Indian Rural Market: A Brief Profile

India lives in her villages.

As described by Adi Godrej, Chairman , Godrej Group” The rural consumers is discerning and the rural market is vibrant . At the current of growth , it will soon outstrip the urban market. The rural market is no longer sleeping but we are.”

RURAL INDIA: A BREIF PROFILE

• Villages are the heart of India. Approximately 75% of India’s population(equaling 12.2% of the world’s population)lives in 6,38,365 villages spread over 32 lakh square kilometers.

• As per the census (2001) rural segments comprises 13.5 crore household which constitute 72% of total households in India with 48 crore adults individuals.

Note:But the rural market is not homogenous across the country .

Demographic Environment

1971 1981 1991 2001

Total Population(million) 548.2 683.3 848.3 1026.9

Rural population(million) 524.0 628.8 741.6

Rural population to total population 80.1 76.7 74.3 72.2

(Source :Census 2001)

Distribution of Population by Age Group (2001)

Age Groups Rural Urban

0-4 11.5 8.9

5-14 25.7 21.8

15-19 9.5 10.6

20-34 23.1 26.8

35-54 19.7 22.5

55+ 10.5 9.4

Total 100 100

Source: Census of India , 2001

Education and the Level Demand

Lowers levels of education in rural sector (approximately 60 percent of the population lies below the middle education brackets). But change is

taking place because the literacy rate in the rural sector has risen 23 percent over the last twenty years.

Rural Literacy

1981 1991 2001

% of literates

36 45 59

Source:Census 2001

Education in India

Education Level Rural UrbanBelow Primary 31.7 18

Primary but below Middle

29.5 22.9

Middle but below matriculation

16.9 16.3

Matriculation but below Graduates

18.4 29.6

Graduates and Above 3.5 13.2

Source: Census of India , 2001

Rural Income Distribution

Rural India is generating more than half of the national income.India’s 58% disposable income comes from its rural parts where 41% of the country’s middle class homes are located

Consumers

Class

Annual Income 1995-96 in % 2006-07 in %

Very Rich Above Rs. 2,15,000 0.3 0.9

Consuming Class Rs.45,001-2,15,000 13.5 25.9

Climbers Rs.22,001-45000 31.6 49.0

Aspirants Rs.16,001-22,000 31.2 14.0

Destitute Rs.16,000& Below 23.4 11.1

Source:Rural Network Rao N.J, Marketing Mastermind,

Per capita income in rural and urban areas.

68867740

9665

37954478

6070

0

2000

4000

6000

8000

10000

12000

1989-90 1994-95 2001-02

Urban

Rural

Annual Per Capita Income 1999-2000 (in Rs)

All India Highest Lowest

Urban 19,407 34,509(Chandigarh) 12,257 (UP)

Rural 9,481 27,256( Chandigarh) 5,704 (Orrisa)

Urban & rural 12,128 33,408 ( Chandigarh) 7,123 (orrisa)

Source : NSSO

Saving pattern

Total %of HHs Rural HHs % of Total HHs

Urban % of HHs

Households(HHs)

192 138 72 54 26

No.of HHs availing banking Services

68 35.5 42 30.1 27 49.5

Source: RBI bulletin 2003

Nature And Characteristics of the Rural market

• Large & Scattered market

• Heterogeneous Market

• Income from Agriculture

• Standard of living

• Infrastructure Facilities

Large & Scattered market

• It consist approximately 75 crore rural consumers who live approximately 6, 38,365 villages.

• Abut 1,45,098 villages or 23% of the total number of village in India have population less than 200 and another 21% have population between 200 and 500 .

• But on the other hand 13% villages have 50% rural population and they posses 60% rural wealth

Heterogeneous Market

• As many as 20,000 ethnic groups are present rural India and this poses a formidable challenges to the marketer.

• There are 24 languages and 1,642 dialects (boli) varies ever 100 km or so it extremely difficult to develop a uniform promotional message.

Income from Agriculture

• Nearly 55% of rural income comes from the agricultural hence rural prosperity is tied with agricultural prosperity to a great extent.

Standard of living

• Over 70% of the rural population is employed in small scale agricultural and related occupations. This dependence on agricultural and natural factors.

• This unreliability factor in case of rural income makes the rural consumers extremely conscious in their purchase behavior,

Infrastructure Facilities

• The infrastructural facilities like road, warehouse , communication system and financial facilities are inadequate in rural areas. Road do not connect nearly 50% village in the country.

• Over 50% rural household have access to electricity as main source of lighting but 46% use kerosene for lighting.

• LIC was also increasing its rural focus through its Bima Gram programme. About 16 per cent of LIC's new premium income came from the rural sector last year.

• The programme, started in December 2001, offers developmental support to gram panchayats, where at least 75 per cent of the families are covered and a minimum of 100 policies sold. The support could take the form of construction of a bus shelter, donation of local library or even digging a well.

• Last year, over 185 villages had come under the Bima Gram scheme, Mr N.C Sharma (Manging Director) said, adding that 2002-03 had a target of 2,000 such villages. "We will also focus on our rural agency scheme, to enable more rural youths to take up the agency business,'' he said.