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8/14/2019 Rural Markets in India 2002
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Indicus Analytics 1
Rural Markets in India
Submitted to:
IMA (Associate of Economist Intelligence
Unit)
Indicus Analytics
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Indicus Analytics 2
Section 1: Demographic Profile
Contents
Population profile of India 3
Family Sizes and Dependence in Rural Areas 4
Distribution of Household Size 5Age and Sex Distribution in Rural India 6
Progressively Fewer Children Less than 10 years of Age 7
Family Characteristics 8
Literate people (Total Population) 9
Sex Ratio across Demographic Segments in rural areas 10
Educational Characteristics 11
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Indicus Analytics 3
Population profile of India
Parts of
India
Total population
(in millions)
Percentage
(%)
Total No. of households
(in millions)
Average
household size
Rural 741.6 72.2 148.3 5.0
Urban 285.4 27.8 63.4 4.5
Total 1,027.0 100.0 211.7 4.9
Population
Rural
72%
Urban
28%
Bulk of the population is rural more than 740 million Indians reside in
rural areas.
Average rural household has five members; slightly higher than in urban
areas
Whom and where should marketing efforts be targeted?
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Indicus Analytics 4
Family Sizes and Dependence in Rural Areas
Population Characteristics Distribution by Economic Class
Poorest 5%Households
Richest 5%Households
All
Avg. Household Size 6.0 3.6
Avg. no of adults per Household 3.0 2.8 3.2
Avg. no of children perHousehold (0 to 10 years)
3.0 0.7 1.9
3.6
5
6
Top 5% Average Bottom 5%
Economic class
Household Size
tribution of Household size per 1000 households
Household sizePart
1 2 3 4 5 6 7 8 9 10+
Rural 50 91 122 187 190 140 87 52 30 50
Urban 106 83 131 225 179 118 65 39 20 35
S: page17
Poorer households have larger families, and more children
The better-off have smaller family sizes
Largely due to fewer children
More available for lesser people in richer households
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Indicus Analytics 5
Distribution of Household Size
0
50
100
150
200
250
Households
per1000
1 2 3 4 5 6 7 8 9 10+
Household size
Distribution of households as per household size
Rural Urban
By and large family sizes in rural areas are not highly different from
urban areas
Incidence of joint families is only marginally more in rural areas
Incidence of single person households largely due to migration
What are the age-sex characteristics?
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Indicus Analytics 6
Age and Sex Distribution in Rural India
Population Age Profile
100 80 60 40 20 0 20 40 60 80 100
< 10
10 to 20
20 to 30
30 to 40
40 to 50
50 to 60
60 to 70
70 to 80
80 to 90
> 90
Number in millions
Male Female
63% of the rural population is below 30 years of age
Half of the population is aged below 21 years
For every 100 people in the 20 to 60 year age group there are 117
dependents (above 60 and less than 20 years).
A young market
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Indicus Analytics 7
Progressively Fewer Children Less than 10 years of
Age
Population Age Profile
0 510
15
20
25
30
35
40
45
0 to 2
2 to 4
4 to 6
6 to 8
8 to 10
Years
Numbers in millions
Fewer children in the 0 to 2 and 2 to 4 age groups
Reflects falling birth rates
Population growth will not forever lead market growth
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Indicus Analytics 8
Family Characteristics
Family Category.
Percentage of Allhouseholds
Average number ofindividuals per household
Unitary
(Single person or with spouse)12.2 1.6
Nuclear
(Couple with children)50.8 4.7
Extended
(Parents with one married child)
28.2 6.1
Joint
(More than one married siblings)4.3 10.3
Miscellaneous 4.5 8.7
Most households contain individuals or couples.
Nuclear households are the norm in rural India.
Extended households include elders living with married children.
Nuclear households are the norm and Joint families are an
exception.
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Indicus Analytics 9
Literate people
Literates
Rural
(millions)
Rural + Urban
(millions)Male 226.3 339.9
Female 140.4 226.8
Total 366.7 566.7
Sex Ratio of Literates(per 1000 males) 620 667
340
227
0
50
100
150
200
250
300
350
PopulationinMillions
Male Female
Literates (All India)
According to the Census 2001, 65.38% of the countrys population is
literate.
