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The Economic Times recently held its 5th edition of Rural Strategy Summit in New Delhi. The two day Summit witnessed the large number of marketeers, researchers, policy markers and advertising professionals, focused on India’s rural markets.
In his inaugural speech, Dr. Nagesh Singh, Additional Secretary, Union Ministry of Rural Development highlighted the government’s push for social sector schemes, leading to increasing rural incomes, rural infrastructure development and overall growing rural economy.
Growing Rural Economy
“PMGSY (Pradhan Mantri Gram Sadak Yojana) to connect 178,000 habitations by 2022. All habitations with 500 population in plain areas and 250 population in hilly and in tribal areas will be connected with all weather roads under the scheme” Singh said.
Adding that, the Additional Sectary in the Government of India said, “For rural housing, Rs 1.2 lakh is being given in the plain areas while Rs 1.3 lakh in the difficult areas under Pradhan Mantri Awas Yojana -Gramin (PMAY-G). Besides, with PMAY-G allocations, Rs 30,000 under Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) to construct toilets along with the houses is also being given. Along with Ujala scheme, the Government is giving complete package to the rural households.”
“One crore houses will be made by 2019 while by 2022, the number will reach three crore. The construction under PMAY-G is being monitored through technology to eliminate corruption. We don’t say that we have eliminated corruption, but to an extent, corruption have been minimised by the infusion of technology,” the senior bureaucrat added.
Urging the private sector, Singh said, “We are creating infrastructure in rural India, but we also need expertise which the private sector can provide us.”
Highlighting the crucial role of animal husbandry in the rural economy, the Managing Director of India’s largest farmers’ cooperative, Gujarat Co-operative Milk Marketing Federation (GCMMF), popularly known as AMUL, RS Sodhi said during addressing the Summit, “Despite housing 68 percent of India’s population, rural India contributes only 46 percent to national income. Cultivation is contributing 32 percent to rural income while animal husbandry’s contribution is 12 percent and wages and services contribute 56 percent to rural income generation. Animal husbandry is generating Rs 500,000 crore through dairy only. Due to its crucial role, the sector needs to be given special focus.”
Since its inception in 1982, National Bank for Agriculture and Rural Development (NABARD) has played a crucial role in creating infrastructure in rural India. Highlighting its renewed impetus on water and irrigation, its Deputy Managing Director, HR Dave said, “We work with the states for creating rural infrastructure. Water has been recognised as a key driver of growth in the last year’s budget under which a long time irrigation fund has been created in NABARD. For water use efficiency, a micro-irrigation fund has been created in which a lot of private companies are involved.”
Food processing sector’s importance in providing remunerative prices to the farmers for their produce has led NABARD to give special impetus on funding food processing, agricultural warehousing and cold cold infrastructure. “Food processing and cold chain sectors are another key drivers of the rural economy. Thus, 20 percent of India’s warehouses are funded by NABARD. APMCs (Agricultural Produce Market Committees) are being integrated with technology and modernised with funds from NABARD,” Dave added.
Financing is a crucial component for economic development. Shedding light on this important area of rural economy, Manish Jaiswal, MD & CEO, Magma Housing Finance & SME Business said, “As a Non-Banking Financial Company (NBFC), we are operating across India with 300 branches. Out of 300 branches, 80 percent are located in the semi-urban and rural areas. Our tractor finance is doing better than housing and MSE financing. Direct benefit transfer (DBT) payments are being transferred to the beneficiaries by 4 crore electronic accounts.’
Sanitising Rural India
Open defecation has been major a challenge in India. Thus, it has led the Government of India to run dedicated rural sanitation programmes. Earlier Nirmal Bharat Abhiyan (Total Sanitation Programme) and now its upgraded form Swachh Bharat Abhiyan have been providing funds for making toilets in rural India and making people aware of cleanliness. Speaking on the status of sanitation in rural India, Deepak Kumar Mitra, SATO (Safe Toilet) Business Head, South Asia, LIXIL Water Technology said, “More than 30 percent population in India do not have toilets and goes for open defecation.” On the impact of digital communication in the hinterland, he said, “WhatsApp and Facebook have made huge impact in rural India, thus we have found them very effective media for reaching rural consumers. With education and penetration of digital media, rural consumers are being turning very demanding whether it is for goods or services, it is going to be very challenging for the marketers to meet their standards.
The increasing penetration of DTH, mobile phones and mobile internet in rural India, is breaking all the traditional consumer connect models. It has brought a paradigm shift in rural marketing. Speaking on this silent revolution taking place in the hinterland, Pradeep Lokhande, Founder & CEO, Rural Relations said, “Every month, 4.5 lakh DTHs are being installed in rural India. By 2018, every Indian will have an Android phone. That is the communication push taking place in rural India. Now, it is turn of the marketeers to re-plan their strategies accordingly. Due to this, irrespective of the their caste and religion, the rural youth have similar aspiration like their counterparts in the urban areas.
How this mobile communication in rural India has changed the marketing strategies of Mondelez India Foods, Hemant Rupani, Director - Sales of the company said, “The biggest nightmare for companies like us was to know what consumers want. We were highly dependent on the second hand research information. However, rural India is, today, moving at a pace beyond of our imagination. With the deep penetration of mobile and mobile internet in the rural hinterlands what products or services dealers sell in what quantity or in what numbers we get the information within seconds. Through mobiles, we get instant feedback from the consumers.”
Beside, reaching rural consumers through mobile phones, how this digital mode of communication has helped grown businesses, Ashok Bhasin, Head of Sales, Marketing & Customer Care, Hero MotoCorp said, “Digital media is immensely educating and creating awareness among rural consumers. Through, digital identification or e-KYC, it has become easier for banks and NBFCs (Non-Banking Financial Institutions) to identify and finance the consumers. It has increased opportunities for sales of two wheelers in the hinterlands.”
Impact of GST
There has been a long demand for a unified taxation, Goods and Service Tax from the logistic and supply chain industry. After this big reform, how GST has proved a game changer for operating businesses, Raghvendra Prasanna, Director - Growth & New Initiatives, StoreKing said, “Earlier duo to different types of VAT in different states, we were forced to operate from a single warehousing located at Bengaluru. Now, under GST, we are planning to open warehouses in every districts of 10 states where we are operating in. For us, GST has been a shot in the arm. But, it also has created a confusion among the retailers which needs to be eradicated.”
“In pre-GST era, there used be a back-door entry of goods from lower VAT states to higher VAT states. It was not good for the economy and has been stopped due to a unified taxation, Prasanna added.