Rural Economy Will Grow at 5% Due to COVID; FMCG Demand to Outgrow Urban Market
The rural economy will recover at 5% from the pandemic impact, faster than other sectors, which are likely to shrink around 5%. India's rural the market has entered a decade of 'digitalization and discovery of consumers,' and rural demand for FMCG will be more than the urban market. This was stated by Mr. Pradeep Kashyap, deemed the 'Father of Rural Marketing', in a virtual talk organized by IIHMR University yesterday on 'Rural is Now,' The talk was facilitated by Dr. Sheenu Jain, Associate Professor, Marketing and Chair, Marketing & Communications at IIHMR University.
Addressing the students, he said that in the pre-pandemic times, the Indian farming market, a segment of the rural market, was projected to grow at a CAGR of 10.8 percent during 2019-2024. In the aftermath of the COVID-induced pandemic, the rural market is considered a bright spot that can help the Indian economy recover. This year's good monsoon will promote record agriculture and horticulture output, and record output of milk, resulting in higher income of farmers. Loans for small & medium enterprises have become easier. More women are joining the formal workforce in rural India and will soon exercise their right to choose brands. Rural demand for FMCG will grow faster than urban demand – annual FMCG consumption in rural areas is projected to reach USD 100 billion by 2025, but the corporates are not ready to meet this demand. The rural economy will grow at around 5 percent due to COVID impact, whereas the industry and services sectors will shrink around 5 percent.
Mr. Kashyap said, "The time between 2020 and 2030 will be the decade of digital and discovery for rural India. There are about 227 million active internet users in rural India, while cities have about 205 million users. Last-mile delivery has become easier due to better roads, while the KYC norm has made loans for SMEs easy. A change in lifestyle of the rural consumer is predicted in the next 5 years. However, it is more important to win the rural consumer's trust than trying to sell a product. Companies will need to tweak their business models to set new price points suitable for rural consumers."
Mr. Kashyap has been a Marketing Advisor to the Ministry of Rural Development; has served on Prime Minister Office and Chief Minister Committees on rural development and provided consultancy services to global bodies such as the World Bank and the United Nations.