Females have a much lower literacy rate than men in general.
Rural women have an even lower likelihood of being literate.
Though there are more women than men in rural India,
literate women are significantly fewer
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Indicus Analytics 10
Sex Ratio
Sex RatioFemales per
1000 males
All Population 933
Rural 946
Urban901
Sex Ratio in Rural and Urban areas
All Population
Urban
Rural
600 650 700 750 800 850 900 950 1000Females per 1000 male
Rural India in general has more females per male than in urban India
This is due to two factors:
Poorer tend to have greater females per male, and rural population
tends to be poorer.
Migration of males to urban areas also contributes
Significantly larger proportion of females in the population
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Indicus Analytics 11
Educational Characteristics
Education Category Rural male (%) Rural female (%)
Non-literate 40.1 61.1
Literate below primary 19.6 25.1
Literate up to primary 13.3 9.8
Literate up to middle 12.6 7.6
Literate up to secondary 6.7 3.2
Up to higher secondary 3.1 1.2
Graduate and above 2.1 0.6
Others 1.4 1.2
0
10
20
30
40
50
60
70
Percentages
Non-literate Literate below
primary
Literate up to
primary
Literate up to
middle
Literate up to
secondary
Up to higher
secondary
Education levels of usually employed
Rural male (%)
Rural female (%)
About Every 2 in five males are literate; every 3 in five females are
illiterate in rural areas.
Among the female employees around 74% in rural India are illiterate.
The percentage of workers, who are graduates and above, iscomparatively much smaller.
Large increases in literacy have only generated basic ability to
read , but education levels continue to remain low
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Indicus Analytics 12
Section 2: Occupation
Contents
Percentage of people in the work force 13
Primary Employment Characteristics of Head of Household 14
Finer break-up of Rural Employment Characteristics(%) 15
Percentage Of work force in a Wage Earning Job Error! Bookmark not defined.
Land Cultivation: Size of Land and Number of Households 18
Land ownership and expenditure profile of households 19
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Indicus Analytics 13
Percentage of people in the work force
Part of India Male (%) Female (%)
Rural 54 30
Urban 54 15
The work force comprises of people willing and able to workoutside of home.
Both rural and urban male populations have broadly equalproportions in the work force.
But rural females are significantly more likely to be in the laborforce than urban females
Rural females are twice as likely to be working than urban females
0
10
20
30
40
50
60
Percenta
geofpopulation
Male Female
People in labor force
Rural
Urban
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Indicus Analytics 14
Primary Employment Characteristics of Head of
Household
Nature of workRura
l
Urba
nSelf Employed 46.1 34.4
Wage/regular/salaried
workers40.2 55.7
Others 13.7 9.7
Employment characteristics of head of household
0
1020
30
40
50
60
Rural Urban
Percentage
Self Employed
Wage/regular/salariedworkersOthers
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Indicus Analytics 15
Finer break-up of Rural Employment Characteristics(%)
Households whose main occupation is:
Self-
employe
d in
agricultu
re
Self-
employe
d in non-
agricultu
re
Agricultu
ral labor
Other
laborOthers Total
32.7 13.4 32.2 8.0 13.7 100.0
Rural households have a much higher ratio of self ownedbusinesses (46%) .
Urban households are more likely to be dependent on beingemployed by others.
41.7% of the urban salaried/wage worker households are employedon a regular basis; 14% are on a casual basis.
