Demand for better quality goods and services increases in rural areas: SBI

The demand for quality goods and services is increasing in rural India reflecting improvement in living standards, a State Bank of India (SBI) report said on Wednesday.

"The good thing is that prices of discretionary consumption in rural areas has been on a declining trend since 2015-16," SBI said in its 'Ecowrap'.

"One possible reason for such is that big manufacturing / FMCG companies have significantly revved up their distribution channels in rural areas," SBI added.

The SBI has factored in items of discretionary consumption as soft drinks, prepared meals, snacks, recreational and amusement, and personal care, among other things in the report.

In India, it said the consumption pattern of the people has been continuously changing with the change in their livelihood, mostly in rural areas.

"With the betterment of rural livelihood, the demand for better quality goods and services is increasing in rural areas," said Ecowrap.

The report noted that non-discretionary (food, electricity, fuel and light, clothing and housing) items have also witnessed declining trend with the decline much more steeper since July 2016.

While the crash in food prices has been one of the reasons, the report said, adding "we believe such decline is also fueled by the big impetus that has been given to Pradhan Mantri Ujjwala Yojana (PMUY) that almost coincided with the beginning of such decline (launched in May 2016)".

The report has also analysed the impact of PMUY on rural fuel and light retail inflation for 10 states.

"These 10 states accounted for 95.3 per cent of total connections and among them Uttar Pradesh, Madhya Pradesh and Rajasthan accounts for top 3 places," it said.

The data shows that the states where more number of connections were distributed (like UP, Rajasthan, Odisha), the rural fuel and light inflation has significantly declined/ stayed flat since the launch of the scheme (May 2016).

The report has also made suggestions to the government to make this PMUY "more successful", including frontloading the subsidy payments to the oil marketing companies so that the subsidy payments are released to the poor people within a stipulated time of say maximum a fortnight from booking.

Further, the government should now target some of the states like Chhattisgarh, Haryana and Maharashtra where the number of LPG connections have not expanded significantly.