Nirmala Sitharaman Celebrates Credit-Driven Consumption Surge in Rural India
New Delhi: Finance Minister Nirmala Sitharaman has praised the remarkable increase in credit-driven consumption across small cities and towns, describing it as a “revolutionary shift” enabled by the Pradhan Mantri Jan Dhan Yojana (PMJDY). This shift marks a significant change in the economic landscape of tier 2, 3, and 4 cities, where household consumption has surged, evident in the rising sales of two-wheelers, air conditioners, refrigerators, smartphones, and fast-moving consumer goods (FMCGs).
Sitharaman emphasized that “Rural India is no longer a passive observer of India’s growth; it is an active driver of it.” This statement reflects a growing trend where rural consumers are increasingly participating in the economy, influenced by improved access to credit and financial services.
The PMJDY, which celebrated its 10th anniversary recently, has been pivotal in this transformation. The initiative has led to the opening of over 53 crore bank accounts, integrating millions of rural Indians into the formal financial system for the first time. Sitharaman noted that more than 80 percent of Indian adults now hold formal financial accounts, a substantial increase from just 50 percent in 2011, showcasing PM Modi’s commitment to advancing financial inclusion in India.
Recent reports highlight that 62 percent of two-wheeler purchases in rural India are now financed through credit, surpassing urban figures of 58 percent. This trend is also mirrored in the electronics and smartphone sectors, where various consumer financing options have facilitated unprecedented growth.
The accounts opened under PMJDY have accumulated a total deposit balance of Rs 2.3 lakh crore, and over 36 crore free-of-cost RuPay cards have been issued, providing users with a Rs 2 lakh accident insurance cover. The program has seen the total number of accounts rise from 14.7 crore with deposits of Rs 15,670 crore in March 2015 to 53 crore with a balance of Rs 2.31 lakh crore. This impressive growth underscores the scheme’s significant role in promoting financial inclusion and economic empowerment among rural populations.
Sitharaman pointed out that prior to the PMJDY, India’s rural populace had been neglected by a financial system that offered only token gestures toward inclusion, while simultaneously obstructing credit access for the economically disadvantaged. She credited Prime Minister Narendra Modi’s decisive leadership for bringing rural communities into the financial mainstream and unlocking their potential. “The opposition blocked progress while PM Modi empowered rural India with pro-poor reforms and welfare policies,” she asserted.
The Reserve Bank of India recently indicated that household consumption is expected to accelerate in the second quarter of the current fiscal year (FY25), as easing headline inflation signals a revival of rural demand, further validating the positive impact of initiatives like PMJDY on the Indian economy.