Incomes less stable in rural areas due to lower regular wage employment
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Indicus Analytics 16
Others Self-employed in
agriculture
Self-employed in
non-agriculture
Other labor
Agricultural labor
The bulk of the rural self-employed households are involved in
agriculture
This is also true of those who are employed by others
Maximum no. of households (around 64%)in rural India earn
their livelihood by agriculture related activities
Largely an agriculture based demography
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Indicus Analytics 17
Age Distribution of Work Force
Age groupsEmployment rate (Male) Employment rate (Female)
15 to 25 years49.6 19.3
26 to 35 years75.3 20.3
36 to 45 years85.4 21.5
46 to 55 years85.3 21.2
56 to 65 years 81.9 18.5
Employment rate calculated on the basis of those working for awage paying job or working in a family business out of the totalwork force (those able and willing to work)
Those involved in household chores not included
Males in lower age groups much less likely to be working that thosein middle and higher age groups
Females employment rate though significantly lower is more stableacross age groups
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Indicus Analytics 18
Land Cultivation: Size of Land and Number of
Households
Land Cultivated in Ha.Number of Households
(millions) Percent
0 to 1 115.9 78.1
1 to 2 16.4 11.1
2 to 3 7.5 5.1
3 to 4 3.0 2.0
4 to 5 2.2 1.5
> 5 3.5 2.3
Total 148.5 100.0
Most households cultivate insignificant amount of land close tofour fifths.
Barely 4 percent of the households (5.5 million) cultivate land greaterthan 4 hectares
Only way farmers economic condition will improve is by greater use of fertilizers and better seeds.
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Indicus Analytics 19
Land ownership and expenditure profile of households
Land Owned by Self Employedin Agriculture in Ha.
Average MonthlyExpenditure (Rs.)
No. of Households(millions)
0 to 1 2,256 22
1 to 2 2,635 12
2 to 3 2,828 6
3 to 4 3,401 3
4 to 5 3,537 2
> 5 4,303 3
All Landowning households 2,689 49
Only about a third of the total households own agricultural land.
The topmost category in terms of land ownership makes less thandouble monthly expenses the lowest category.
Indicates large numbers of poorer households
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Indicus Analytics 20
Section 3: Expenditure Characteristics
Contents
Expenditures by All Households.................................................................................................... 21
Occupations and Expenditures...................................................................................................... 22
Land Owned by Self Employed in Agriculture and expenditures .................................................. 23
Expenditure Distribution of an average household........................................................................ 24
Annual Expenditure per Household and Annual Market Size ....................................................... 25
Defining Economic Classes........................................................................................................... 26
Annual Expenditures by Rural Households................................................................................... 27
Total Amount Spent by different categories of households........................................................... 28
Rural Market Size Of Different Commodities ................................................................................ 29
Rural Market Across Expenditure Classes- 1................................................................................ 30
Rural Market Across Expenditure Classes- 2................................................................................ 31
How to define Major Economic Classes........................................................................................ 32
Households Value of Purchases Across Economic Classes........................................................ 33
Expenditure Profile ........................................................................................................................ 34
Rural Economic Classes -Expenditures per household............................................................... 35
Rural Economic Classes - Expenditure Characteristics............................................................... 35
Expenditure Profiles of Broad Economic Classes......................................................................... 36
Expenditure Distribution across Broad Economic Classes ........................................................... 37
Access To Media ........................................................................................................................... 38
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Indicus Analytics 21
Expenditures by All Households
Family CategoryAnnual Total
Expenditure in Rs.
Annual PerCapita
Expenditure inRs.
Average no. ofindividuals per
household
Unitary (Single person or with spouse) 12,214 7,973 1.6
Nuclear(Couple with children) 24,617 5,541 4.7
Extended (Parents with one married child) 29,909 5,069 5.7
Joint (More than one married siblings) 51,551 5,078 10.2
Miscellaneous 42,003 4,916 8.2
Larger households spend greater amounts in total than smallerhouseholds
Per capita expenditure falls with household size
Economies of scale presumably play a strong role in householdexpenditures
Do occupation play a strong role in determining expenditures?
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Indicus Analytics 22
Occupations and Expenditures
Type of HouseholdsAverage Yearly Expenditureper household(Rs.millions)
Households(Rs. millions)
Total Amount Spent in Rs.Bill.
Agriculture Labour 20 47
Self Employed in Agriculture 32 49 1,575
Other Labour 25 12 291
Self Employed in Non Agriculture 29 20 577
Others 29 21 615
Total 135 149 3,993
Almost two-thirds of the households depend upon agriculture fortheir main source of livelihood.
The self-employed tend to have much higher expenditures in ruralareas.
The self-employed agriculturalists are both greater in number andhave higher spending power than other broad categories
How does ownership of land impact expenditures?
