Gap widening between rural and urban India
While inflation has been slowing both in rural and urban areas of the country, there is a widening difference between the two as rural inflation is decelerating at a much slower pace. The resultant gap between rural and urban inflation has more than doubled over the last one year, data analysed by HSBC Global Research show.
“Inflation has fallen strikingly over the last several months, but the gains are not equally distributed…Rural inflation is running higher than urban inflation and its underlying trend is higher than the RBI’s target,” analysts at HSBC Global Research wrote in a note.
Urban inflation momentum, according to the analysis, has slowed to 4.5 per cent, which is lower than the Reserve Bank of India’s target level of 6 per cent. The trend in price gains in rural India, however, is running at 6.5 per cent.
The ‘excess inflation’ in rural India, HSBC noted, is arising from food, fuel, transportation as well as from core inflation. The difference between rural and urban inflation is most stark for fuel and transportation, followed by core and to a lesser extent food.
Consumption data from the NSSO suggests that rural India’s fuel mix is more geared toward domestically produced firewood, chips and biogas inputs, which are not a part of the global deflation cycle. On the other hand, fuel products more widely used in urban India, such as LPG, petrol and diesel, have benefited from lower global prices.
“Rural India has some structural disadvantages vis-a-vis urban India: structural bottlenecks are harsher, transport networks sparser and distribution channels insufficient…And this relative disadvantage is showing up more so now, as urban India is benefitting from lower global prices while rural India, partly because of its structural ailments, is not being able to partake with equal vigour,” said HSBC.
Despite two successive years of drought, overall food inflation in India has remained tepid, as low global prices have made it possible to import food products that are in short supply. Rural Indians, however, do not seem to have benefitted as much from food imports as their urban counterparts, according to the analysis. Vegetables and oilseeds are seeing more stubborn price trends in rural areas than they are at urban centres possibly because insufficient distribution channels may be hindering imported vegetables and oilseeds reaching rural areas, HSBC said. “While much of India’s food is produced in rural India, rural Indians seem to be facing higher food price pressures, at least for some items.”
Separately, higher inflation for perishables such as meat and fish again point towards relatively worse distribution channels and may have more to do with cold storage, it said.
Its analysis of the rural-urban output shows that a steeper decline in the potential growth of rural India is likely driving the excess core inflation. It is possible that insufficient investment, growing bottlenecks and impact of two successive droughts have contributed to lowering rural India’s potential (or trend) growth and the narrow output gap is keeping core inflation from slowing rapidly in rural areas, despite weak growth.
“Higher investment in rural infrastructure and meaningful agricultural reforms are needed to make growth weather proof and put it on a higher, more sustainable path” to enable the RBI to meet its 4 per cent inflation target sustainably, the research noted.
Please note that under 66A of the IT Act, sending offensive or menacing messages through electronic communication service and sending false messages to cheat, mislead or deceive people or to cause annoyance to them is punishable. It is obligatory on kemmannu.com to provide the IP address and other details of senders of such comments, to the authority concerned upon request. Hence, sending offensive comments using kemmannu.com will be purely at your own risk, and in no way will Kemmannu.com be held responsible.
Similarly, Kemmannu.com reserves the right to edit / block / delete the messages without notice any content received from readers.
2 BHK Flat for sale on the 6th floor of Eden Heritage, Santhekatte, Kallianpur, Udupi
Obituary: Emilian Bridget D’Souza (80), Gudiyam, Kemmannu
Agricultural Land at Alevoor and Malpe (UDUPI) for Sale - Contact Direct to 9008199430.
Final Journey of Judith Lewis (91 years) | LIVE From Kallianpur
Rozaricho Gaanch April, 2024 - Ester issue
Final Journey Of Theresa D’Souza (79 years) | LIVE From Kemmannu | Udupi |
Invest Smart and Earn Big!
Creating a World of Peaceful Stay!
For the Future Perfect Life that you Deserve! Contact : Rohan Corporation, Mangalore.
Final Journey Of Joe Victor Lewis (46 years) | LIVE From Kemmannu | Organ Donor | Udupi |
Milagres Cathedral, Kallianpur, Udupi - Parish Bulletin - Feb 2024 Issue
Way Of Cross on Good Friday 2024 | Live From | St. Theresa’s Church, Kemmannu, Udupi | LIVE
Good Friday 2024 | St. Theresa’s Church, Kemmannu | LIVE | Udupi
Maundy Thursday 2024 | LIVE From St. Theresa’s Church, Kemmannu | Udupi |
Kemmennu for sale 1 BHK 628 sqft, Air Conditioned flat
Symphony98 Releases Soul-Stirring Rendition of Lenten Hymn "Khursa Thain"
Palm Sunday 2024 at St. Theresa’s Church, Kemmannu | LIVE
Final Journey of Patrick Oliveira (83 years) || LIVE From Kemmannu
Carmel School Science Exhibition Day || Kmmannu Channel
Final Journey of Prakash Crasta | LIVE From Kemmannu || Kemmannu Channel
ಪ್ರಗತಿ ಮಹಿಳಾ ಮಹಾ ಸಂಘ | ಸ್ತ್ರೀಯಾಂಚ್ಯಾ ದಿಸಾಚೊ ಸಂಭ್ರಮ್ 2024 || ಸಾಸ್ತಾನ್ ಘಟಕ್
Valentine’s Day Special❤️||Multi-lingual Covers || Symphony98 From Kemmannu
Rozaricho Gaanch December 2023 issue, Mount Rosary Church Santhekatte Kallianpur, Udupi
An Ernest Appeal From Milagres Cathedral, Kallianpur, Diocese of Udupi
Diocese of Udupi - Uzvd Decennial Special Issue
Final Journey Of Canute Pinto (52 years) | LIVE From Mount Rosary Church | Kallianpura | Udupi
Earth Angels Anniversary | Comedy Show 2024 | Live From St. Theresa’s Church | Kemmannu | Udupi
Kemmannu Cricket Match 2024 | LIVE from Kemmannu
Naturya - Taste of Namma Udupi - Order NOW
New Management takes over Bannur Mutton, Santhekatte, Kallianpur. Visit us and feel the difference.
Focus Studio, Near Hotel Kidiyoor, Udupi
Earth Angels - Kemmannu Since 2023
Kemmannu Channel - Ktv Live Stream - To Book - Contact Here
Click here for Kemmannu Knn Facebook Link