RM

Rural Marketing Environment & Rural Economy

Structure of Rural Markets
Demographic Environment
1971 1981 1991 2001
Total population (million) 548.2 683.3 848.3 1026.9

Rural population (million) Rural Proportion to total population (%) 80.1

524.0 76.7

628.8 74.3

741.6 72.2

Source: Census of India 2001

Education and the Level of Demand

Rural Literacy % of literates

1981 36

1991 45

2001 59

Source: Census of India 2001

Household Pattern Family Structure

Particulars Rural Households (Million) Family Size (Number) 112 5.55

1991 Urban 40 5.32 Total 152 Rural 138 5.36

2001 Urban 54 5.31 Total 192

Source: Census of India 2001

Rural Housing Pattern
House Type Pucca (%) 1981 22 1991 31 2001 41

Semi-Pucca (%)
Kuccha (%) Total Source: Census of India 2001

37
41 100

36
33 100

36
23 100

Occupational Pattern
Distribution of Households by Occupation of the Head, 1999-2000 Head’s Occupation Distribution of households (%) Urban Housewife Cultivator 0.84 3.45 Rural 1.01 40.86 All 0.96 29.99

Wage earner
Salary earner Professional Artisan Petty Shopkeeper Businessman Other Total Source: NCAER 2002

20.93
40.72 3.59 6.90 16.05 3.68 3.85 100.00

35.28
11.28 0.73 3.41 4.97 0.46 1.98 100.00

31.12
19.84 1.56 4.42 8.19 1.40 2.52 100.00

Physical Environment
Rural and Urban Life: Distinguishing Features
Population Density (Urban + Rural) (Per Sq. Km.) 1971 Popu. Density (Total) Rural 177 1981 216 171 1991 267 214 2001 312 253

Distribution of Towns and Villages 1991 No. of Towns No. of inhabited Villages Total no. of Villages Source: Census of India 2001 3,697 580,779 634,321* 2001 5,161 593,154 638,588*

* The total number of Villages also includes non-inhabited Villages.

Settlements (Scattered and Clustered)
Town class Class-I Class-II Class-III Class-IV Class-V Class-VI Total Population No. of Towns 423 498 1,386 1,560 1,057 237 5,161 % of total Towns 8.2 9.6 26.9 30.2 20.5 4.6 100.0 % of Population 61.5 12.3 15.0 8.1 2.8 0.3 100.0 Decadal Growth (1991-2001) 24 15 16 7 8 -22

1 Lakh and above 50,000 – 99,999 20,000 – 49,999 10,000 – 19,999 05,000 – 09,999 Less than 5,000

* 10 Lakh + : 27; 5-10 Lakh: 42; 1-5 Lakh:354 Source: Census 2001

Economic Environment

80 -70 -60 -67.3

% Households

50 -42.7 40 -30-20-10-0-8.8 1989-90 _________ Low (<Rs.45K p.a) _________ High (>Rs.90k p.a) 2001-02 2009-10 23.9 17.8 20.6 39.5 42.5 36.9

________ Middle (Rs.45K-90K p.a)

Source: Market Information Survey of Households, NCAER

Changing Rural Consumers Expenditure Pattern
Per capita consumption expenditure (Rs. Per month) Rural Urban Composition of rural per capita consumption expenditure Food Non-Food

1983

112

166

1983

66

34

1991

281

458

1991

63

37

2001

486

855

2001

59

41

Source: NSSO

Source: NSSO

Technological Environment

Size of Rural Market
Estimated Annual Size : Rural Market FMCG Durables Agri-inputs (incl. tractors) 2/4 Wheelers Total Source: Francis Kanoi 2002 Rs. 65000 Crore Rs. 5000 Crore Rs. 45000 Crore Rs. 8000 Crore Rs. 1,23,000 Crore

The Rural Economy:

The Economic Scenario in Rural India
Human Development Index (HDI) Year Rural Urban Total

1981

0.26

0.44

0.30

The HDI is a composite of variables capturing attainments in three dimensions of human development, viz., economic, educational and health.

