Bright Prospects in Rural India
Illuminating article in Knowledge @ Wharton about the turbo charged growth prospects in Rural India. The title of the article is ‘Why Companies See Bright Prospects in Rural India‘,states that the global recession has impacted only the urban India. But rural India, which depends mainly on agriculture which grew by 2.7%in the last quarter of 2008-2009 (compared to -1.4 in manufacturing)has a lesser impact due to global slowdown. Because of buying power of the rural India, the Economy in the fourth quarter of the fiscal year(January-March 2009), the economy grew 5.8% against expectations of less than 5%.
Is rural India’s growth a short term anomaly or a secular trend that is going to aid India’s long term growth? Let’s look at some numbers. 12.2% of the world’s consumers live in India and rural households form 72% of the total households. This puts the rural market at roughly 720million customers. According to the Wharton article, total income in rural India (about 43% of total national income) is expected to increase from around US$220 billion in 2004-2005 to US$425 billion by2010-2011, a CAGR (Compounded annual growth rate) of 12%. This is the main reason why the companies are marketing to the rural India.
Companies are looking for opportunity to broaden their consumer base. The consumers in the western world deleveraging due to global recession. Same can be said of affluent and urban consumers in developing countries. Hence, the big push for the global companies to reach new customers. The only way to do is to reach out to the 'bottom billoin'. Mainly these customers are in rural India. I think if the companies learn ways to market and package products in a way that will attract the rural customers, they would have successfully learnt ways to diversy their customers. It will also lessen the impact of this global recession.
I also believe that the government should focus on diversifying the rural economy. Currently, since the rural economy only depends on agriculture which in turn is tied to monsoon, a bad monsoon year will derail the rural economy. Private companies needs to be incentivised by the government to start and expand their manufacturing base in rural India. It will have double impact. It will slow down the rural migration to urban India in addition to diversifying and stabilizing the rural economy.
read more at Young and Restless India
Is rural India’s growth a short term anomaly or a secular trend that is going to aid India’s long term growth? Let’s look at some numbers. 12.2% of the world’s consumers live in India and rural households form 72% of the total households. This puts the rural market at roughly 720million customers. According to the Wharton article, total income in rural India (about 43% of total national income) is expected to increase from around US$220 billion in 2004-2005 to US$425 billion by2010-2011, a CAGR (Compounded annual growth rate) of 12%. This is the main reason why the companies are marketing to the rural India.
Companies are looking for opportunity to broaden their consumer base. The consumers in the western world deleveraging due to global recession. Same can be said of affluent and urban consumers in developing countries. Hence, the big push for the global companies to reach new customers. The only way to do is to reach out to the 'bottom billoin'. Mainly these customers are in rural India. I think if the companies learn ways to market and package products in a way that will attract the rural customers, they would have successfully learnt ways to diversy their customers. It will also lessen the impact of this global recession.
I also believe that the government should focus on diversifying the rural economy. Currently, since the rural economy only depends on agriculture which in turn is tied to monsoon, a bad monsoon year will derail the rural economy. Private companies needs to be incentivised by the government to start and expand their manufacturing base in rural India. It will have double impact. It will slow down the rural migration to urban India in addition to diversifying and stabilizing the rural economy.
read more at Young and Restless India
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