RM NOV2011 LPD 2

3

4 Education in India (2001) Education LevelRuralUrban Below Primary Primary but below Middle Middle but below Matric Matric but below Graduate Graduate and above Distribution of Population by age groups (2001) Age GroupsRuralUrban 0 – – – – – Source : 2001 Census Lower due to lack of facilities Lower due to migration factor

RM NOV2011 LPD 5 Family Structure Type of HouseholdRuralUrban Joint19.5%15.2% Nuclear without elders60.2%65.5% Nuclear with elders17.1%15.4% Others3.2%3.9% Total (million)13854 Household Size Size of HouseholdRuralUrban 1 – 2 members11.1%10.7% 3 – 4 members30.4%38.8% 5 – 6 members34.0%32.8% 7 members and above24.5%17.7% Average Family Size Joint Family System Breakdown

"pucca" doubled from 22% to 41% " kuccha" houses halved (41% to 23%)

Demographic Environment Share of rural population down from 80.1% in 1971 census to 72.2% in 2001 census. The number at million indicates an increase of over 15% Youth (20 to 34) 23.1% of rural population Rural literacy up from 36% in 1981 to 59% in 2001 census Rural households up by 26 million in last decade Family size has gone down marginally due to migration Joint families now breaking apart with over 77% going nuclear in rural Concept of individualised joint families staying in the same house but having separate kitchens RM NOV2011 LPD 7

Population Number of Villages Less than 20092, , ,000144,817 1,001-2,000129,662 2,001-5,00080,313 More than 5,00018,758 Total number of villages 593,145 RM NOV2011 LPD 8 Source : MART Do not include uninhabited. Total villages including these are 638,365 Hardly any shops in these villages account for 50% of rural population & 60% rural wealth

Town ClassPopulation Category Number of Towns Literacy (%) LPG penetration (% of HHs) Working population (% of pop) Class I 1 lakh & above Class II 50,000 – 99, Class III 20,000 – 49,999 1, Class IV 10,000 – 19,999 1, Class V 5,000 – 9,999 1, Class VI Less than 5, All India5, RM NOV2011 LPD 9 Source: Census 2001 *10 lakh+ : 27, 5-10 lakh: 42, 1-5 lakh: % of durables purchased by rural people from these towns

RM NOV2011 LPD 10

Annual Income Above Rs 215, Rs 45, , Rs 22, , Rs 16, , Rs 16,000 & Below RM NOV2011 LPD 11 All figures in % Projections Based on 7.2% GDP Growth The rich and the very rich have doubled in the last ten years The aspirers and the destitute have fallen by 50% Increasing incomes are also changing expenditure patterns

RM NOV2011 LPD 12

Per Capita Consumption Expenditure (Rs. Per month) YEARRURALURBAN Source: NSSO Consumption Expenditure – Rural Percentage YEARFOOD NON- FOOD Source: NSSO RM NOV2011 LPD 13 Per capita consumption expenditure has grown 4 times in the last two decades Expenditure on non-food items is increasing 42 million rural households avail banking services in rural against 27 million in urban

RM NOV2011 LPD 14

 Over 40% of rural population is in cultivation followed by 35% wage earners  11% of the rural population are salary earners and nearly 5% petty shopkeepers  3.4% are artisans  The cultivator’s disposable income is highly seasonal being available at the time of harvesting RM NOV2011 LPD 15

Infrastructure is improving rapidly  In 50 years only, 40% villages have been connected by road, in next 10 years another 30% would be connected.  More than 90% villages are electrified, though only 44% rural homes have electric connections.

 Rural telephone density has gone up by 300% in the last 10 years; every pop is connected by STD.

