DETAILANT: part – 01- Rupa Purushothaman

1 – Rupa Purshottaman on Urban to Rural.

Rupa is the Research Head of Futures Group. By education she has done majors in Economics from London School of Business. She has done BA in Ethics from Yale. Before joining Futures she worked for Goldman Sachs, where she also contributed in writing BRIC report.

The presentation was on the Urban Rural gap. Since Futures is in retail it is very much necessary to find out what is the distance between the development of rural and urban India. This is because urban market will soon be saturated by the other retail players. It is the rural market which is huge enough and untapped.

The basic finding she had was that people in rural India are moving from Farm to Non Farm sector. That is they are moving towards manufacturing industry. The industrial revolution is hitting them hard. This is due their increase in purchasing power. As per Rupa this can be directly related to the increase in spending power of the urban India. According to the facts she provided, every 100 Rupee spend of urban India increases the purchasing power of rural India by 30%.

Since people are moving from farming to non- farming this will create an indirect employment of worth $6.3 million. Every 10% increase in urban expenditure will increase the rural non farm employment by 4%. It is seen that the GDP is rising even though the graph of urban India is declining. Every 10% increase in urban expenditure increase the rural income by 3.5%.

The urban influence in India is quite less than the other countries. India has only 8% change in urban share from 1975 to 2005. While China has 23%, Indonesia has 29%, and Korea has 32%. Rural manufacturing accounts of 42% of total manufacturing sector.

Earlier agriculture accounted for 72% of total GDP, this was in 1971. Come 2006 it declined to 52%. To augment this rural spending has literally doubled in last 5 year span.

Hence the conclusion can be made that the rural India is the next big thing for Retail. But it will take its own time to capitalize on the opportunity.

 

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