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Publication: The Economic Times Mumbai;Date: Jul 25, 2010;Section: Front Page;Page: 1

A NEW PLOT IN FARM VILLE

Businesses are geared up to hit the countryroad for growth; this timethey’ll piggyback on the purchasing power of rural youth

Monica Behura NEW DELHI

LAST month, when a group of eight top global investors met in London to ponder over their next India strategy, all theywanted to know was how to go ‘rural’. They had been advised by experts that the country’s hinterland was no more thechallenge that it was two decades ago, when the economy was first opened up. Prosperity in the villages was slowly starting tooutdo the scope of urban India—Bharat was blossoming into the next big opportunity.

Deutsche Bank, which facilitated the London meeting, invited Pradeep Kashyap of MART, an Indian consultancy specialising

in emerging and rural markets, to make a presentation. Kashyap told the eclectic group that all they needed to do was to tapthe village youth.

The same man had years ago helped FMCG major Hindustan Lever (now Hindustan Unilever) cocreate Project Shakti toappoint women micro entrepreneurs among village self help groups as the company’s salespersons. He was a strong believer inthe concept of opinion makers such as the village headman or the quintessential postman to influence the villagers’ buyingdecision. So, why was he now talking about the power of India’s rural youth?

Part of the reason is the success of the government’s National Rural Employment Guarantee Scheme, which promised 100days of guaranteed employment with an income of 100 a day. With 43 mn new jobs (1.82 billion new mandays), the villageeconomy became a big draw for the village youth. Young people not only decided against migration, those who had alreadymigrated began returning home. At the same time, better power scenario, good connectivity with the cities and access tocommunication facilities such as mobiles and satellite televisions improved not only the standard of life in far flung villages, but

also increased awareness and enhanced aspiration levels. As a result, rural spending in the last three years quadrupled to awhopping 40,000 cr.

“The nature of the spending shows that the biggest driver of the economy is the youth. Young people are earning money,spending on their daily chores and are still left with enough disposable incomes. All that money is going, or will go, into buyingvehicles, TVs, mobiles, FMCG products, clothes and a decent education for the next generation,” says Sujit Nair, chief executive officer of Linterland, a rural marketing agency of Lowe Worldwide.

Take a look at the facts. The rural market already contributes more than half of FMCG and durables sales, 100% of agri-products sales, and nearly 40% of automobile sales. In the last few years, the biggest push to India’s mobile telephonystory has come from the hinterland where 175 million connections have been sold—and this is expected to rise to 440 million by2012. Half of life insurance policies are also sold in India’s villages.

Companies that are operating in India have already latched onto this boom. In village Shahjahanpur, 30 km off the highwayfrom Meerut in UP, a group of young HUL executives and rural marketing experts last week made a sales pitch to the villagerswho huddled amid thatched houses to watch a promotional video in a campaign called ‘Khusiyon ki Doli’ (palanquin of happiness). As the women giggled, watching the films and demos, 20-year-old Jyoti Saudan stepped aside to take a call fromher husband on her mobile phone.

“A high degree of awareness facilitated by communication devices has empowered the youth in the villages. Gone are thedays when the company would approach the village headman or the postman or other opinion makers to influence buying-decisions in the village. Now, we are creating campaigns that directly influence the youth,” says Raj Kumar Jha, nationalcreative director of Ogilvy Action, a rural marketing agency. “The money is now with the village youth and it is he/she who doesthe spending,” adds Sudhanshu Vats, vice-president for home & personal care category of Hindustan Unilever.

That explains why Nokia’s campaign for the rural market says ‘Dikhao Apna Standard (show your worth)’, Bharti Airtel says

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‘Aaj Koi Akele Nahin’ (no one is alone) and Max New York Life Insurance calls its rural policies ‘Vijay’. “More than 50% of ruralyouth in the age group of 25-35 years have contributed to 2.5 million value top-ups of our policies through their mobile phones,”says Anisha Motwani, chief marketing officer of the insurance firm which has sold 93,000 ‘Vijay’ policies in the rural market.

Companies are also branding Internet café’s, movies halls and youth clubs in villages, where youth participation in localfunctions especially during festivals goes up. Helping GDP growth

“AT EVERY function, we demonstrate our mobikes and register at least two sales,” says Anil Dua, chief marketing officer atHero Honda. Hero Honda gets 42% sales from the rural market. Seventy percent of the consumers are in the age group 25-35.

Indeed, it was this youth-led demand that helped the Indian economy post a healthy near 7% GDP growth even when theworld had slipped into the worst recession in several decades. And so, in the eyes of the investors, India’s rural youth emergedas the Knights in shining armour. “It is an opportunity no corporate can overlook. India’s rural market is already a $0.5 trillionmarket today, and it is expected to double to $1 trillion by 2020,” adds Kashyap.

monica.behura@timesgroup.com

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