneously, spending on fuel, light, health and education increased from 35% to nearly 40% over a decade, pointing to improved human-capital prioritisation.
- Digital Inclusion Outpacing Traditional Media: Near-universal mobile ownership (96% rural) has begun replacing the role of television—consistent with trends noted in Telecom Regulatory Authority of India (TRAI) reports that highlight rural smartphone penetration as the main driver of digital service uptake, including UPI and telemedicine.
- Slow Uptake of Laptops/PCs: Despite rapid mobile adoption, laptop penetration remains low (2.3%). The PM-EAC cites skill gaps and specialised use-cases as barriers—an observation supported by the National Education Policy 2020, which identifies digital literacy as a foundational capability requiring urgent attention.
Why is this shift essential?
- Marker of Middle-Income Transition: The diversification of the consumption basket—less on food, more on durables—is a textbook indicator of a society moving towards middle-income status, reinforced by Economic Survey 2022-23 which noted similar trends of rising discretionary expenditure.
- Boost to Domestic Demand-Driven Growth: With consumption contributing about 70% of India’s GDP, greater rural demand strengthens sectors such as automobiles, electronics, and FMCG. This helps stabilise growth during global downturns, as seen during post-COVID recovery where rural markets anchored demand.
- Reduction of Urban-Rural Development Gap: States like Haryana, Punjab, and Telangana now report higher rural vehicle ownership than urban areas, signalling reduced spatial inequality and improved access to opportunities, especially in mobility, education and markets.
How should it influence policy-making in the country?
- Strengthen Rural Infrastructure & Market Access: Faster rural consumption growth underscores the need for continued investments under PM Gram Sadak Yojana, rural logistics, and digital connectivity to support mobility and e-commerce.
- Expand Financial Inclusion for Asset Creation: Given the role of vehicle finance and microcredit, policies should deepen formal credit access using Jan-Dhan–Aadhaar–Mobile stack and targeted interest-subvention for productive assets.
- Bridge the Digital Skills Gap: Low laptop penetration highlights gaps in advanced digital skills. Scaling PM-DISHA, digital labs in schools (Samagra Shiksha), and community training centres is essential to transition from basic smartphone usage to higher-order digital capabilities.
