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May 17, 2010

Is the Rural Market in India really growing?

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By Smruti Ranjan Mahamansingh

The common answer to this question will be 'No' as we all believe that the investors will not be fooling themselves by investing in the rural market. But current figures obtained from a survey conducted by an Indian news channel has proved these perceptions wrong.

According to this survey, about 74% of Indian population sits in the rural area which was earlier far away from all the facilities provided from the government let alone from private companies and organizations. Rural areas in India are no doubt the pulse of the nation in terms of agriculture production, but most neglected parts of the country even after sixty years of getting independence. Despite this hard reality many private companies from various sectors reach the rural market through ads campaigns and generating good profit.

For FMCG companies the rural belt of the country not no longer unknown place rather a place where the FMCG goods are treated as brand and icon for their fashion. Now many Indian and multinational companies are in rush to catch the rural Indian market, where more buyers are there, through their network expansion in in rural arena. Its noteworthy, that the government also now giving stress on rural market expansions.

According to the numbers the revenue generated from rural market in the year 2004-2005 was 220 crore rupees and the revenue expected in this year would be around 425 crores rupees . That indicates a sharpe rise in revenue generation from the rural India. In the recent budget, Indian Government has approved a 3,50,000 crores rupees allocation for the rural market development, which will have positive impact in the years to come on the business of everyone.

If you look upon the growth percentage of rural market, then the figures are quite astonishing. The Telecom sector has shown the highest growth of 14% in the rural areas and the reason behind this is the mass use of moblie phones by rural people.

In other sectors, the FMCG has shown 10% and real estate has shown 5% growth. Now the rural consumers have got many choices before buying a product as the market is growing with new products and ideas.

Now the rural people also know the value of money and ups & downs in market. Due to the development of transportation, literacy and telecom, Investors don't step back to invest in this market. As the rural areas are full of resources, so that is also an advantage for these companies to grow with very less investment.

The phrase 'India, the Agriculture centered country' is now fading away due to the rapid growth of market in different sectors. I hope one day will come when the rural market will be the centroid of the Indian Market.


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