The Indian economy is undergoing a transformative phase, highlighted by an increasing reliance on robust data and evidence-based policymaking. The ministry of statistics and programme implementation has made strides in enhancing the quality, frequency, and representativeness of data. The latest data on consumption patterns and labour force participation have revealed the new trends, driving India’s policy agenda.
Recent government data reveals a substantial increase in average per capita monthly expenditure—164% in rural areas and 146% in urban areas over the past decade. For the first time in modern India, food expenditure constitutes less than half of total consumption. Urban households now allocate 39% to food, down from 43%, while in rural households, the share has dropped to 47% from 53%.
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Change in dietary habits
This shift reflects a remarkable diversification in dietary habits. Households are consuming a wider variety of food items, particularly fresh fruits, milk, and processed foods. The percentage of households consuming fresh fruits has surged from 63.8% to over 90%, with the largest gains among the poorest quintile. Similarly, milk consumption has increased, with 92.2% of households now reporting regular consumption compared to 80% a decade ago.
The decline in cereal consumption—down 18% across all income groups—has coincided with rising intake of protein-rich and nutrient-dense foods. However, cereals remain the primary source of iron, underscoring the need for targeted fortification policies. Diversified diets have led to reductions in anaemia rates, particularly when iron is sourced from natural foods rather than fortified cereals.
Indian economy: Resurgence in labour force participation
India’s labour force participation rates (LFPR), particularly for women, are showing signs of resurgence after years of decline. The periodic labour force survey (PLFS) data indicates significant increases in female LFPR, driven largely by rural areas. This trend persists even when excluding unpaid work, pointing to deeper structural changes.
Marriage and labour dynamics: Marriage emerges as a strong predictor of labour participation. For men, married individuals exhibit higher and more sustained participation rates compared to their unmarried counterparts. Among women, labourparticipation patterns vary significantly by state, with rural Rajasthan and West Bengal leading in higher participation rates among married women.
Durable assets at the bottom of the pyramid: Asset ownership among the bottom 20% of the population has surged. Motorised vehicle ownership, for example, has increased from 4% to 40% in a decade. This remarkable growth reflects improved access to credit and infrastructure, alongside rising incomes.
Reducing vulnerability: Healthcare shocks traditionally pushed many households into poverty. However, expanded healthcare access through schemes like Ayushman Bharat has reduced consumption vulnerabilities. The probability of falling into lower consumption categories after a health shock has declined by 35%.
Role of satellite data in policymaking
Emerging datasets, such as high-resolution satellite imagery, provide new tools for analysing growth and infrastructure development. These datasets reveal that economic growth is spreading to historically underserved regions, such as the Northeast, highlighting the inclusive nature of India’s recent development.
India’s growth story hinges on evidence-based policymaking supported by high-quality data. The convergence in consumption patterns, labour force participation, and asset accumulation underscores the dynamic nature of the Indian economy. Policymakers must leverage these insights to address gaps and foster inclusive growth.
As India progresses towards its 2047 vision, robust data and empirical research will be indispensable. The evolving consumption patterns, labour dynamics, and economic growth trajectories offer valuable lessons for crafting policies that ensure sustainable and equitable development. The time is ripe for a collective effort to strengthen the infrastructure of evidence-based policymaking and realise the dream of a prosperous India.
(This article is based on a presentation made by Shamika Ravi, member of Economic Advisory Council to the Prime Minister, at an online event organised by EGROW Foundation.)