WHILE THE overall Consumer Price Index (CPI) inflation in rural areas is lower as compared to urban areas at an ‘all-India level’, the opposite is true in Punjab, showed the ‘Economic Survey of India 2019-20’, tabled in Parliament a day before the Union Budget was presented.
Experts said this is an opposite trend for the state where residents of urban areas are heavier consumers of various components because of their lifestyle. Higher rates of food and other miscellaneous components in the rural area led to higher rural CPI inflation.
In Punjab, rural inflation was indeed higher than urban inflation in April-December 2019.
The survey shows that overall inflation in urban areas was 3.3 per cent in 2019-20 (April-December), approximately 3 percentage points higher than that observed in rural areas.
A fall in growth of real rural wages, and a rise in the rural price index for items like food, education, health, etc led to rural inflation in Punjab.
“Though in general, rural CPI inflation is lower in rural areas, Punjab falls under this category because of higher food rates in rural areas due to the higher input cost to grow food items,” said Kesar Singh Bhangu, an economics professor in Punjabi University, Patiala, adding that currently, stagflation has hit the country where along with increasing prices, unemployment is also increasing. He said that in inflation, if prices are increasing then employment is also generated but it is opposite in case of stagflation.
He further said that in rural areas people are spending more on health, education, farm machinery, transportation, etc. because of the fall in subsidies on the social security services which included both health and education.
“The growth of the agriculture sector is negative currently, which needed to be increased by 2 to 2.5 per cent at least to come out of the slump,” he added.
There is no control of the government on private hospitals and educational institutes in rural areas and they are charging higher rates for such services,” said BKU (Dakuanda) General Secretary Jagmohan Singh, adding that even fruit and vegetables are costly in villages than urban areas where the market is quite competitive.
The survey report also says that divergence in rural-urban food inflation in 2019-20 was mainly led by cereals, eggs, fruits, vegetables etc. and the divergence has been mainly on account of the differential rates of food inflation between rural and urban areas as inflation observed in rural areas was higher than that in the urban areas.
The survey says that in 2019-20, miscellaneous component, a major contributor in the CPI inflation, has shown higher CPI inflation in the rural areas as these components included household goods and services, health, transport and communication, recreation and amusement, education, personal care etc.
Punjab has around a 38 per cent urban population and 62 per cent rural as per the 2011 census but in the past decade, a large population has shifted to the city area and now the urban population would be much higher than the 2011 census.
Prof. Gian Singh, another economics expert and retired professor, said that a huge cut on the subsidies of fertilisers also hit Punjab most because the state is the highest consumer of fertilisers in the country and it would lead to further inflation due to higher rate of fertilisers.
The survey report also says that nine other states in the country also fall under rural CPI inflation — Haryana, Uttarakhand, Delhi, Rajasthan, Uttar Pradesh, Nagaland, Tripura, Kerala and Madhya Pradesh.
Meanwhile, other major components that contributed to inflation in rural and urban CPI inflation included paan, tobacco and intoxicants and fuel, the consumption and inflation of which are higher in rural areas than urban areas. Inflation rate of food and clothing and footwear is 3.4 per cent and 5 per cent in rural and urban areas, respectively.
The survey report also expressed concern over the burning of paddy stubble.
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