Rural areas of India are home to 75% of India's population of over 1.2 billion people, spread across more than 638,000 villages. While rural incomes and standards of living have been improving, poverty remains widespread and infrastructure like electricity, sanitation, and healthcare are lacking in many rural areas. The rural market contributes over half of India's total consumption and is divided into groups based on income levels, with many rural households still classified as "destitute" living on less than 16,000 rupees annually. Various government programs aim to reduce rural poverty and stimulate development.

1. Rural Marketing Environment
Module 2
Prof. Raghavendran Venugopal

2. RME: Introduction
The rural market is transforming year after
year, and it would be quite inappropriate to
approach it with the mindset about its past image.
RURAL INDIA, A Snap Shot:-
 Villages are the heart of INDIA, 75% of India's
population(12.2% of world’s population), spread
across 6,38,365 villages in INDIA.
 90% is concentrated in the villages having
population less than 2000.
2 Prof. Raghavendran Venugopal

3. Rural Income Distribution
 India’s 58% disposable income comes from its
rural part, where 41% of the Middle class
population are located.
 Rural India contributions are high than the urban
India contribution(55.6% from 74.6 crore rural
population and 44.6% from 25.4 crore 2006-2007 %
Consumer Annual 1995-1996 % urban
Class Income
people.
Very Rich Above 2,15,000 0.3 0.9
Consuming Rs 45001- 13.5 25.0
Class Rs215k
Climbers 22001 – 45k 31.6 49.0
Aspirants Rs16001-22k 31.2 14.0
Destitute Rs16k and 23.4 11.1
3 Prof. Raghavendran Venugopal below

4. RME: Income-wise distribution
 Income-wise distribution of rural households
Source: NCAER, The future of the new market
Place.
Income Group Rural (2001-02) in cr Households (2006-07)
in cr
Total No. % Total No. %
High 0.26 0.07 26.9 0.52 0.12 23.1
Middle 12.04 7.73 64.2 16.70 10.32 61.8
Low 5.74 5.09 88.7 3.68 3.52 95.7
Total 18.04 12.09 71.4 20.90 13.96 66.7
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5. RME:
Constituents of rural market (as on 2001-02).
Class Annual Number of
Income People
Very Rich Above 2,15k 40 lakh
Consuming 45k-215k 11.5 crore
Class
Climbers 22k- 45k 33.1 cr
Aspirants 16k-22k 17 cr
Destitute <16k 12.4 cr
5 Prof. Raghavendran Venugopal

6. Magnitude of poverty in Rural
India
 The rural population is normally perceived as a
multitude of poor population with limited purchasing
power.
 Poverty is measured in terms of proportion of
population living below the poverty line.
Poverty alleviation programmes and rural development
schemes.
Various programmes aimed at reducing poverty in rural
areas have been launched from time to time. They
include like Gram Sadak Yojna, Providing Urban
Amenities in Rural Areas (PURA), National Rural
Employment guarantee act, Integrated Rural
6
development programme (IRDP), Jawahar Rozar
Prof. Raghavendran Venugopal
Yojna (JRY)

7. Rural Consumption
 The total value of the rural market at a whopping
Rs1,23,000 crore, divided into these categories
FMCG-Rs 65,000 Crore
Durables- Rs 5000 Crore
Tractors & Agri- Inputs Rs 45,000 Crore &
Two & Four Wheeler Rs 8000 Crore.
Per capita expenditure on education by urban is 4.5
times, health 2 times, rental 5 times.
In Rural households, extra money earned goes to
straight to consumption. Thus actual disposable
income for consumption in Rural HH remains the
same as Urban HH.
7 Prof. Raghavendran Venugopal

8. Relationship between Agriculture,
Rural Income and Consumption
 The average growth in the agricultural sector in
the last 5years has been mere 2%.
 In 1988-93, 5.8% growth in FMCG Sector, Rural >
Urban
 In 1993-98, 1.94% in Agricultural growth, FMCG
Sector
was 12%. Share in Rural Share in Urban
Income Income
1995-96 2004-05 1995-96 2004-05
Agriculture 43 32 4.4 3.7
Industry 19 22 42 35
8 Service
Prof. Raghavendran Venugopal 38 47 53 61

9. Literacy in Rural India
 It is improved from 39% to 56%, but still long way
to go.
 16.5 crore people are literate people compared to
16 crore people in urban India.
 51% of rural population reported no formal
education 16% in case of urban.
 55% urban population at least secondary
education as against 15%.
 26% of urban households, the head was a
graduate or a technical degree/diploma holder.
9 Prof. Raghavendran Venugopal

10. Electricity availability in Rural
India
 In the year 2005, 56% households has a
electricity connection.
 Majority of household in rural India are not
electrified.
 90% rural house holds at Punjab & Goa, 25% in
Jharkhand, where as Bihar rest at Bottom. 70% in
Karnataka, TN, J&K, Haryana, Maharashtra,
Kerala and MP.
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11. Development Indicators in Rural
India
 Ranked 138th position in HDR.
 Infant mortality is 75/1000 being highest in World.
 Access to potable water, health care, sanitation
and shelter as far cry.
 Kerala has highest HDI, which 80% higher than
National average.
 Ranked 103rd in gender disparity index in world.
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12. Nature and Characteristics of the
rural market.
 Large and Scattered Market
 Heterogeneous Market
 Income from Agriculture
 Standard of Living
 Infrastructural Facilities.
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13. End of Module 2
Prof. Raghavendran Venugopal
13 Prof. Raghavendran Venugopal