Rural population worst hit by inflation: Crisil

Even as the country continues to grapple with inflation, nearly 69 per cent of the total population which resides in rural areas has been largely impacted against those living in urban areas, a study says.
In the last five years, folks in rural areas or 69 per cent of India's population, have got the rough end of the stick on inflation compared with their urban counterparts, according to a study by the rating agency Crisil.
In the 24 months to June 2016, while urban inflation fell from 9 per cent to 5.3 per cent, compared to the two years prior, rural inflation declined from 10.1 per cent to 6.2 per cent.

"The gap has remained 100 basis points in the recent past, caused by higher core and fuel inflation in the rural areas," the report said.
In fiscal 2015-16, rural core inflation was 6.7 per cent compared with 4.8 per cent in urban, while fuel inflation in rural was 6.8 per cent, more than two-and-a-half times the 2.7 per cent in urban.
Sub-categories such as health, education, household goods and services and recreation and amusement have all recorded higher inflation in hinterland last fiscal.

According to Crisil, inflation in firewood and chips which is used by 84 per cent of the rural population compared with 23 per cent of urban, was 7.4 per cent, while that in dung cake (used by close to 41 per cent of rural households compared with just 7 per cent in urban centres) was 10.8 per cent last fiscal.

"No surprise then that rural fuel inflation has felt greater upward pressure compared with urban. Also, the meltdown in commodity prices like petrol and diesel which fell 7.6 per cent and 11.7 per cent, respectively, in last fiscal, has not benefited rural areas as much as urban," the agency said.
In addition, poor storage and transport facilities (poor roads and connectivity) have meant limited pass-through of lower commodity prices to the countryside. This, in turn, feeds into food and non-food inflation.
"Lack of recreation options and supporting infrastructure such as constant electricity also stoke inflation in rural areas. And the absence of ample institutional medical services has had a bearing on healthcare costs," it said.

Crisil further noted that to sustainably lower inflation and bridge the gap between urban and rural prices, the government needs to improve road connectivity and healthcare infrastructure in rural areas, and relentlessly implement the Pradhan Mantri Ujjwala Yojana, which aims to provide cooking gas connectivity to 5 crore below-poverty line beneficiaries over the next three years.