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Go Rural - The New Mantra

Go Rural - The New Mantra

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Published by Abhijit Jadhav

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Published by: Abhijit Jadhav on Sep 23, 2009
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07/12/2010

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GO RURAL: THE NEW MANTRA
As per the latest estimates of the Central Statistical Organisation (CSO), thegrowth rate of the Indian economy during 2008-09 is expected to be around 7.1per cent, as against the earlier expectations of 8 per cent. Not only this, it has
now been estimated that India’s growth rate during the financial year ending
March 2010 would moderate further to 5.5 per cent, which would be lowestduring the past several years.As direct fallout of the ongoing global recession, rapidly increasing unemploymentrate has been a major cause of concern. In USA, the unemployment rate has goneup to 8.7 per cent and the same in Japan has also been the highest in the recenttimes. China has reported 20 million job losses. In India this figure is officiallyestimated to be about 5 lakh during the quarter ending December 2008. Loss of  jobs in the unorganized sector due to reduced economic activity is going to bemuch higher and beyond estimation.International Labour Organisation (ILO) maintains that the employment rate inIndia and other South Asian nations may by lower than the world average, due totheir lesser exposure to the American economy and the financial markets.Further, relatively larger rural base in India is a positive and strong factor incombating the ill effects of global recession. It is perhaps for the first time afterthe onset of the process of reforms that the Indian government has realized theimportance of the rural economy to tide over the difficult economic situation.
 
Rural Orientation
Indian economy is peculiar to the extent that it has a lot more rural orientationthan most economies of the world. Majority of the countries in the world aredependent on their industrial centres and rapidly growing cities for maintainingtheir growth rate. In India, though industries and the services sectors are centredaround the industrial and urban areas, yet over 60 per cent of the work force isdirectly or indirectly dependent on the primary sector. This sector contributesabout one fourth of the total GDP and offers tremendous potential for growth inthe near future. Being a low income segment, this also does not get influencedeasily by extraordinary economic situations.As per the views of the Rural Marketing Association of India, there has been noimpact of economic slowdown on the rural economy of India. A nation-wide studycarried out in the rural markets of the country found out that the rural markets inthe country actually offer an opportunity to the marketers to come out of currenteconomic crisis.Main reasons for such immunity are stated to be higher percentage of totalexpenditure on food items and the fact that majority of the population is involvedin self-employment occupations, having no fear of loss of jobs. The telecom sectorhas witnessed a rapid growth in the villages and small towns. The total telecomsubscriber base for India grew from 70.83 million in the first quarter of 2008 to90.98 million in the second quarter. Out of this growth 71 per cent rise in this
 
sector came from the rural India, while the urban areas accounted for theremaining 29 per cent growth.The study also brings out that more than 72 million Kisan Credit Cards are in usein the rural areas of the country, which number almost matches the number of Credit Cards under use in the urban areas. During 2008, larger part of growth of Fast Moving Consumer Goods (FMCG) came from rural and sub-urban markets.Majority of the people in the rural areas do not invest in stock markets and parktheir savings in low risk portfolios like post office/bank savings or fixed deposits.The government of India was quick to realize this and immediately after therecession began to show its impact began to direct its economic policies towardsthe rural sector. Fortunately for the country, at the critical juncture when thegreat recession knocked at the doors of Indian economy, several governmentsponsored programmes involving huge public expenditure in the rural areas werealready being implemented.The Interim Budget for the year 2009-10, presented by Mr Pranab Mukherjee onFebruary 16, 2009, also had its focus on the rural economy. Under the NREGSduring the year 2008-09, about 3.51 crore rural households were benefited,generating 138.76 crore mandays. For the year 2009-10, a massive allocation of Rs 30,100 crore has been made for the said scheme. In other words, this hugesum would be distributed as wages to the rural households during the said year.

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