This paper investigates consumption pattern of both rural and urban households in India. Over the years, Indian economy has undergone highly significant structural shifts. Millions of households have experienced huge welfare transformation which has caused substantial changes in their consumption pattern. The objective of this research paper is to assess the factors affecting the income of households and to analyse whether these factors differ significantly between rural and urban areas. The data required for the study was collected from the factsheet of household consumption expenditure survey. There are substantial differences within rural and urban areas but there is quantitative evidence for the reduction in the differences when compared earlier years. Thus, bridging the gap between the rural and urban population.