Rural India: An Emerging Market

India's rural economy is about to explode, mushrooming to three times the size of the current urban market by 2017. Pradeep Kashyap, the father of rural marketing and CEO of MART looks at how advertisers can best tap this upsurge of demand.

A population migration on a grand scale is about to happen in India. Around 300 million people are moving, not one from one geographical area to another - but out of poverty.

These are the people living in rural communities, in households with a current annual income of Rs 90,000, who today make up 64 per cent of India's rural population.

By 2025, consultants McKinsey & Co predict this income level will only apply to 29 per cent of that rural mass and that India's middle class, with an income between Rs 90,000 and Rs 500,000 will more than double, to 500 million people.

All of this means that, by 2017, per capita consumption of consumer goods in rural areas is expected to equal that currently witnessed in conurbations. Already, India's GDP has been growing at an impressive 7 to 8 per cent annually for the past decade and its 1.1 billion people represent US $ One trillion economy. Currently the twelfth biggest economy in the world, it is set to shoot up to fifth position by 2025.

The major stimulus for such growth is the strategy of the Indian government. In 2005, it launched the biggest rural infrastructure programme in the world - the Bharat Nirman scheme - which, over a four year period, aims to provide electricity to the remaining 1,25,000 villages, drinking water and telephone connections to the remaining 55,000 villages, roads to 60,000 villages and additional irrigation capacity for 10 million hectares of land.

In addition, its employment guarantee scheme will ensure that one member from every rural household will be given 100 days of paid employment.

And, following the long overdue agriculture reforms to allow free movement of grain from one state to another, private grain markets (mandis) and contract farming have been taken up with earnestness by different states.

A study by NCAER found that the ownership of consumer durables per family in rural India is about a third of that in urban centres. The main reason is not a lack of purchasing power among rural households, but a lack of electricity.

About Pradeep Kashyap
He is the Founder and CEO of MART, India’s leading rural marketing consultancy organisation.

He co-created Project Shakti with Unilever and has pioneered the low cost, last mile rural distribution model using village volunteers on bicycles for Colgate, Godrej, Eveready, Heinz, Tata Tea and others.

Kashyap has also, along with his MART team, developed rural market entry strategies for MNCs and large corporates such as GSK (Horlicks), Airtel, Microsoft, Novartis, Intel and others.

Pradeep Kashyap is the recipient of the Jamnalal Bajaj Endowment Award and has authored the 'Rural Marketing Book'.