Rural consumers contribute in service and industrial sector more than agriculture, increase in the GDP
By, Rajender Chhabra
If you weigh the development on the parameter of infrastructure, then we can say that the rural India has developed tremendously in the recent times. Experts say that the digitalization has triggered a plethora of opportunities in all sectors. If you look at the survey done on 2016 to know assess the growth of vehicles n the rural sector, then a shocking reality reveals. As against the 39.2 percent increase in the population, the number of vehicles showed an increase of 685 percent. There has been a transformation in the lifestyle of the rural population due to the availability of resources and access to the information.
As there is a drop in the dependency on agriculture and higher contribution by the service sector and industries, GDP of many states recorded an increase. If you look at the state of Rajasthan only, then there is a phenomenal increase in the GDP was recorded by the state. Figures say that the Per Capita Income has reached to the level of 66779 rupees in 2015-16 as compared to 8300 rupees in 1995-96.
The gush is overwhelming
Experts say that the surge in the rural market is visible after 2011 when there was a change in the calculation of the GDP. After 2011, the revenues of the state are considered based on the market cost instead of the production cost.
In a state like Rajasthan where financial independence is almost non-existent, the number of vehicles in the rural areas has increased exponentially (to be precise 1, 33, 50,646 in 2016 as against 100,000 in 1996). Only two-wheelers are more than a Billion today as against one million in 1996. The number of cars has increased to 876000 from 77000 in 1996. At the same time, there is a drop in the population growth in the rural areas because of several reasons. In 1995, the population of Rajasthan was 4.92 Crores. Today it is 6.85 Crores.
The rural markets performed extraordinarily well in the past two decades, but there are some strange aspects also. If we look at the GDP, then the contribution of the agriculture sector has dropped to 25 percent as against 40 percent in 1990. Finance experts feel that the change is because of the ups and downs in the agriculture. Particularly, the youth in the rural market considered the industrial sector more lucrative. It is the reason; industries contribute 28 percent in the GDP today whereas the figure was 18 percent in 1980.
What do the experts feel?
The change in the rural markets it quite positive and welcomed by the financial experts. They feel that people look at the new possibilities of economic growth instead of being dependent on the agriculture. You can see the effect on paper. Today, the service sector contributes 47 percent to the GDP. In 1990, the figure was 30 percent.
Abhishek Gupta, Brand Head (North) Honda Two Wheeler says that the financial dependence has turned into financial independence today. People aren’t confined to the agriculture today. They are finding their own paths. With the development of the industrial sector and availability of alternate jobs (such as call centers) in Rajasthan, the state is marching ahead effectively. The Generation Next has got financial independence which triggered growth in the industrial sector.
Rajiv Singh, State Sales Head Honda Two Wheeler feels that there is another important reason behind such a fantastic growth. He says that the rural consumers are more aware and alert today. They know about the brands and interest rates. Undoubtedly, it results in the delay in the decision-making. However, it is good in the long run. Nowadays, you need to market the brand to reap the benefits. There are many examples where products that were superior in quality fell to cope up in the market whereas inferior products got success due to proper marketing.
Ankit Jain, Director Airtel Infratech Ltd thinks that the industrial sector has increased contribution in the GDP, but it is a tough job to keep the momentum. Companies will have to be focused in the rural markets. The mindset of the rural population has changed with time, and they are quite aware of the other sectors such as service sector and industries. It brought a positive change in the overall market.
Brand Manager of JK Cement Rajiv Soni gives the credit of this positive change to the massive digitalization. He draws the attention towards the Digital India Campaign of the government. He feels that when 900 Million mobile phones and 300 Million Internet connections can be achieved without an active participation of the Government of India, it is easy to imagine the massive benefit of Digital India since it is driven by the government itself. The long-term benefits will be unbelievable. He says that it is a high time that we look at the rural market from a different perspective. Consumers are more educated and informed today, and their preference to quality has made the industrial sector more concerned about product standardization.
A few important facts
There has been a remarkable change in the lifestyle of rural consumers. In spite of the recession, the rural areas showed significant progress. FMCG market records a consistent increase of 15 to 20 percent per annum in the last three years.
Maruti Suzuki India Limited sold 1,29,599 cars this year. The numbers are pretty high than the last year’s numbers 1,26,220. It is certainly due to the financial independence in the rural areas. As people have the liberty of taking financial decisions, they explore new ideas.
World Rating Agency Fitch feels that the number of commercial vehicles sold in India will show the growth of seven to nine percent in 2017. It is due to the positive approach of people in the rural areas. Of course, liberal policies and lowered prices of fuel will play a major role in it. Agency says in a report that the growth in the sale of commercial vehicles will be seven to nine percent in the light of 13 percent growth annually.