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Indicus Analytics 23
Land Owned by Self Employed in Agriculture and
expenditures
Land Owned (Hectares)Average MonthlyExpenditure (Rs.)
No. of Households (Millions)Total Amount Spent per Year
by Households
0 to 1 2,256 22.2 60,232
1 to 2 2,635 11.9 37,888
2 to 3 2,828 6.3 21,425
3 to 4 3,401 2.5 10,507
4 to 5 3,537 2.1 9,163
> 5 4,303 3.4 17,945
All 2,689 48.7
About 48 million households are self employed in agriculture
Land size directly linked with expenditures
Of these barely 30 percent have land greater than 2 hectares
Agriculture based households would tend to have lower expendituresthan those in other professions
Per Household expenditures rise sharply beyond 3 hectares, but
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Indicus Analytics 24
Expenditure Distribution of an average household
Areas of expenditure PercentageAllocation
Food and basic needs 59
Cereal 22
Fuel & light 8
Total non food, nonbasic
41
Clothing & footwear 8
Medical 6
Toiletries and Misc. 10
Transport & services 12
Durables 3
Others 2
The major expenditure is in basic requirements that include cereals andother food and fuel
Non basic expenditures that include everything else, are allocated onlytwo out of five rupees spent.
Clothing and footwear, and toiletries (e.g. cosmetics, detergents)account for less than half the non basic expenditures.
Purely manufactured items (above plus durables) account for only onein five rupee spent by a rural household
Per Household expenditures rise sharply beyond 3 hectares, but total
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Indicus Analytics 25
Annual Expenditure per Household and Annual Market
Size
Expenditure categoryExpenditure per household (Rs.)
Total Market(Rs. Billion)
Basics (food and fuel) 18,433 2,710
Of which, Fuel 1,925 283
Clothing 2,003 294
Medical 1,757 258
Of which, Non-institutional
Medicine1,365 201
Toiletries 886 130
Commuting and Transport 654 96
Education related articles 413 61
Institutional Medicine 391 58
Footwear 331 49
Rent 117 17
Entertainment 62 9
Misc. Goods & Services 770 113
But these break-ups are likely to be different acrosseconomic classes
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Indicus Analytics 26
Defining Economic Classes
First rate households on the basis of its monthly total expenditures
Then see how various components of expenditures change as total expenditure of thehouseholds increases
Obtain insights into the same
Use these insights to define broad economic classes
Study the expenditure profile of these economic classes
Answer questions of the type:
What are the higher economic classes?
Where are they located?
What are their other characteristics?
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Indicus Analytics 27
Annual Expenditures by Rural Households
Annual Expenditute by Expenditure Ranked Households
0
20,000
40,000
60,00080,000
100,000
120,000
140,000
160,000
180,000
200,000
020406080100
Lowest Spending Classes Highest Spending Classes
ExpenditureinRs.
Most households spend more than Rs. 24,000 per year
Top 1% of the households (about 1.5 million) spend greater than Rs.100,000 per year
Some possibility that high expenditure households are under-reportingexpenditures (dashed line represents this possibility)
Great potential for low priced commodities
A large but poor market
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Indicus Analytics 28
Total Amount Spent by different categories of
households
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
0102030405060708090100
Lowest Spending Classes Highest Spending Classes
Rs.
Million
In total rural household spent about Rs. 4000 billion in the year 2000.
Of this the higher economic classes spent the largest amounts, despitehaving significantly fewer households
The poorest sections of the rural population do not have high purchasingpower individually as well as in the aggregate.
The richest 10% of the households spent Rs. 670 billion, the next 10%spent Rs. 583 billion, the next 10% Rs. 440 billion, a similar amount bythe next 10%.
Apart from the top and the bottom 10% rest of the households are similarin terms of their spending characteristics
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Indicus Analytics 29
Market Size Of Different Commodities
Institutional Medical 58 391
Footwear 49 331
Expenditure CategoryTotal Market Size (Rs.Bill.)
Expenditure perHousehold (Rs.)
