Rural markets driving India Inc’s growth story

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Increasingly, many companies and brands are realising the untapped growth opportunity presented by the rural landscape in the country and are pursuing activities and initiatives specially targeted towards the ‘other’ India. Industries across FMCG , cosmetics, telecom, consumer durables and even automobile have set foot in the emerging markets of rural India.

FMCG company, HUL is one such brand that has been engaging in significant rural-centric activities. Project Shakti is a rural initiative by the company that targets small villages. The Shakti Entrepreneur programme helps to create livelihood opportunities for underprivileged rural women using micro-credit opportunities, and according to HUL, has helped create employment for 45,000 women.

On a holistic level, HUL is bringing alive the spirit of the ‘Unilever Sustainable Living Plan’ to contribute to the social, economic and environmental aspects in rural India.

Packaging it right
To make safe drinking water accessible and affordable to the rural populace, HUL has launched chlorine-based Pureit sachets. Marketing smaller SKUs is perhaps an intelligent way of driving brand recall for the purifier brand.

Harish-Manwani, Chairman, HUL

Harish-Manwani, Chairman, HUL

It is also working with small tomato farmers in Punjab, Karnataka, and Maharashtra to help them adopt sustainable agricultural practices. “We have initiated work to encourage the adoption of sustainable farming practices by our suppliers of tea, fruits and other vegetables, both for India and other Unilever markets,” said Hindustan Unilever Limited (HUL) Chairman, Harish Manwani.

According to Manwani, the company has been the pioneer in developing the rural markets through affordable products and a wide distribution strategy and 40 per cent of its products are consumed in this fast growing segment.

Eyeing the rural markets
He spoke at length about the potential in these markets while addressing shareholders at HUL’s 79th Annual General Meeting held recently. In a speech titled, ‘Rural India – An Emerging Powerhouse,’ Manwani talked about the new hope and energy driving rural India at present, as well as the underlying challenges and remedial measures.

He stated that with the explosion in rural consumption as well as the pressure on the scarce natural resources, a public-private partnership is the way forward and all stakeholders, NGO’s, civil society and corporate will need to play their part as enablers to the rural sector growth.

“Consider that if only our agricultural growth can pick up to 4 per cent as envisioned by the Planning Commission, the cascading impact that rural prosperity will have on the national economy could add up to an additional 2 per cent to our national GDP growth and enable us to go for double digit growth,” said Manwani. With agricultural productivity being the primary source of revenue generation for the rural market, he called for a need to go beyond agriculture to achieve a sustained growth and listed five key enablers that would help to leverage the underlying potential of rural India and not just restrict the focus on agriculture.

Access to urban services, according to him, is one such enabler that has led to higher levels of knowledge and alternate sources of livelihood in villages located in 19 rural-urban clusters. Citing the example of one such hub, the National Capital Region, Manwani added, “Creating another 50 rural-urban hubs where every village is within one hour of travel time to an urban centre would be transformational. This could ensure that more than 2/3rd of the rural population has easy access to urban India. These urban hubs will support rural areas and become the big markets of tomorrow.”

Need to push small sector growth
On the technology front, Manwani spoke of the opportunity presented by the Aadhar scheme in the remote, rural areas.

One of the greatest challenges in the rural landscape also remains the lack of capital and Manwani agreed on a wider net of formal banking that would penetrate into even the remote, rural areas. “Access to formal banking would not only eliminate unbearable debt for the poor but also bring capital investments into rural. This would improve agricultural productivity and also help in building SSEs and other commercial ventures,” he added.

The fourth enabler that he highlighted was education and called for a more consistent implementation of education-centric policies and programmes. There is also the need for rigorous accountability and sharing of best practices to raise the quality of programme execution. He also spoke favourably about the scope of e-learning in transforming the cost and access to education.

Skill building is another crucial factor to the growth of the rural economy and Manwani felt that the need of the hour is not to take the lead in setting up the programmes, but also provide training and employment assistant. “Preparing young people for roles in the flourishing retail, BPO, hospitality and other service related industries will be very important. Just as the ITIs in the 60s & 70s built industrial skills and prepared young people for roles in the manufacturing industry, we now need to set up institutions that build similar skills to prepare our rural youth for manufacturing and service industries,” he said.

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