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New-economy cos see promise in rural India

23-April-2005
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New-economy cos see promise in rural India

It is not just fast moving consumer goods (FMCG), automobiles, fertilisers or agro-implements that are targeting the rural market. Telecom service providers, handset brands and insurance companies are likely to be the new categories eying this segment.

Speaking to Business Line, Ms Priya Monga, Business Head, Rural Communication & Marketing (RC&M), said: "We expect telecom companies to start going to smaller towns. Nokia, in fact, has sent out sales vehicles to some towns."

And with cell phone companies trying to broaden services and handset costs coming down, interest in telecom products is bound to go up.

Citing the example of Kerala, Ms Monga said while the first purchase made by fishermen there is a cell phone to be in touch with the markets, in some other parts of the country a TV, washing machine or some other durable is preferred.

Insurance companies are expected to be another potential sector especially as the rules for the sector clearly talk about rural penetration.

"Companies like Max New York Life and Aviva have done some work, it is not yet very big," she added.

However, for the moment, automobiles seem to be the most active in wooing rural consumers. Mahindra & Mahindra, for instance, talked about airflow technology to push one of its tractor models. "People in the rural areas are still somewhat apprehensive about technology. SO one has to subtly talk about it," Ms Monga said.

But laser shows, cookery contests, rangoli or mehndi competitions are used extensively to promote brands.

Interestingly, the aspiration levels of people living outside the cities are also quite high. "On a broad level, the ability to buy is almost the same as in the urban areas," Ms Monga said. Referring to National Council for Applied Economic Research (NCAER) study, she said that while showed urban families owned at least three durables per family, rural India showed one per family. However, only one-third of rural homes in the country are electrified.

"For example rural folks in Punjab are spending almost as much on consumption as an average urban Indian. In rural Punjab, the monthly per capita expenditure (MPCE) is Rs 886," she elaborated.

Also the demographics is changing with the rural youth are playing an increasing active role in the decision-making process.

"The youth there too are exposed to urban influences and hence have attitudes and aspirations similar to those of the urban youngsters, leading to a situation where villages are getting urbanised," Ms Monga added.

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