RMAI: No economic slowdown on rural markets in India
Televisionpoint.com Correspondent | Mumbai
The Rural Marketing Association of India (RMAI), in association with MART, had conducted a study to understand the impact of "Economic Slowdown on Rural Markets in India".
Pradeep Kashyap, chief executive officer, MART and vice-president, RMAI, who presented the findings of the research, says, "There has been no impact of the economic slowdown on the rural economy. Infact, rural markets offer great opportunities to marketers trying to find a way out of the current economic crisis."
The aim of the study was to assess the impact of the economic slowdown on the macroeconomic scenario in rural India, rural income and economic opportunities, rural household sharing and on major sectors such as agriculture, telecom and FMCG.
The national study, used both secondary data and a dipstick poll approach, was conducted in all the four regions of the country. One state from each region was chosen and then, one district was selected from each chosen state. From each district, two villages and a small town were selected for the study, which was conducted between July and December, 2008.
The study showed that in villages and towns, self-employment is preferred over salaried jobs, with 53 per cent of the rural population being self-employed, as compared to 36 per cent of the urban population.
In addition, among the salaried individuals in the rural population, 11 per cent hold government jobs, such as clerks and teachers, and hence, have a minimal risk of losing their jobs, while 37 per cent work in private firms.
About 66 per cent of the rural population makes a living out of agriculture and the economic meltdown has no negative impact on this sector. Eight percent of the rural population is involved in trade and manufacturing. Since the economic slowdown has a negative impact on the import and export sector, both trade and manufacturing has seen a marginal drop in numbers.
Construction, which accounts for 7 per cent of rural employment, saw a rise, because wages and employment have increased in the sector.
The study revealed that more than 60 per cent of India's income comes from the rural segment and small towns. In rural areas, 46 per cent of a household's income is spent on food, while 10 per cent is spent on ceremonies and leisure travel. Spending on health accounts for 9 per cent of the total household earnings; while 8 per cent of the income is spent on transportation.
Spending on weddings have not shown any reduction nor have spends on travel for pilgrimages. Weddings and celebrations account for 58 per cent of non-routine expenditure. Wedding celebrations are seen as status symbols in rural India and despite the recession, the study states that there is a marked increase in durables purchases.
Villages and small towns seem to be getting ahead of urban cities where expenditure on consumer durables is concerned. A growth of 15 to 20 per cent is expected in this sector during 2008- 2009, which will largely come from rural markets.
The telecom sector has witnessed a growth spurt from the villages and small towns. The total telecom subscriber base for India grew from 70.83 million in the first quarter of 2008 to 90.98 million in the second quarter. Rural India contributed to a 71 per cent rise in this sector, while the remaining 29 per cent growth came from urban India. This segment is currently growing by 8-10 per cent every month.
Rural India has a different outlook towards financial services and savings, as compared to their urban counterparts. Most rural people prefer to invest their money in low-risk options, such as post office savings and fixed deposits. Hence, they have no wealth erosion, because they do not invest in high-risk, volatile options such as stocks.
The study also shows that there is an increased demand for consumption loans in rural India. There are 72 million Kisan Credit Cards (KCC) users in rural India, which is almost equal to the number of credit cards users in urban India. The moneylender's dominance continues in rural India, because loans can be taken for ceremonies and emergencies.
In 2008, FMCG growth from urban markets was 22 per cent, while a significant 57 per cent came from rural markets. Semi-urban markets contributed the remaining 21 per cent growth. The research found that the consumer is upgrading from loose to packaged products even in the rural markets.
Earlier, giving his introductory remarks, R. V. Rajan, president, RMAI, said that the study was conducted by the Association to provide an industry view on the subject of the impact of economic slowdown on the rural markets.
This is the second study conducted by the Association in the last 12 months, the first one being a Report on a National Study on Rural Retail Stores and Rural Retail Habits released in August 2008.
The Rural Marketing Association of India (RMAI), in association with MART, had conducted a study to understand the impact of "Economic Slowdown on Rural Markets in India".
Pradeep Kashyap, chief executive officer, MART and vice-president, RMAI, who presented the findings of the research, says, "There has been no impact of the economic slowdown on the rural economy. Infact, rural markets offer great opportunities to marketers trying to find a way out of the current economic crisis."
The aim of the study was to assess the impact of the economic slowdown on the macroeconomic scenario in rural India, rural income and economic opportunities, rural household sharing and on major sectors such as agriculture, telecom and FMCG.
The national study, used both secondary data and a dipstick poll approach, was conducted in all the four regions of the country. One state from each region was chosen and then, one district was selected from each chosen state. From each district, two villages and a small town were selected for the study, which was conducted between July and December, 2008.
The study showed that in villages and towns, self-employment is preferred over salaried jobs, with 53 per cent of the rural population being self-employed, as compared to 36 per cent of the urban population.
In addition, among the salaried individuals in the rural population, 11 per cent hold government jobs, such as clerks and teachers, and hence, have a minimal risk of losing their jobs, while 37 per cent work in private firms.
About 66 per cent of the rural population makes a living out of agriculture and the economic meltdown has no negative impact on this sector. Eight percent of the rural population is involved in trade and manufacturing. Since the economic slowdown has a negative impact on the import and export sector, both trade and manufacturing has seen a marginal drop in numbers.
Construction, which accounts for 7 per cent of rural employment, saw a rise, because wages and employment have increased in the sector.
The study revealed that more than 60 per cent of India's income comes from the rural segment and small towns. In rural areas, 46 per cent of a household's income is spent on food, while 10 per cent is spent on ceremonies and leisure travel. Spending on health accounts for 9 per cent of the total household earnings; while 8 per cent of the income is spent on transportation.
Spending on weddings have not shown any reduction nor have spends on travel for pilgrimages. Weddings and celebrations account for 58 per cent of non-routine expenditure. Wedding celebrations are seen as status symbols in rural India and despite the recession, the study states that there is a marked increase in durables purchases.
Villages and small towns seem to be getting ahead of urban cities where expenditure on consumer durables is concerned. A growth of 15 to 20 per cent is expected in this sector during 2008- 2009, which will largely come from rural markets.
The telecom sector has witnessed a growth spurt from the villages and small towns. The total telecom subscriber base for India grew from 70.83 million in the first quarter of 2008 to 90.98 million in the second quarter. Rural India contributed to a 71 per cent rise in this sector, while the remaining 29 per cent growth came from urban India. This segment is currently growing by 8-10 per cent every month.
Rural India has a different outlook towards financial services and savings, as compared to their urban counterparts. Most rural people prefer to invest their money in low-risk options, such as post office savings and fixed deposits. Hence, they have no wealth erosion, because they do not invest in high-risk, volatile options such as stocks.
The study also shows that there is an increased demand for consumption loans in rural India. There are 72 million Kisan Credit Cards (KCC) users in rural India, which is almost equal to the number of credit cards users in urban India. The moneylender's dominance continues in rural India, because loans can be taken for ceremonies and emergencies.
In 2008, FMCG growth from urban markets was 22 per cent, while a significant 57 per cent came from rural markets. Semi-urban markets contributed the remaining 21 per cent growth. The research found that the consumer is upgrading from loose to packaged products even in the rural markets.
Earlier, giving his introductory remarks, R. V. Rajan, president, RMAI, said that the study was conducted by the Association to provide an industry view on the subject of the impact of economic slowdown on the rural markets.
This is the second study conducted by the Association in the last 12 months, the first one being a Report on a National Study on Rural Retail Stores and Rural Retail Habits released in August 2008.
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