All living entities are conscious in various degrees.
The Vedas speak of evolution - an evolution of consciousness.
The soul, which is an atomic particle of God’s consciousness, is situated in all living entities. The human life-form is a extremely rare occurrence for the soul. Every skin-cell in our body is a soul, every piece of grass, every microbe, every bacteria is a soul, so we can understand how rare it is for a soul to obtain a human body.
In the human body, the consciousness of the soul is sufficiently evolved to understand God and its relation to Him. In all the other 8 million non-human species, the consciousness of the soul is limited to the bodily needs of eating, sleeping, mating, and defending.
In the material world, the consciousness of the soul evolves gradually from fish, plants, insects, reptiles, birds, animals and then to humans (including demigods, rakshasas, gandharvas etc).
"There are 900,000 species of aquatic life; 2,000,000 species of plants and trees; 1,100,000 species of insects; 1,000,000 species of bird life; 3,000,000 species of beasts, and 400,000 species of human life." —Padma Purana
And then, finally, after having attained the human form of life, the soul is given the opportunity for the the consciousness to evolve from Sraddha to Prema, meaning an evolution from faith in God to love of God. Obviously, to love God, one needs to know Him first.
"One attains the human form of life after transmigrating through 8,400,000 species by the process of gradual evolution. That human life is spoiled for those conceited fools who do not take shelter of the lotus feet of Govinda." --Brahma-vaivarta Purana
In the science of bhakti (devotion to God) the consciousness evolves through 9 stages:
1. sraddha - faith
2. sadhu-sanga - association with saintly people
3. bhajana kriya - following and practicing devotional principles
4. anartha nivritti - purifying the mind from material contamination
5. nistha - becoming steady in one’s sadhana (practice)
6. ruchi - taste for Krishna
7. asakti - attachment to Krishna
8. bhava - the dawning of pure love of God
9. prema - pure, unalloyed love for Krishna
After many births and deaths, he who is actually in knowledge surrenders unto Me, knowing Me to be the cause of all causes and all that is. Such a great soul is very rare. (Bg 7.19)
Srīla Prabhupāda says:
As far as the soul is concerned, the evolutionary process is going on, and we are struggling for existence, struggling to come to the point of eternal life. That eternal life is possible. If you try your best in this human form of life, in your next life you can get a spiritual body. Your spiritual body is already within you, and it will develop as soon as you become free from the contamination of this material existence. That is the aim of human life. People do not know what actual self-interest is; it is to realize oneself, to realize, "I am part and parcel of God, and I have to return to the kingdom of God to join with God."
—Back to Godhead Magazine-Build Your Nations on the Spiritual Platform-An Address Given At The University Of Nairobi His Divine Grace A.C. Bhaktivedanta Swami Prabhupāda