Food 2,452 16,508
Commuting, Travel & Misc. 326 2,194
Clothing 298 2,003
Fuel & Light 286 1,925
Medical 261 1,757
Non Institutional Medical 203 1,365
Durables 146 986
Toiletries & Cosmetics 132 886
Food, Clothing, Fuel, and Medical expenditures are the highest householdexpenditure categories.
Travel, commuting, and miscellaneous services are also a highexpenditure category
Manufactured items such as durables, toiletries, and footwear bring up the
rear.
How do these expenditures differ across expenditure classes?
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Indicus Analytics 30
Market Size Across Expenditure Classes- 1
Total Expenditures of Rural Households across Economic Classes: Concave
Expenditures
0
1
2
3
4
5
6
7
8
9
10
0 10 20 30 40 50 60 70 80 90 100
Expenditure Class of Households
Rs
.Bill.
Durables Non Institutional Medical
Institutional Medical Commuting,Travel & Misc
Commodities with concave expenditures shoot up across higherexpenditure classes.
With economic growth these expenditures should increase the most
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Indicus Analytics 31
Market Size Across Expenditure Classes- 2
Total Expenditures of Rural Households across Economic Classes: Convex
Expenditures
0
1
2
3
4
5
6
7
0 20 40 60 80 100
Expenditure Class of Households
Rs.
Bill.
Fuel & Light Toileteries & Cosmetics Footwear Clothing
Commodities with convex expenditures do not shoot up across higher
expenditure classes.
Minor fall in prices will greatly increase penetration among lowerexpenditure classes
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Indicus Analytics 32
How to define Major Economic Classes
The Broad Economic Classes: Division Based on Durable to Non-Durable
Expenditures
0 20 40 60 80 100
Affluent
Middle
Mar inall non- oor Poor
Many ways of deciding the cut-off between broad economic classes
We use expenditure on durables
Among lowest expenditure classes, the ratio of expenditures on durablesto non-durables increase in a linear manner (Red and green lines)
There is however a slight non-linearity among the 22nd to 10th percentiles,(the blue curve) this curvature is strongest in the topmost 9% of thehouseholds (the mauve curve)
The curve implies that the proportional expenditure on durables increasesat a much higher rate.
This denotes the poor, marginally non-poor, the middle, and the affluentclasses respectively
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Indicus Analytics 33
Households Value of Purchases Across Economic
Classes
Affluent Middle ClassMarginallyNon-Poor
Poor
Top 9% 9 to 22% 22 to 52% 52 to 100%
Number of households(in millions)
13 18 45 71
Number of people(in millions)
113 123 255 271
Average yearlyexpenditure perhousehold
5,790 3,355 2,296 1,228
All expenditures in Rs.
The rural consumers can broadly be divided into four categories
The poor - Bottom 48% of the economic classes
The marginally poor 22 to 52 percent
The rural middle class 9 to 22 percent
The rural affluent Top 9 percent
We find that there is homogeneity of expenditure profile within a category
Caution: Rural affluent and middle classes have a very different profile
than urban affluent and middle classes
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Indicus Analytics 34
Expenditure Profile
Basic Goods(Food + fuel)
Non - Basic
Durables
(TV, automobiles, etc.)
Non-basic Non-Durables(Clothing, footwear, toiletries,etc.)
Broad hierarchy of expenditures
Basic and non-basic expenditures
How do the expenditures differ across economic classes?
We would expect the poor to spend the bulk of their expenditures on
basic goods, and insignificant amounts on durables
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Indicus Analytics 35
Rural Economic Classes -Expenditures per household
Affluent Middle Class Marginally Non-Poor Poor
Top 9% 9 to 22% 22 to 52% 52 to 100%
AYE on Basic commodities 39,983 27,079 19,759 11,183
AYE on non-basic non-durables 24,269 11,887 7,123 3,256
AYE on durables 5,223 1,303 679 2
All expenditures in Rs
Rural Economic Classes - Expenditure Characteristics
Affluent MiddleClass
MarginallyNon-Poor
Poor
Top 9% 9 to 22% 22 to 52% 52 to 100%
Basic/Total 0.57 0.67 0.71 0.75
Toiletries/Other non-basic non-durables 0.08 0.11 0.13 0.16
Durable/ Other non-basic non-durables 0.21 0.10 0.09 0.08
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Indicus Analytics 36
Expenditure Profiles of Broad Economic Classes
Expenditure
category
Annual Expenditure per Household ( in Rs.)
