With reference to the rural market, NCAER has classified durables into three categories. The first consists of relatively low priced durables like watches, radios, irons, fans etc. The second consists of relatively higher priced durables like black and white television, sewing machines mixers and two-in-one music systems. The third consists of high aspiration and high priced durables like color TVs, refrigerators and motorized two wheelers. The first is well penetrated and accounts for the lion’s share of rural durables demand and is slow growing. The second is modestly penetrated and accounts for one-fifth of the total value of rural durables demand and is growing at a healthy rate while the third is nascent and is growing at a high pace. If we examine who are the consumers for the high priced durables in the rural areas, we get some interesting Insights.
It can be seen that more than the land owning class, those engaged in service (government staff teachers and self employed service providers including shopkeepers) are the major buyers of the high durables in the rural market. The shopkeepers and service people together account for 45, 55 and 60 per cent of the market of television, two wheelers and refrigerators respectively though they account for just 21 per cent of the rural households. Between the two groups, the service class seems to have far greater potential for high priced durables than the shopkeepers. The service class comprises just 3 percent of the rural households but owns 30 to 40 per cent of these durables. Within the service class, those who work outside the villages, but live in the villages seen to be a fair fertile consumption group. Owner farmers continue to be significant consumer group. They comprise one-third of rural households (their estimated number 43 million households), and own one-third of the stock of these durables.
Factors behind the growth and diversification in Rural Demand:
While a variety of factors acting in concert, have brought about the big growth and welcome change in the rural demand, a few of them such as growth in income, changes in income, distribution, changes in lifestyles, and the expectation revolution among the rural folks deserve special mention.
New income due to agriculture/rural development: The technological breakthrough popularly known as the green revolution, which took place in Indian agriculture from the mid-1970s onwards has added to the prosperity of rural India considerably. Moreover in recent years, as part of the new farm policy, high support prices are offered for farm products. As a result, there is now more money in the hands of the owner farmers in the rural areas. There have also been some concerted efforts towards rural development in general besides agricultural development. This has generated new employment and new income and purchasing power among the rural people. The rural population can no longer be labeled en masse as a poverty stricken lot.
The expectation revolution: The expectation revolution among the rural folks completes the picture. The rising expectations of the rural people have greatly influenced the rural market environment. It has enlarged the desire as well as awareness of the rural people; it has strengthened their motivation to work, earn and consume. The rise in income provides substance in their aspirations.
Rural is more Seasonal:
Rural demand is more seasonal compared to urban demand. The pre-dominance of agricultural income pattern is one main reason for this. The relatively greater influence of marriages and festival on the purchase pattern is another. Interestingly marriages and festivals often coincide with the harvest. Besides being seasonal, rural demand is somewhat irregular as well. The pre-dominance of agriculture in the income pattern is again the main reason for this. After all, agriculture in many parts of India still depends on the vagaries of the monsoons.