As rural wages rise, it is not uncommon for a small-town villager in Punjab, Tamil Nadu or Kerala to purchase a 29-inch colour television. Rising incomes and improved access to infrastructure are set to exponentially raise demand for consumer durables.

A new survey has noted that rural households in richer States such as Kerala and Punjab are likely to move further up the ladder, and purchase more high-end durables, such as refrigerator, air coolers, four-wheelers, and digital cameras, among other items.

Moreover, for the first time in nearly 25 years, rural spending outpaced urban spending between 2009-10 and 2011-12. In terms of the highest discretionary rural household spending, Kerala and Punjab bagged the top spots, witnessing higher growth.

However, the study by research agency Crisil Research has shown that despite rising affordability, potential demand for consumer durables in rural areas is eroded by a dearth of infrastructure to justify the purchase of a new television or refrigerator.

The study has estimated that 12 million rural households in Uttar Pradesh and 4 million in Bihar would have bought a ceiling fan by 2009-10, if they had assured electric supply. What is more, each of these States would have 5 million additional rural households with colour TV sets if there was better access to electricity.

The study has noted that better road infrastructure can also spur consumer durables purchases. An improvement in road connectivity between 2004-05 and 2009-10 appears to have resulted in a sharp pick-up in ownership of two-wheelers in several States, including Bihar, Orissa and Rajasthan.

While ownership of consumer durables has increased among rural households, it remains low compared to urban areas. Though rural India accounts for about 68 per cent of the total households in India, only 42 per cent of rural households owned a television (against 76 per cent in urban India), 55 per cent owned an electric fan (compared to 91 per cent of urban households), 14 per cent owned a two-wheeler (against 33 per cent in towns and cities) and just 1 per cent possessed a motor car (compared to 7 per cent of urban Indian households).

Crisil’s State-wise analysis of ownership patterns found that even in States where the level of discretionary spending was equivalent, the pattern of penetration of consumer durables varied greatly. For instance, rural areas in Bihar, Karnataka and West Bengal have similar levels of discretionary household spending.

The discretionary spending of a typical rural Indian household rose to Rs 24,000 in 2009-10 from Rs 14,000 in 2004-05, translating into a growth rate of 11 per cent a year, which was higher than the average inflation rate of nearly 6 per cent a year during the period. Consequently, at least one in every two rural households across India owned a bicycle, an electric fan or a mobile phone in 2009-10.

Kerala and Punjab were the States with highest annual discretionary spend of Rs 55,228 and Rs 46,337, respectively. This translated into average growth of 14.5 and 11.5 per cent every year during the 2004-05 to 2009-10 period.

But discretionary spending by rural households in Maharashtra, Gujarat and West Bengal rose at a faster pace of over 12 per cent, though the actual expenditure in the States was less than half that of Kerala rural consumers.

In times to come, the study has held, in addition to higher income, increased access to electricity and roads would be key determinants of demand for consumer durables in rural areas across many States.

>arvind.jayaram@thehindu.co.in

> amritanair.ghaswalla@thehindu.co.in

Related Topics