WWRR Vol.2.015

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India Agri-inputs / Automobiles BENJAMIN MATHEW: STATE OF THE RURAL ECONOMY Head of Strategy & Partner, MART Key takeaways 56% of GDP is accounted for by rural India. A ‘rural’ area is defined as area where 75% of male population is engaged in agriculture, total population is less than 4,000 people and population density does not exceed 400 persons per sq. km. India has 640,000 villages, which account for ~70% of total population. There is disparity among these as 17% of villages contribute 5% of population but 60% of rural wealth. This data is relevant for FMCG companies for whom rural is a focus area for growth. Agriculture growth is difficult and cannot exceed 4-5% despite interventions. Rural incomes will remain depressed due to high disguised unemployment. Thus, it is imperative to pull people out of agriculture and into other professions (services and industry). Over the past decade, 90 mn people have moved out from agriculture into services and industry. The positive is that multiplicity of incomes is reducing volatility in incomes. By 2020, every agricultural household will have one person employed in the services sector. MNREGA has played an important role in lifting rural incomes. Healthcare can create a good number of jobs. Horticulture and cash crops are also contributing to employment and agriculture incomes. Poultry is also an employment generator, and has added 3.8 mn jobs in small towns and rural areas. The construction industry can also absorb people – for instance, tile manufacturing also needs 0.5 mn people. Skilling is a problem as people are not employable to start with. The income of a construction worker would be twice that of a farmer, and thus this sector can meaningfully improve incomes. Irrigation is enabling multiple cropping of land in a year, improving incomes, and increasing demand of equipment such as tractors. In 2016, rural households spent 49% on food, 7% on health, 5% on travel, 6% on clothing, 6% on durables, 4% on household, 9% on fuel, 3% on education and 11% on others expenses. Proportional spend on food is high, but is expected to reduce. Fuel is still a high cost (higher than urban). In times of higher incomes, rural households would spend first on acquiring productive assets, durables, education, travel etc., and would then focus on other items of discretionary spend. Regional retail players such as Balaji and Ghari are more successful than national chains as they connect to consumers better. They also realize that the buying behavior of rural consumers’ is very different from the urban customer. Eastern has the largest proportion of rural retail outlets (81%), while southern India has the lowest proportion (66%). National FMCG companies cater to 0.5-1.0 mn outlets, which is only a small proportion of overall outlets. 6 KOTAK INSTITUTIONAL EQUITIES RESEARCH
12/5/2018 From India to US Elections, Data Expert Gaurav Pradhan's Predictions Never Go Wrong POLITICS The Man Who Predicted 2014 Indian Election Reveals Who Will Take The Throne In 2019 He is also the same man who predicted results of 2016 United States polls and recently held Punjab and Uttar Pradesh elections 4.7k shares NEXT ARTICLE Image credit: Facebook Priyadarshini Patwa ENTREPRENEUR STAFF Features Editor, Entrepreneur India November 29, 2018 8 min read Politics is one conversation that can make every head turn. You can miss sports, movie, the latest trends but you can’t turn your eyes away from diplomacy and country affairs. How is the current government performing and who will win the 2019 Lok Sabha election is always up for debate. https://www.entrepreneur.com/article/324025 1/10
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07 th December 2018 What We Are Rea
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Prudent Policy Mix Is the Anchor of
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Steady Growth Expected in F2020 We
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Exhibit 9: Cyclical Component of In
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Exhibit 15: Saving Less Investment
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Risks: Skewed to the Downside, Main
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2019 Global Economic and Market Out
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Page 25 and 26: 2019 Global Economic and Market Out
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Page 69 and 70: M Retail Model #3: The Hybrid Model
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Page 85 and 86: Christopher Wood christopher.wood@c
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Page 105: India Economics “Strong growth to
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WWRR Vol.2.015

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