"India lives in her villages” - Mahatma Gandhi
Rural India consists of 70% of the total population as per the standard definition. But as a Rural Market Professional, it would be better described as 95% of the total market. Out of this 95%, around 25% is urban and the rest is rural. Catering to this big rural population is an opportunity as well as a challenge. The growth in rural India is fuelled by agriculture. The rise in use of fertilisers and other agrochemicals is a clear indicator of the growth in agriculture. There is a requirement of the infrastructural development to tackle the increasing yield of the crops. Road infrastructure, grain markets and other infrastructural development have been done to support the agrarian growth. The surge in industry have also helped the rural population to fulfil their dreams. With this development in the infrastructure and storage, the price and selling management have worked in a big way.
The development of private education in villages and nearby towns with CBSE and even ICSE schools have led to the development in educational standards in rural areas. A lot of awareness channels like mass media, TV channels and newspapers in regional languages have played an important role in transferring information to masses. In the last decade or so, the rise in use of mobiles and even smart phones have connected every village with the global information hubs. The role of social media, of course, needs to be discussed here in order to understand the rural market completely.
A Big Rural Population:
70% of the total population still lives in villages and around 20% in the tier III and IV cities of India. In a way, almost 90% of India is rural. Despite 71% of the country being predominantly rural, the proportion of doctors and nurses in rural areas are 34% and 33% respectively, as informed by the government to the Parliament. While over 38% of all bank branches are concentrated in urban areas, nearly 34% are in the rural areas, with the remaining in the semi urban areas.
According to a survey report on health insurance coverage in Rural India, only 14% of the rural population is insured whereas 19% of the urban population is insured. This shows a large scope for health and life insurance industry in Rural India. In a Gaon Connection Survey, every third person living in rural India (36%) prefers going to a private doctor. This clearly indicates a rise in the paying capacity of Rural India.
Agricultural Growth:
Agrochemical industries in India present immense growth opportunities. India is the 4th largest producer of agrochemicals globally and ranks 4th in terms of production of crop protection chemicals. The market in India is expected to reach US$ 7.5 billion (INR 532 billion) by FY19 and register exports of about 50% of the value of Indian crop protection industry (Source – India Brand Equity Foundation IBEF, February, 2018). Revenue growth of Indian Agrochemical companies was expected to increase by 12% to 14% between 2017-2019 (Source – Religare Institutional Research Report, January, 2017). In 2017, the market size for Indian seeds was approx. 3.6 billion dollars (INR 256 billion). Indian fertiliser market was INR 4675 billion in 2017. This data clearly indicates the growth in industry as well as in production in agriculture in India. This is certainly going to change the purchasing behaviour of rural India.
Advertising and promotional spends allocated by agri input companies towards rural promotion is approx. 2.5% to 3% of its revenue. Potential revenue of the rural advertising and promotion sector is estimated to be approx. INR 23.6 billion in 2020 (seeds and agrochemical industry).
Amongst the reasons cited for the current size of the rural market are high growth in technology and infrastructural development of the country, improvement in agri technologies and growth in yield of every crop and better market infrastructural development and godown and storage development.
One more reason is the development of big companies for procurement like Adani in apple procurement in Kashmir and Himachal and many private corporates in procurement of basmati rice in Punjab and Haryana.
Industrial and Service Sector in Rural India:
Nearly 100 years ago Dr. B.R. Ambedkar wrote, “In short, strange as it may seem, industrialisation of India is the soundest remedy for the agricultural problems of India.” The rural economy is growing not just because of farming. In a paper written for the NITI Aayog by Ramesh Chand, S. K. Srivastava and Jaspal Singh, there is indication of the structural transformation of the rural economy. More than half of the industrial production comes from rural India. Rural construction also accounts for nearly half of the total building activity in the country. The value of rural services is about a quarter of the total services output.
This development of the industry and service sector across the country has led to the development of the middle classes in rural areas. Rural middle classes are now fuelling the economy of India.
Infrastructural Development:
Road network and rural electrification have not only improved the living standards but have also improved the employment opportunities in rural India. Around 97%, or 579,012 of Indian villages were electrified by March 31, 2015. A village is declared electrified if 10% of the households can access power, along with public institutions such as schools, the panchayat office, health centres, dispensaries and community centres. But by 2019, 100% villages were electrified as promised by Prime Minister Modi in 2014. However, more than 3 crore households are still in darkness, which I believe will be connected in the next couple of years. Rural roads form 73% of the 1.7 million km of Indian roads. The Pradhan Mantri Gram Sadak Yojana, a rural road networking scheme, has done wonderfully well for the connectivity of villages with the cities. But still 30% of villages with a 250 plus population are yet to benefit from the Pradhan Mantri Gram Sadak Yojana (PMGSY) in India. To boost connectivity of villages with hospitals, schools and markets, the Government of India has launched Phase-3 of its rural road programme to widen and revamp 1.25 lakh km of roads in the country. The duration of this phase will be of five years, expected to be completed by 2024-25. All these schemes will certainly make rural markets much more lucrative.