Affluent Middle Marginal Poor
Basics (food and fuel)39,983 27,079 19,759 11,183
Of which, Fuel3,910 2,746 2,060 1,245
Misc. Goods & Services16,271 6,954 3,734 1,512
Toiletries 1,951 1,308 937 537
Medical7,175 2,751 1,498 622
Commuting & Transport2,392 1,109 590 242
Education related articles1,709 727 371 110
Entertainment175 108 60 29
Rent 285 251 117 49
Clothing5,099 3,069 2,108 1,063
Footwear939 554 338 151
Durables5,223 1,303 679 287
Total69,466 40,267 27,555 14,733
Food remains the main expenditure segment across economic classes
Unlike in urban areas rent is insignificant across various economic classes
How does the expenditure distribution vary across economic
classes?
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Indicus Analytics 37
Expenditure Distribution across Broad Economic
Classes
Expenditure on basic items like food and fuel increases as the household
becomes poorer .The poor households spend more than 70% of their total
expenditure on basic items.
On the contrary expenditures on miscellineous goods and durables
decreases as we move across richer to poorer households.
The share of expenditure on clothing , footware and toiletries, almostremain the same across all economic se ments.
40%
50%
60%
70%
80%
90%
100%
Percentageoftotalexpenditure
Affluent Middle Marginal Poor
Distribution of average yearly expenditure per household
Durables
Footwear
Clothing
Toiletries
Misc.
Goods &
Services
Basics(food and
fuel)
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Indicus Analytics 38
Access To Media
Affluent MiddleClass MarginallyNon-Poor Poor All
Newspapers
1 17% 3% 1% 0% 3%
>1 1% 0% 0% 0% 0%
Television
Colour 14% 2% 0% 0% 3%
BW 44% 29% 13% 2% 16%
Cable
TV with Cable 14% 4% 2% 0% 3%
TV w/out Cable 44% 27% 11% 1% 15%
Radio 61% 44% 28% 14% 30%
Telephones 8% 1% 0% 0% 2%
Note: The figures above are estimates and may be biased downwards by about 10 percent.
Low access to media across economic classes.
The poor and the marginal classes have insignificant exposure to media
barring radio.
Access to cable TV is much higher than access to a telephone.
Radio has the highest penetration among mass media.
Low levels of access to all types of media
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Indicus Analytics 39
Section 3B Seasonality in Expenditures
Contents
Seasonality in Rural Consumption Expenditures 40
Seasonality in Rural Consumption Expenditures: The Affluent and Middle Classes 41
Seasonality in Rural Consumption Expenditures: The Marginally Non-poor and Poor Classes 42
Seasonality Across Economic Classes: Comparing the Per household Monthly Expenditures 43
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Indicus Analytics 40
Seasonality in Rural Consumption Expenditures
Seasonality: Total Consumption Expenditures
10.00
15.00
20.00
25.00
30.00
35.00
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Rs
.Billion
Rural household consumption expenditures show distinct seasonality
They tend to follow agriculture cycles
Rural seasonality differs highly from urban seasonality Note thetrough in October and November
Is likely to be different across different geographical regions
Do consumption expenditures differ across economic classes?
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Indicus Analytics 41
Seasonality in Rural Consumption Expenditures: The
Affluent and Middle Classes
Affluent expenditures are concordant with major agriculture output selling
Middle
3,200
3,400
3,600
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Affluent
5,000
5,200
5,400
5,600
5,800
6,000
6,200
6,400
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
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Indicus Analytics 42
Seasonality in Rural Consumption Expenditures: The
Marginally Non-poor and Poor Classes
Marginal
2,200
2,400
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Poor
1,000
1,200
1,400
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
The expenditures of the poor are concordant with the harvesting times
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Indicus Analytics 44
Section 4: The Geography of Rural Markets
Contents
Where are the Better-off Households located? ....................................45
The states in terms of Rural Affluence .................................................46
The Affluence Rates in Rural sub-regions............................................47
What determines Rural affluence? .......................................................48
Consumption characteristics of the affluent..........................................49
Similar types of affluence across India.................................................50
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Indicus Analytics 45
Where are the Better-off Households located?
