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South leads, East lags in consumer durables purchases in India

With increasing purchasing power and aspiration for a better life in the villages, Karnataka, Andhra Pradesh, Kerala, Rajasthan, Tamil Nadu and Gujarat have registered a phenomenal growth in ‘rural’ consumption of consumer durable goods and the overall growth in rural areas during the period of 2007-08 and 2011-12 was higher than the cities, according to the study brought out by ASSOCHAM.

The top five states which registered phenomenal growth rate of durable goods rural consumption expenditure were Karnataka (59.5 %), Andhra Pradesh (44.3%), Rajasthan (40.7%), Kerala (40.4%) and Gujarat (37.0%) during the period.

Consumer durables, unlike fast moving consumer goods or FMCG, are goods that have a long term value, such as televisions and appliances.

As per the CSO data, most of the states witnessed a double digit growth in consumer durables goods expenditure and much higher than all India during the 2007-08 to 2011-12.

The other states which have recorded robust growth rate of rural consumption expenditure on consumer durable goods were Tamil Nadu ( 33.3 per cent), Madhya Pradesh (27.2 per cent), Maharashtra (25.2 per cent), Bihar (25.0 per cent), Haryana (23.9 per cent) and Punjab (f 22.7 per cent), reveals the ASSOCHAM paper.

Odisha, however, registered nominal growth in consumer durable goods consumption expenditure, adds the paper.

The all India rural consumption expenditure on consumer durable goods grew at a compound annual growth rate of 16.5 percent during 2007-08 to 2011-12 whereas urban consumption expenditure on this head increased 15.6 percent per annum.

The states which have registered lower than all India rural consumption expenditure growth were West Bengal (15.7 per cent), Uttar Pradesh (14.6 per cent), Assam (13.3 per cent) and Odisha (1.4 per cent).

“The study further suggests as the income level of rural people increases, consumption expenditure on consumer durable also goes up reflecting aspirations for a better life in the countryside. There also appears to be a positive nexus between consumer durable goods consumption expenditure and availability of basic infrastructure in rural areas such as, electricity etc. In fact, adequate availability of electricity is the key”, ASSOCHAM spokesman said.

If we compare the consumption expenditure on consumer durable goods during 2004-05 to 2007-08, it indicates different scenario. The consumer durable goods rural consumption expenditure was lower than urban consumption expenditure during the same period. The consumer durable goods rural consumption expenditure growth rate was 11.4 percent and urban consumption expenditure growth rate was 11.8 per cent during the same period.

However, under the impact of economic slowdown, in the recent past, consumer durable goods index of industrial production (IIP) has witnessed a sharp deceleration. “But once the overall industrial output is revived, the rural India would again lead the growth of consumer goods”, the study says.

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