The Rural – Urban Divide

Basic Statistics

Specification Census 2001 - Urban Census 2001 - Rural

Total Population 1028.7 m

Population Density 27.80% 72.20%

933 : 1000
Sex Ratio (Women : Men)
900 : 1000 946 : 1000
64.80%
Literacy Rate
Urban : 79.9% Rural : 58.7%
62 Yrs
Life Expectancy
Urban: 64.9 yrs Rural: 58 yrs

Close to 72% of India’s population resides in Rural Areas and therefore its very
difficult for marketers to be in India and not go Rural
Basic Statistics Contd..
• Rural India contributes to more than 54 per cent of India's GDP, has 64 per cent of its consumption
expenditure and accounts for 33 per cent of the national savings.
•BOP, by itself, is a very large market, and corporates are increasingly focusing on tapping these
consumers. BOP are focused on improving their lives, use education as a tool to improve life, and dream
big for their children
•Key Drivers of Growth in Rural India
• Changes in occupation pattern (reduced dependence on farming), is ensuring steady & regular income
• Better infrastructure, increased investment, a good monsoon, farm-loan waivers and improved income
levels are stimulating activity in rural India. Consumerism and propensity to spend is visible.
• Schemes like National Rural Employment Guarantee Act (NREGA), and Sampoorna Grameen Rozgar
Yojana (SGRY) etc have helped significantly
Snapshots of Rural Urban India
No. of Villages in India : 638,596
No. of Towns/Urban Agglomerations: 5545
Rural India – per Capita Income : Rs. 20 /day

Literacy Rate % Rural/Urban Age Distribution

100.00% 60 56.955.1
90.00% 86.30%
79.90% 50
80.00% 72.90%
70.70%
70.00% 40
58.70% Rural
60.00%
30 25.5 Urban
50.00% 46.10% Urban 19.4 Rural
40.00% 20 15.9
12.2
30.00% 7.8 7.1
10
20.00%
10.00% 0
0.00% 0-9yrs 10-14 yrs 15 to 59 yrs 60 yrs &
Total Male Female above

• 58.7% of rural India is literate , wheras 79.9% of • A very high population of India is young
Urban India is literate • Even though in percentage terms there is huge
• As expected the gap between rural – urban literacy similarity but in absolute terms a far larger number
rates is higher for women of people live in rural India constituting a huge
market across age groups
Source: Census of India
Consumption Patterns in Rural India-
Not Just an Agri-Economy Anymore
Contribution to GDP

• Even though agriculture is still 52%

contributor to GDP in Rural Markets, other
sectors are fast catching up
• Manufacturing and Restaurants emerge as
strong second contributors

Per 1000 households product penetration

• Car sales in Rural have tripled over the decade

• Motorcycle sales have more than doubled in
Rural
• Increase in consumer goods in Rural markets
• These are indicators of growing rural prosperity
Sector Wise Growth Rates in Rural Markets

•CONSUMER GOODS: In the FMCG sector, the rural share

is 34 per cent of national FMCG sales and growing at a
faster pace than urban India
•DURABLES: India's rural consumer durable market is
tipped to attain an annual growth of 40 per cent in the
next fiscal 2011-12, as against the current pace of 30 per
cent owing to the changes in lifestyle and higher
disposable income in the hands of the rural consumer.
•TELECOM: rural markets are expected to be the
propellers of the Indian telecom sector as well. Rural
users account for at least 50 per cent of new subscribers
for some of India's leading telecom providers.
•BANKING: In 2009, more than 31 million Kisan Credit
Cards were issued – much more than the 18+ million
credit and debit cards issued in India
•INSURANCE: Close to 50 per cent of LIC's policy holders
are from rural areas.
•HEALTHCARE: It is estimated that rural healthcare in 2015
would be Rs 240 billion (US$ 5.29 billion), which is 24 per
cent of the total market size
Size of Rural Markets – Management Insights

FMCG Rs.65000 crore

Agri-inputs Rs.45000 crore
Durables Rs.5000 crore
Automobiles (2 & 4 Wheelers) Rs.8000 crore
Clothes, footwear etc. Rs.35000 crore
Construction material Rs.15000 crore
Total Rs.173000 crore
Source: CII Report (2008)
• Rural Markets are still at a stage where they need basic lifestyle products
• This is a great opportunity for FMCG companies which can increase sales by penetration in
these areas
• As entertainment becomes important, Rural markets are attractive for consumer durable
companies that offer basic entertainment products
• All rural marketing campaigns should aim to balance affordability and availability
Thank You