Mandis or Agricultural Markets and Market Towns in India are the hubs of economic activity. These are the places where farmers sell their produce and buy almost everything for their needs. According to available estimates, there are over 7500 regulated agricultural markets in India today, operating under different state level acts covering a huge variety of notified agricultural produce. All these numbers are the opportunities present in rural India which I have tried to present. Hope marketers will get a good insight.
Rising Standard of Education:
With this development in the infrastructure and storage, the price and selling management have worked in a big way leading to the development of private education in villages and nearby towns with CBSE and even ICSE boards leading to development in educational standards in rural areas. As per the ninth Annual Status of Education Report (ASER) released, 29% of enrolments in the 6 to14 age group are in private schools. This is a 10% increase in seven years from 18.7% in 2006 to 29% in 2013. Other States and Union Territories with a high percentage of elementary school children in private institutions include Puducherry (54.3%), Haryana (51.4%), Uttar Pradesh (49%), Punjab (46.7%), Jammu & Kashmir (45.5%) and Meghalaya (45.3%). As with private schooling, there is also a growing prevalence of private tuitions among elementary school students. The figure stands at 24.1%.
This development of schools and professional colleges in rural India have led to development of professional workforce in rural areas and the companies were able to recruit these people for work in their own home towns. This educational development has also improved the environment for entrepreneurship which have led to development of the industrial areas in smaller towns and development of dairy business and agri allied business.
Many students who have studied well have started moving outside the country to foreign lands for a better livelihood leading to more exposure to technology and developed products.
Rising Mass Media:
There was AIR and Doordarshan, then came the cable channels in the 90’s which started the revolution of mass media penetration. The television actually changed the pattern of thinking of rural population in a big way. TV led to the adaptation of new technologies across the country. New ideas started flowing. According to the viewership monitoring agency, TV penetration rose from 99 million to 109 million in rural India and from 20 million to 21 million in the mega cities like Delhi, Mumbai, Kolkata and Bengaluru during this period. The survey also shows a 6.9% increase in male TV viewers (from 401 million to 429 million) versus a 7.5% jump in female TV viewers (from 378 million to 407 million).
The rise of vernacular press also came up as a revolution in print. The vernacular papers started a lot of local editions covering local news making people of rural India interested in them. The rise in local papers and papers covering specific topics like agriculture, machinery, dairy etc. also made good penetration into the market. These papers also helped companies to reach the real customers. The share of daily newspaper readers in rural areas across the country was approximately 31% in 2017, a significant rise from around 22% in the year 2014. According to the New Delhi-based Indian Newspaper Society, India has 62,000 newspapers, with a staggering 90% of them in local languages. Indian news publishers are doing relatively well, precisely “because they’ve spread their wings to smaller towns,” says Divya Radhakrishnan, president of TME, the media division of Mumbai based advertising agency Rediffusion Y&R. But now the change of the medium from paper to internet have actually hit hard, the news through newspaper’s internet sites with latest live coverages have changed the whole scenario. The use of local languages on the internet have actually worked very well for online media. Still, the newspaper penetration is increasing.
Mobile Telephony and Internet Explosion:
According to TRAI (Telecom Regulatory Authority of India) data, tele-density in rural India is growing at a much faster rate than in urban India. Mobiles, especially after the introduction of 4G connectivity, and smart phones have become popular among people above the age of 40 as well. A lot of people above the age of 60 are also using WhatsApp and Facebook. This change in the mind-set of people with user friendly smartphones have actually moved the advantage of marketing towards rural India.
Online sales have increased many folds in rural India. Flipkart said that it recorded almost 100% increase in sales to customers in Tier-III cities. During sales season, more than 40% of sellers were from Tier-II cities and beyond. Kalyan Krishnamurthy, Flipkart’s chief executive officer said in a statement, “Bharat has moved closer to India in more ways than one.” While Amazon India’s chief says, “This has been our biggest celebration ever, a digital Bharat festival.”
The impact of local language usage on the internet has changed the complete dynamics of rural marketing. According to a report by KPMG and Google published in 2017, “Indian Languages - Defining India’s Internet”, there were 234 million vernacular internet users and 175 million English users in 2016. By 2021, users of Indian vernaculars are expected to reach 536 million, while English users will increase to only 199 million. 90% of new internet users between 2016 and 2021 will use local languages, said the report.
The change in technology definitely gives rural marketers many things to ponder upon.
Role of Social Media:
Facebook, WhatsApp, Instagram and other media have also started their operations in local languages. Rural traffic, on these apps and sites, has increased many folds. Rural internet users have reached 120 million logging in through inexpensive devices. Using low-tariff data plans, they are sharing images and downloading songs and videos like never before. The numbers are going to surge. By 2020, rural consumers will constitute about 50% of India’s internet users to reach 315 million by logging in through inexpensive devices, according to a report by the Boston Consulting Group (BCG), the US based management and business consultancy.
The surge in aspirations, incomes and resources in multiple ways are clear indication of the rise of rural India. Marketers need to understand and focus on this part of India in a different way. The colossal rural market of India is an attractive preposition but need quite carefulness while planning and implementing the campaigns. In the next chapters, we will discuss about it in detail.
Blog taken from Book " Rural Market Unleashed " available on Amazon.in