Rural Economy of India

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The success story of Indian economy is spreading its wings towards India's districts and rural areas which accounts for over 65% of the nation's total populace. Currently, the rural sector of India is not only observing a massive increase in its per capita income but also in its expenditure and production.

To enhance the rural economy of India, the Indian government has increased the monetary incentives allotted for the National Rural Employment Guarantee Act (NREGA) to USD 8.04 bn in its 2009 Union Budget. Moreover, the government has also allotted USD 34.74 bn in its Bharat Nirman Programme for enhancing rural road and rail network.

Surprisingly, the rural economy was unaffected by the recent global financial meltdown as per the research conducted by Rural Marketing Association of India (RMAI). The research also revealed that the rural economy in India is soon to witness an increase in its earnings which will be largely triggered by the incessant expansion in agriculture for the last four successive years.

Rural consumer market of India

The rural consumer market of India is expected to attain its target of USD 425 bn by 2010-2011, which can be translated as double of 2004-05 economy size, as per the report by CII-Technopark.

Indian rural Retail Industry

As per the report by Associated Chambers of Commerce and Industry of India (ASSOCHAM), the Indian rural retail economy is worth USD 113 bn which can be translated as 40% of the total Indian retail market worth USD 280 bn. Some of the firms which have already established their base in rural areas are Reliance, AV Birla and Godrej, while firms like DCM, Pantaloon-Godrej JV, Tata, Hindustan Unilever, etc. are all set to expand their retail business in rural market.

Demand for FMCG in Indian rural areas

During the fourth quarter of the FY 2009, the demand for fast moving consumer goods (FMCG) increased steadily as compared to its urban counterparts, as per the research conducted by AC Nielsen.

Companies like Dabur, HUL, Godrej, etc have started recruiting more and more deserving candidates from rural districts in an attempt to elevate their network and market. Firms like Nestle and GlaxoSmithkline Consumer Healthcare (GSK) are all set to introduce new products for the rural areas in order to promote their brand. This indicates that the FMCG firms no longer treat rural markets as an appendage to their metropolitan strongholds and are targeting the market for positioning their brands and for industrial set-ups.

Indian rural Healthcare Industry

The Indian rural Healthcare market is expected to expand at a pace of 44% by 2015, totaling its worth to USD 8.8 bn, according to a survey carried out by McKinsey. Conglomerates like Sanofi-Aventis, has currently introduced a promotional activity to advertise generics in rural provinces called 'Prayas'. This initiative is considered as an attempt to share medicinal information with practicing medicos in rural districts through seminars.

Indian rural Automobiles Industry

The recent development that the Indian rural Automobiles Industry saw was the declaration of the establishment of new sales and service channels in rural India by the President of Mahindra and Mahindra Group (M&M) Rajeev Dubey. These service outlets have a premeditated target of manufacturing 1,00,000 automobiles by FY 2015.

Indian rural Services Industry

Surprisingly, more than 60% of the services industry of the nation is based in the rural areas, as per the research conducted by National Sample Survey Organisation (NSSO). In the fiscal year 2007, there were around 85% of the own account enterprises (OAEs) in India which deployed 76% of the manpower in rural districts of India.

Indian rural Telecommunication Industry

According to the research carried out by Confederation of Indian Industries (CII), the Indian rural Telecommunication Industry is expected to account for more than 65% of the entire telecom subscribers in India.

In an attempt to envelop rural subscribers, many telecom giants in India have willingly invested in rural telecom industry to benefit from its massive potential. Mobile equipments manufacturing firms like Intex Technologies, Karbonn, etc have allocated USD 21.03 mn for its promotional activities for 2010.

(Last Updated on 19 May 2011)