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000
Uttar Pradesh
Bihar
Maharashtra
West Bengal
Andhra Pradesh
Rajasthan
Madhya Pradesh
Gujarat
Karnataka
Kerala
Tamil Nadu
Punjab
Haryana
Assam
Orissa
Affluent Middle Marginal
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The states in terms of Rural Affluence
States (Only Ruralareas)
Affluent
Households in000s
Middle
Households in000s
Affluent
in State Total(%)
Affluent + Middle
in State Total(%)
Rural Delhi 276 299 36.2 75.4
Haryana 837 642 30.9 54.6
Punjab 817 729 27.1 51.3
Goa 27 45 16.8 45.2
Kerala 1,004 1,075 20.6 42.7
Himachal Pradesh 208 258 18.5 41.5
Rajasthan 1,180 1,560 17.0 39.5
Gujarat 800 1,135 12.3 29.8Uttar Pradesh 3,125 3,628 12.9 27.8
Karnataka 618 886 8.0 19.6
Maharashtra 882 1,412 7.0 18.2
Assam 154 492 3.9
West Bengal 584 1,270 4.8 15.4
Madhya Pradesh 745 1,062 6.2 15.0
Bihar 723 1,467 4.6 13.8
Tamil Nadu 529 668 5.2 11.8
Andhra Pradesh 449 933 3.2 9.7Orissa 194 411 2.9 9.0
Sorted in descending order by Affluent + Middle in state total
The Haryana Delhi Punjab rural belt is the highest in terms ofaffluence rates.
Southern India has the lowest rates of rural affluence
Uttar Pradesh, Kerala, and Rajasthan have the highest numbers ofthe affluent
How are the affluent distributed within the states?
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The Affluence Rates in Rural sub-regions
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What determines Rural affluence?
Afluence and Agriculture Production (Logarithmic Scale)
10,000
100,000
1,000,000
10,000,000
100,000,000
10,000 100,000 1,000,000 10,000,000
Foodgrain and Pulses Production
NoofAffl
uentHouseholds
.
Close relationship between presence of affluence and agriculturalproduction.
However other factors are also important, such as handicrafts,
rural industry, trade, migration, etc.
The middle class also follows a similar same relationship.
The most important relationship of the presence of rural affluent, not surprisingly, is with
agricultural production.
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Consumption characteristics of the affluent
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Similar types of affluence across India
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Section 5 Trends
Population Characteristics ..................................................................................52Number of households engaged in different types of work ................................53Number of rural households per every 1000 in different size class of landcultivated.............................................................................................................54Literacy rate ........................................................................................................55Number of persons in different education levels ................................................56Section 5B: How will Rural Markets evolve?.......................................................57Close relationship between Agricultural Value Added and GDP.........................57What would the agricultural GDP be? .................................................................58Demand for Agricultural Inputs ...........................................................................60
Where would the future take Rural India?...........................................................61The Great Unknowns..........................................................................................62
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Population Characteristics
Year Household Size Sex Ratio (Females per 100 males)
1978 5.2 96
1983 5.1 96
1988 5.1 95
1994 4.9 94
2000 5.0 96
Minor fall in household size expected to continue at similar
rates
Fall in females per male throughout the late seventies till mid
nineties
Has it been reversed? Inconclusive evidence
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Number of households engaged in different types of
work
Occupation Structure 1988 1994 2000
Self Employed Agriculture 37.7 37.8 32.7
Agriculture Labour 30.7 30.3 32.2
Agriculture 68.4 68.1 64.9
Self Employed non-Agriculture 12.3 12.7 13.4
Other Labour 9.0 8.0 8.0
Others 10.1 11.2 13.7
Total 100.0 100.0 100.0
Fall in farmers who cultivate their own land
Self employment in other activities on the increase
This may also be the result of absence of other employment
activities
Sustained fall in importance of agriculture as a main source of
employment
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Number of rural households per every 1000 in different
size class of land cultivated
Size of Land Cultivated byHousehold in Ha.