1991

0.34

0.51

0.38

2001

------

------

0.47

Source: Human Development Report, 2001

The Changing Face of Rural Development

Population below the poverty line (Rural) Period No. of Persons (Million) 252 244 % of Persons Poverty line (Rs.) 89.5 206

1983 1993-94

46 37

1999-2000

193

27

328

Source: Human Development Report, 2001

The Development Exercise: The Five-Year Plans
Sectoral allocations during the five-year plans (Rs. Billion) Head of Development Seventh Plan (1985-90) 1. 2. Agriculture Rural Development 105 89 Eighth Plan (1992-97) 225 344 Ninth Plan (1997-2002) 372 890 Tenth Plan (2002-07) 589 1,219

Source: Planning Commission 2002

Percentage share of the different sectors in GDP (at 1993-94 prices) Year 1950-51 1980-81 2001-02 Primary (Agri and Allied) 57.2 39.7 23.9 Secondary (Manufacturing) 14.8 23.7 26.6 Tertiary (Services) 28.0 36.6 49.5 Total 100.0 100.0 100.0

Source: National Account Statistics, 1951-2001

Transition of the Rural Economy
1. Non-food grain crops, cash crops 2. Off-land allied activities like livestock and fisheries 3. Non-farm activities, including manufacturing and services.

1. Food grain crops 2. On-land activities 3. Farm activities

The Rural Economic Structure
Rural Economy

Farm Sector (Agri & Allied)

Non-Farm Sector (Formal & Informal Sector)

Agriculture

Rural Industries

Rural Services

Animal Husbandry (Dairy, Goat, Poultry)

Agro Processing (Sugarcane, Oilseed etc)

Retailing & Trading

Horticulture

Manufacturing (Handloom, Handicrafts etc)

Community & Social Service

Forestry

Mining & Quarrying

Transport & Storage

Fishing

Construction

Communication

Income Disparity

Rural-Urban Income Comparison Sector Bottom (30%) Rural Average Consumption Expenditure (Rs./Annum) Population (Million) 3,270 Urban 4,580 Middle (40%) Rural 5,110 Urban 8,150 Top (30%) Rural 9,400 Urban 18,720 All Classes Rural 5,830 Urban 10,260

223

86

297

114

223

86

742

285

Source: NSS 55th Round (1999-2000), Census 2001

The Rural Infrastructure Road Connectivity
Road Connectivity at the Village level (%) Population less than 1,000 1991-92 1994-95 1996-97 36.52 37.45 49.18 Population between 1,000 and 1,500 72.32 76.54 74.58 Population more than

89.82 91.72 78.04

Source: National Human Development Report 2001

Telephone Services
Telecom Density (Phone per 100) 2000 Urban Rural All 8.2 0.7 2.9 2005 26.2 1.74 9.08 Increase 220% 148% 213%

Source : Telecom Regulatory Authority of India Report, 2005

Why Agriculture Growth has been slow & tardy?
1. 2. 3. 4. 5. 6. 7. Low priority to Agriculture Subsistence Orientation of Agriculture Failure of Land Reforms Low size of operational Landholdings Inadequate Food Supplies Sluggish Infrastructural Growth Disconnect between Research & Farmers 8. Insufficient Availability of Credit 9. Inadequate Inputs 10. Slowdown of Rural Industrialization

Policy Interventions Required
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Thrust on Land Reforms Strengthening the Panchayati Raj Institutions Financial Inclusion (Innovative Credit Delivery) Development of Rural Infrastructure Expansion of Kisan Credit Card Scheme Protection of Farmers from natural calamities Extensive use of ICT Higher Investment in Agriculture & Rural Development. Focus on High Value Crops & Non-farm Incomes. Bridging the Gap Between Agri-Research & Farming.