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 Indias population(equaling 12.2% of the worlds 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) Rural population(million)

548.2

683.3 848.3 524.0 628.8 76.7 74.3

1026.9 741.6 72.2

Rural population to total population 80.1

(Source :Census 2001)

Distribution of Population by Age Group (2001)

Age Groups Rural 0-4 11.5 5-14 25.7 15-19 9.5 20-34 23.1 35-54 19.7 55+ 10.5 Total 100 Source: Census of India , 2001

Urban 8.9 21.8 10.6 26.8 22.5 9.4 100

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 % of literates

1981

1991

2001

36

45

59

Source:Census 2001

Education in India
Education Level Rural
Below Primary Primary but below Middle Middle but below matriculation Matriculation but below Graduates Graduates and Above 31.7 29.5 16.9 18.4
3.5

Urban
18 22.9 16.3 29.6
13.2

Source: Census of India , 2001

Rural Income Distribution

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

Consumers Class
Very Rich Consuming Class

Annual Income
Above Rs. 2,15,000 Rs.45,001-2,15,000

1995-96 in %
0.3 13.5

2006-07 in %
0.9 25.9

Climbers
Aspirants Destitute

Rs.22,001-45000
Rs.16,001-22,000 Rs.16,000& Below

31.6
31.2 23.4

49.0
14.0 11.1

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

Per capita income in rural and urban areas.

12000 10000 8000 6000 4000 2000 0 1989-90 1994-95 2001-02 3795 7740 6886 4478 6070 Urban Rural 9665

Annual Per Capita Income 1999-2000 (in Rs)

All India
Urban 19,407

Highest
34,509(Chandigarh)

Lowest
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.