1988 1994 2000
Less than 0.40 54.4 57.5 63.2
0.4 to 1.0 17.3 17.1 16.8
1.0 to 2.0 13.9 13.5 11.2
2.0 to 4.0 8.6 7.6 5.9
Greater than or equal to 4.0 5.8 4.3 3.0
Total 100 100 100
Sustained fall in size of land cultivated by each household
Will not be able to take the burden of a large number of rural youth
Expect a rapid increase in out-migration in the absence of rural
employment opportunities
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Literacy rate
Year Male Literacy Female Literacy
1983 44.9 21.9
1988 48.4 26.0
1994 54.5 32.1
2000 58.8 38.5
20
30
40
50
60
1983 1988 1994 2000
Male Literacy Female Literacy
Rapid advances in the eighties and nineties on the literacy front
The relative increase for females much higher
Expected to continue in the next few years
Populations level of education increasing steadily, but still low by international standards
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Number of persons in different education levels
Educational attainment 1994 2000 1994 2000
Male Female Male Female
Not literate 45.5 41.2 67.9 61.5
Literate up to primary school 33.7 34.2 23.0 26.0
Middle school 10.9 12.6 5.6 7.5
Secondary School and above 9.8 11.7 3.4 5.0
All 100.0 100.0 100.0 100.0
Though literacy is increasing, the general of education is quite
low, and is likely to remain so.
Female education levels are abysmally low
Current growth rate indicates it will be a long time before a
significant chunk of the rural population will attain educationalstandards above simple literacy
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Section 5B: How will Rural Markets
evolve?Close relationship between Agricultural Value Added and GDP
Agriculture Value Added and GDP at Factor Cost
Agri Value Added
GDPatFactorCo
st
Strong relation between GDP and Agricultural GDP
Other factors are not as important econometric analysis
But it is not clear what causes agriculture growth, they both feed
into each other.
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Our trend analysis is based on GDP estimate AgricultureValue Added estimate Value of Agriculture Inputs estimates
What would the agricultural GDP be?
Agriculture GDP and Overall GDP Trends
0
5000
10000
15000
20000
25000
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
Rs.
Billion(199
5ConstantRs.)
Agriculture, value added (constant 1995 Rs. Bill)
GDP at factor cost (constant 1995 Rs. Bill)
In the year 2000 we estimate it to have been approximately Rs.
4300 billion
If 6% per annum growth in GDP is to continue through till 2010
then based on past relationships Agri GDP should be about Rs.
7000 Billion (at 2000 price levels)
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For every Rs. 1 growth in GDP we have observed a Rs. 0.21 paise
increase in Agriculture value added in the past. Estimates till 2010
are based on this finding
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Demand for Agricultural Inputs
What would be the growth in Agriculture inputs?
0
500000
1000000
1500000
2000000
2500000
3000000
3500000
4000000
4500000
1961 1971 1981 1991 2001
0
5000000
10000000
15000000
20000000
25000000
30000000
35000000
40000000
45000000
Agricultural machinery, tractors . Fertilizer consumption (metric tons) .
By 2010 the number of tractors in the country would have doubled
from about 2 million currently to 4 million.
Fertilizer growth would be marginally higher from current levels
of about 20 million metric tones consumed annually, it would
reach about 42 million metric tons
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Where would the future take Rural India?
Positives
Large number of people will enter the workforce
They will be relatively better educated than their elders
Better information availability and greater opportunities for
commerce
Negatives
Falling size of land.
Over dependence on limited land.
Poor living conditions will continue for the bulk of the population
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The Great Unknowns
Unlike past growth estimates, these figures are not based on any
high assumptions of economic growth.
However changes in the structure of the economy could impact
them adversely or positively.
The Great unknowns for the future:
Political ups and downs
Dependence on rains
Impact of WTO
Large group of young people reaching adulthood positive
if opportunities exist.
But what would happen if opportunities are absent?