Highlights:

• The Indian growth story has now spread to India's hinterlands. Rural India, home to about two-thirds of the country's 1 billion population, is not just witnessing an increase in its income but also in consumption and production.
  
  Additionally, the rural economy has not been impacted by the global economic slowdown, according to a recent study by the Rural Marketing Association of India (RMAI). The study found that the rural and small town economy which accounts for 60 per cent of India's income has remained insulated from the economic slowdown. Moreover, rural incomes are on the rise driven largely due to continuous growth in agriculture for four consecutive years.
  
  Lets look at some key sectors that benefit from this trend

FMCG

FICCI says that in a clear defiance of the economic slowdown of the past 12 months, India's Fast Moving Consumer Goods (FMCG) sector has grown consistently during the last three to four years, reaching a size of  US$ 25 billion (Rs. 120,000 crore)
Rural consumers spend around 13 per cent of their income, the second highest after food (35 per cent), on fast moving consumer goods (FMCG), as per a RMAI study.
The FMCG industry in India was worth around US$ 16.03 billion in August 2008 and the rural market accounted for a robust 57 per cent share of the total FMCG market in India.
Most FMCG companies are now working on increasing their distribution in smaller towns and focusing on marketing and operations program for semi-urban and rural markets.
Industry analysts state that the increased consumption is also the result of a growing middle class base in these markets. The total number of rural household is expected to rise to 153 million in 2009-10 from 135 million in 2001-02, suggesting a huge market.

Retail

The rural retail market is currently estimated at US$112 billion, or around 40 per cent of the US$ 280 billion retail market. Major domestic retailers like AV Birla, ITC, Godrej, Reliance and many others have already set up farm linkages. Hariyali Kisan Bazaars (DCM) and Aadhars (Pantaloon-Godrej JV), Choupal Sagars (ITC), Kisan Sansars (Tata), Reliance Fresh, Project Shakti (Hindustan Unilever) and Naya Yug Bazaar are established rural retail hubs.

Pharmaceuticals

According to a report by McKinsey, the rural and tier-2 pharma market will account for almost half of the growth till 2015. The tier-2 market will grow to 44 per cent by 2015, amounting to US$ 8.8 billion.

Telecommunication

A Gartner forecast revealed that Indian cellular services revenue will grow at a compound annual growth rate (CAGR) of 18.4 per cent to touch US$ 25.6 billion by 2011, with most of the growth coming from rural markets. Also, a joint Confederation of Indian Industries (CII) and Ernst & Young report reveals that of the next 250 million Indian wireless users, approximately 100 million (40 per cent) are likely to be from rural areas, and by 2012, rural users will account for over 60 per cent of the total telecom subscriber base in India.

To be continued...