 In villages inward migration is insignificant while outward migration to urban and foreign is reasonably high  The settlement pattern is in clusters largely around caste lines  Land is the primary source of livelihood  Activities limited to smaller geographic areas resulting in higher adherence to customs and traditions  Variations between regions and sub-regions RM NOV2011 LPD 18

 Villages are self-sufficient and autonomous  Each village has a council of elders (panchayat)  Panchayats have the constitutional authority for exercising self-governance  The panchayat structure has undergone change with elections and reservation for underprivileged families  Shift from subsistence farming to commercial and mixed farming has made the village dependent on external factors RM NOV2011 LPD 19

 The rural society has a strong caste system:  Brahmins  Kshatriyas (Warriors)  Vaishyas (Business Class and traders)  Shudras (involved in odd jobs) – Untouchables  The settlements of the lower castes are normally on the outskirts of the village  Marketers have to be sensitive to the caste system especially in the area of communication RM NOV2011 LPD 20

 The panchayats were dominated by upper castes  The panchayati raj system has introduced an integrated and inclusive approach to governance in the rural sector  Villages with 5000 population or a cluster of villages with a combined population of 5000 form a panchayat  Gram Sabhas are to be organised once a quarter to bring in transperancy, accountability and achievement  The sarpanch represents the village at the tehsil/taluka/ block level RM NOV2011 LPD 21

 Triggered by three major revolutions:  Green Revolution (1967 to 1978) to bring about food self- sufficiency. Resulted in adoption of high yield seeds, fertilisers, pesticides, and farm mechanisations  White Revolution – Milk production through producer cooperatives and moving processed milk to urban-demand centres. Milk production has gone up from 17 million tonnes in to over 100 million tonnes in  The NGO movement has created grassroot level assimilation of technological extensions in rural areas  NGOs have also been instrumental in providing health, homes, hygiene, child care, education and other social development programmes RM NOV2011 LPD 22

23

Mrs. Indira Gandhi decided to take a major step on present Agriculture condition.  Thus "Green Revolution" was applied to the period from 1967 to 1978 basically in parts of Punjab and Haryana.  At this stage the Green Revolution was concern only with Wheat & Rice.  In 1965 the present government of

 The introduction of high-yielding varieties of seeds after 1965 and the increased use of fertilizers and irrigation.  Provided the increase in production needed to make India self-sufficient in food grains, thus improving agriculture in India.  It introduced the new techniques and machinary to farmers

 Also known as “operation flood”.  It resulted in making India the largest producer of milk and milk products, and hence is also called the White Revolution of India.  Operation Flood was a rural development programme started by India's National Dairy Development Board (NDDB) in  Kurien Saga the father of milk revolution India. It helped transform India into the largest milk producer of the world.

 Blue revolution led India to become the second largest producer of inland fish in the world.

RM NOV2011 LPD 29

RM NOV2011 LPD 30

Particulars Rural Market Crores FMCG products65,000 Consumer Durables5,000 Agri-inputs incl. tractors 45,000 2/4 wheelers8,000 TOTAL1,23,000 Source Francis Kanoi 2002  In the FMCG market the size of the pie is larger than the urban pie. Problems of logistics, supply and storage  Rural markets accounted for 54% of the durables sold in the country  The decadal growth rate for consumer durables is 100% in rural against 40% in urban RM NOV2011 LPD 31

 The big question – transactional or developmental approach to the rural markets  Agri-input companies follow an extension services approach to increase productivity  HPCL is promoting concept of community kitchens to popularise cooking gas  HUL’s Project Shakti improves the income of rural women  The rural marketing process needs to be evolutionary and not revolutionary RM NOV2011 LPD 32

 NGOs have started partnering with corporates  Corporates are facing saturation in the urban segment and do not understand the rural environment  The potential for a marriage between the two to fulfill each other’s needs exists RM NOV2011 LPD 33

- McKinsey Global Institute, May 2007

 Phase I (Before 60s)  Traditional farming methods  Focus on marketing of rural products in urban markets and agricultural inputs in rural  Phase II (1960s to Early 90s)  The Green and the White Revolution  Demand for agricultural inputs  Domain of marketing of agricultural inputs added  Phase III(Mid 90s to present)  Higher development in rural sector  Marketers realised the potential of the vast rural market RM NOV2011 LPD 35

DurablesUrbanRuralTotal (% of Rural HH) CTV Refrigerator FMCGsUrbanRural Total (% of Rural HH) Shampoo Toothpaste Low penetration rates in rural areas, so there are many marketing opportunities