Financial inclusion of the rural markets in India: Introducing investment and credit tools

Abstract

It is eminent that the urban demand of consumer products has been a little sluggish worldwide compared to its rural counterparts. In world’s largest emerging economies, the rural markets have been growing at fast pace. In India the scenario is a healthier as of 2009 to 2012, spending by the 800+ million rural audiences crossed a total spending of $69 billion and projected growth rates are astounding. As per Nielsen estimates the consumption of the rural masses is growing at 1.5 times to that of its urban counterparts. Thus, rural Indian market is estimated to be more than $100 billion by 2025. The rural consumers are stepping up and branded goods are paving way in the rural markets by replacing entry-level versions. This is an after-effect due to increased disposable income of the TG. The increase in the disposable income is due to the steady migration of manufacturing jobs and new opportunities near the rural area. According to the Credit Suisse it has been estimated that more than 75% of the factories that opened in India in the last decade were located in rural India. So, this states that rural India accounts for 55% of the nation’s manufacturing GDP and 70% of all manufacturing jobs. With this fast-paced development, the GDP has grown at a compound rate at 6.2% YoY since 2000. Industrialists of various sectors have recognized the true potential of this nascent market and stepping up to gain a strong foothold. But there is a bigger barrier of entry to such a market. Inadequate electricity service, unreliable telecommunications, undeveloped transportation, etc. render the whole operation as a costly affair and establishing a profit becomes a disparity. India with a population more than 1.37 billion is the second most populated country in the world. Nearly 70 % of the nation’s population still live in the rural areas. With a total of 640,867 villages, there is an untapped market that has immense potential. For the last few decades marketers have been trying to understand and tap the rural market and make the most out of it. The rural population has shown a trend of change due to gradual urbanisation in terms of exposure, habits, lifestyles and consumption pattern of goods and services. Rural consumers like following the trend that is followed in the urban markets. India being one of the global players in IT and call centre operations has begun influencing the government to take steps towards development at a domestic level in areas such as e-governance, ecommerce and e-health. Bhoomi was one of the early steps towards digitisation where Karnataka govt. and the Govt. of India digitised all land records and provided the provision to access the records via information kiosks and fingerprint authentication systems in the State of Karnataka. There is a lack of physical infrastructure, agricultural inputs and poor access to agro-based information thus resulting into decreased agricultural productivity in India. The fast growth of mobile telephony and mobile enabled information compared to fixed telephony can provide a way to overcome existing lack of information. These tools can also help bridge the gap that is existent between the availability and delivery of agricultural inputs and infrastructure. With the onset of Digital India programme e-governance initiatives took a broader dimension. E-Kranti (National e-Governance Plan 2.0) included integration of all the governance processes on application backed by a database. India has the second largest network and more than 1.12 billion subscribers by the end of November, 2017. With such a good connectivity it’s now much easier to reach across far off distances and connect with remotely located people despite of difficult terrain areas. Digitisation in rural India has been noted to have penetrated in the field of health. Telemedicine is one of the miraculous steps towards improving healthcare delivery systems, bettering quality and access. The Planning Commission of the nation has reported that how computer with internet connectivity, cell phones and availability of applications like Skype can revolutionize healthcare while providing quality treatment to the residents of areas with deprived quality healthcare facilities.