New Delhi, Sep 30
There has been a significant uptick in rural private consumption in India, thanks to the Pradhan Mantri Jan Dhan Yojana (PMJDY), which has helped millions open bank accounts seamlessly and join the mainstream.
There has been a definitive surge in household consumption in tier 2, 3 and 4 cities and even beyond, as evident in sales growth of two-wheelers, ACs, refrigerators, smartphones and FMCGs in small towns and cities.
According to the industry, various consumer financing options, made available after the new bank accounts were opened under the PMJDY -- launched by Prime Minister Narendra Modi on August 28, 2014 -- has made this stupendous growth possible.
The purchase of two-wheelers in rural India is now at 62 per cent, more than the urban growth (58 per cent) this fiscal to date.
There has been a surge in auto loans for car ownership as people from tier 2, 3 cities and beyond now opt for longer-tenure financing options to afford the latest vehicles. As per reports, auto companies like Maruti Suzuki, Hyundai, Mahindra and Tata Motors feel that finance penetration will rise to up to 84 per cent this year from 75 per cent in the pre-pandemic era.
A continued momentum in discretionary spending of consumers, coupled with a favourable price effect, has helped private final consumption expenditure (PFCE) pick up, said a latest Bank of Baroda (BoB) report.
According to Kantar Worldpanel, FMCG volumes in the rural market could equal those in the urban market, which is higher at present. The rural FMCG market is more valuable to the industry than before and is generating almost half the volume and value for the sector.
As per the Reserve Bank of India (RBI), household consumption is poised to grow faster in the second quarter of the current fiscal (FY25) as headline inflation eases, with a revival of rural demand already taking hold.
PMJDY has integrated the poor into the economic mainstream, playing a crucial role in the development of marginalised communities, according to the government.
The success of the initiative is reflected in 53 crore people having been brought into the formal banking system through the opening of Jan Dhan Accounts.
According to the government, these bank accounts have garnered a deposit balance of Rs 2.3 lakh crore and resulted in the issuance of over 36 crore free-of-cost RuPay cards, which also provide for a Rs 2 lakh accident insurance cover.
With the support of banks, insurance companies and state governments, we are moving towards a more financially inclusive society and PMJDY would always be remembered as a game changer for financial inclusion in the country.