While demand is a major growth driver in the rural segment, a number of companies have forayed into the sector to improve supply-chain dynamics directly with the farmer. By eliminating the role of the middleman, the farm-to-fork models e. Contract farming is also seeing growing corporate interest. Moreover, with several companies also tying up with banks, retail is fast aiding penetration into financial services in the rural segment. Insurance companies are making inroads, too. Another initiative is the Mahamaza model where dealers consolidate orders from surrounding villages and pass on the discounts from bulk buying.
The aim is to set up basic data processing outsourcing centres in the villages adopted by Byrraju so as to enhance employment, technology and education, and at the same time benefit from low-cost labour. Government initiatives have also been positive and have encouraged growing commercial viability. It is also believed that major changes have taken place in the economic fundamentals, decrease in agricultural dependence, and increase in average income, life style, standard of living of the rural due to high economic growth rate.
Business tycoons plan huge investments focused on rural areas, as part of growth of rural strategy. Rural India has witnessed a wave of change in recent times. Rural markets dominate Indian marketing scene and they need special attention for the expansion of marketing activities. With media exposure and increasing literacy levels, people are now demanding a better lifestyle.
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The changing shape of income distribution suggests growth in rural incomes which in turn should herald a consumption boom. Now-a-days, liberalisation, comfort with technology, changed attitude of people especially middle income group, alongwith rise in aspiration, the rural India is going beyond agriculture and is creating a new market for mass consumption.
The figure given below depicts that with the increase in income, the rural people are moving from lower to lower middle, lower middle to middle; middle to upper middle and upper middle to upper level as far as income and spending are concerned. The coming together of a diverse set of economic, demographic and social change waves-point towards the fact that a brave new market is here. Table 1shows the demand for consumer durables in rural India.
Inspite of the lower penetration and lower per capita purchase of consumer goods by rural people when compared to that of urban Indians, marketers are attracted towards rural markets because of large population Table II.
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Table 1 explain the position from to The demand for the consumer durables in case of automobiles, white goods, low cost items is more or less is same, but there is an increased trend in fans, scooters etc. That is rural consumers are willing to go for premium brands in any product category.
The changing face of India
Rural market is providing ample options to its consumer in terms of tastes, choices which are changing. The three most important factors are:. In this regard, many large sized corporations have seen great success in rural areas because of innovative strategies like smaller packaging Fast Moving Consumer Goods — FMCG companies have creams and soaps priced at Rs5, hair oil and shampoo sachets at Re1 and small Coke at Rs5 , customized development and positioning and a good distribution network.
The rural India success story is being replicated across a range of sectors in the rural markets. Thus, the sales of FMCG products in rural markets is growing at a fast pace, even faster than that in urban markets. Rural India consumers hold a major share in many categories. Bijoor adds some growth numbers. Statistics presented at the meet assessed the market size for nail polish at around Rs.
Same is the case with lipstick and face creams.
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This is mainly due to the rise in the disposable income of an average rural family. These itself bring awesome opportunities to the investors in rural markets. Nirma — the first FMCG Company which initiated and produced goods according to the rural consumers in This scheme increased Maruti sales by units; c Other schemes Maruti are steel wheels for steel industry employees, 1 class officer for Indian Railways employees and Teacher Plus schemes for teachers.
This project has created employment opportunities to the youth in villages and small towns. This helps Dabur in reaching millions of rural customers. There are such IOC outlets across India. Presently, India is globally the fifth largest life insurance market in the emerging insurance economies. The Indian pharmaceuticals market is regarded as one of the fastest growing in the world. According to the Ministry of Communications and Information Technology, India is having more than Out of this about 40 percent are from rural areas, and by , rural users will account for over 60 percent of the total telecom subscriber base in India.
Thus, India has witnessed an increase in the purchasing power of consumers, accompanied by their desire to upgrade their standard of living. With the rapid growth of rural market, the quantum of consumer grievances also increases simultaneously. The main problems faced by rural consumers are related to adulteration, lack of safety, quality in appliances and equipment, unfair warranties, unreasonable pricing etc.
The Department of Consumer Affairs of the Government of India and various state governments has undertaken a number of innovative measures to protect rights of rural consumers. Yalala Srinivas, 32, from Murthad in Telangana, owns a four-acre farm but now sells drip irrigation systems and micro-irrigation techniques to nearby farmers. His income has grown; he has bought an Alto and now wants to complete his studies.
The flowering of ambition and enterprise through farming is widespread in Murthad, which for a population of 14, boasts of 3, motorcycles, 20 cars and 32 tractors that are seldom idle. Most houses have concrete roofs, rare enough in rural Telangana, as well as modern kitchens and cooking gas stoves. A decade ago, that was unthinkable.
Local farmers produce nearly 70 per cent of the national requirement of red jowar seeds which are then sold to seed companies. The impact on the local economy is considerable. Twenty-five thousand farmers provide direct employment to another 25, families. Moreover, rural youth, sporting cellphones and clad in fake designer wear, are no longer forced to migrate to cities in search of jobs.
Nearly 50, acres produce four lakh quintal of seeds a year.
The Changing Face of Rural India - Inclusion
This has led to 35 seed processing plants in the area, adding to the value chain. Palle Ganga Reddy, director, Andhra Pradesh State Seeds Corporation, says that the seed is procured, processed and packed locally, and is also exported to Pakistan and Bangladesh. Conservative estimates state that individual farmers earn over Rs 5 lakh a year.
Nomula Muthyam Reddy is one. He is just back from his son's graduation ceremony in the US. Mritunjay Sharma, 42, is another who's literally minting money. He's recently added menthe oil mint to the crops on his farm in Chandauli village in Barabanki and the returns are already enough for him to consider buying a Honda City to replace the Maruti Swift he owns.
Says Sharma: "Earlier, farmers grew wheat and paddy but menthe oil has given us an added financial advantage.
Hundreds of menthe oil units have sprung up in Barabanki. In Madhya Pradesh, it's soyabean. When it started two years ago, soyabean was Rs 1, per quintal.
The Changing Face of Rural India
It is now Rs 2, per quintal. For a farmer who produces quintals of soyabean, it means additional income of almost Rs 2. No wonder then from hatchbacks to SUVs, it's all available in local showrooms. Says Ramaraj Verma, a local farmer: "People now have pucca houses, electronic goods, swanky cars, mobiles and refrigerators.
Technology Rules: Much of the new prosperity is to do with connectivity and new channels of communication.
Rural road projects have made it easier and faster for farmers to get their produce to markets while communication tools have given them access to weather forecasts and critical inputs. ITC's e-chaupal reaches 3.