Rural India constitutes `the heart of India', generating more than half the national income. According to McKinsey Global Institute's Report, "The `Bird of Gold': The Rise of India's Consumer Market"(May 2007), 63% of India's population will still live in rural areas in 2025, but rural consumption will nonetheless accelerate from a compounded annual rate of 3.9% over the past two decades to 5.1% during the next two. Aggregate rural consumption which had increased from Rs. 4,498 bn in 1985 to Rs. 9,688 bn by 2005 is projected to gallop to a figure of Rs. 26,383 bn by 2025!
The product offerings for rural markets cannot be imitations or extensions of those meant for the urban market. It is high time that marketers understood this basic fact; that is, products designed as per the needs of urban consumers cannot be dumped in the rural market, without understanding the needs and value perceptions of rural consumers.
By the end of 2025, rural consumption is expected to be nearly three times of what it is today, creating a gigantic potential market worth over Rs. 26 tn ($577 bn). By way of comparison, in 20 years, the rural Indian market will be larger than the total consumer market in countries such as South Korea or Canada today, and almost four times the size of today's urban Indian market. Rural India will also see consumption growth on a per-household basis. At present, consumption rates in rural areas lag behind to those in urban areas by around 10 to 15 years. The McKinsey Report has forecast that per-household annual spending in rural India will reach the current levels in urban India (Rs.116,000 per household in 2005) by 2017. The per-household annual consumption in rural India is expected to reach Rs.158,000 by 2025. |
