NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, July 9, 2009

On his extensive travels across rural India as founder of MART, a rural marketing and research consultancy, Pradeep Kashyap has seen several instances of the kind of micro level development prescribed by policy statements such as the Union Budget. Kashyap, whose organisation earlier this year had done a study which showed that rural demand for goods and services was alive and kicking despite the slowdown in urban India, says that the increased spend in the rural economy as envisaged by the 2009-10 Budget would give a further boost to consumerism.

Kashyap emphasises that the rural infrastructure and roads are improving and the increased spending on rural schemes targeted at the rural poor will see many first-time consumers coming to the market. “There’s huge spending on rural schemes and next year one can see a lot more demand and more companies will want to enter the rural markets,” he says.

Concurs R.V. Rajan, former Chairman of The Rural Marketing Association of India and Anugrah Madison Advertising. “We know for a fact that rural demand has not been impacted. The FMCG industry will be the first to be benefited, followed by durables, including mobiles, and then the spends on automobiles will get a boost.”

A fact that will gladden the hearts of marketers as they make a beeline for rural markets. The elements have all been outlined: a focus on upgrading rural infrastructure and improving the road network to villages and the huge increase in allocation for rural jobs under the National Rural Employment Guarantee Scheme.

Says V.S. Sitaram, COO, Consumer Care, Dabur India Ltd, “Rural India has been the big growth driver for the FMCG industry in the previous year with this section of the economy accounting for almost 40 per cent of the industry’s sales.” He says that the Government’s decision to extend the loan waiver scheme in view of the delay in monsoons and offer subsidised loans (at 6 per cent) for farmers who have paid their dues in time would put more money in their pockets. “This move would go a long way in giving the rural economy and consumerism a big boost,” he adds.