On basis of the findings of a SBI research report, Times of India today reported that the states with more number of Pradhan Mantri Jan Dhan Accounts have witnessed rural inflation at lower levels.The Newspaper said that since demonetisation, Jan Dhan accounts witnessed a steep growth and to date more than 30 crore accounts have been opened.
Top ten states accounted for 23 crore accounts (75 percent) with Uttar Pradesh topping the list at 4.7 crore accounts, followed by Bihar (3.2 crore) and West Bengal (2.9 crore).Nearly 60 percent of Jan Dhan accounts have been opened in rural areas alone.
“The data shows that the states where more number of Jan Dhan accounts opened, the rural inflation is at lower level. This indicates that formalisation of economy has happened,” said Ecowrap.
There is both statistically significant and economically meaningful drop in consumption of intoxicants such as alcohol and tobacco products in states where more PMJDY accounts opened, the report said.
“This could be because of Jan Dhan-Aadhaar-Mobile (JAM) Trinity which has helped in better channelising government subsidies and helped in curbing the unproductive expenditure such as alcohol and tobacco expenses in rural areas,” it said.
There is also increase in household medical expenditure in more exposed regions like Bihar, West Bengal , Maharashtra and Rajasthan, among others, since October 2016 due to changing lifestyles and increased demand for medical services, the report said.
The Consumer Price Index (CPI) or retail inflation stood at 3.28 per cent in September as against 4.39 per cent in September 2016. The report expects CPI inflation to remain sub-4 per cent till December 2017 and remain sub-4.5 per cent thereafter this fiscal.
The country’s agriculture and allied growth is likely to be over 3 percent in the ongoing fiscal and it is expected to be lower than last year. For 2017-18 , the farm sector growth was pegged at 4.9 percent, which is likely to be revised upward taking into account the final foodgrain production figures. “Looking at the performance of the kharif season, I can say with confidence that growth will be more than 3 percent,” Niti Aayog member Ramesh Chand said. The expected 3 percent growth this year is not that bad when compared to FY17 when the sector grew from a low base effect, he said. The farm growth in FY16 stood at 1.2 percent due to poor rains and drought.
Rural consumption is driven by multiple factors and forces at work. Economic growth in general and agriculture growth in particular play critical role in driving consumption. Over 60 percent Jandhan accounts have been functional in rural areas. This formalisation of economy would obviously impact rural inflation. Over 3 percent growth of farm sector would keep rural inflation in modest and manageable range.