Illuminating article in Knowledge @ Wharton about the turbo charged growth prospects in Rural India.  The title of the article is ‘Why Companies See Bright Prospects in Rural India‘, states that the global recession has impacted only the urban India.  But rural India, which depends mainly on agriculture which grew by 2.7% in the last quarter of 2008-2009 (compared to -1.4 in manufacturing) has a lesser impact due to global slowdown.  Because of buying power of the rural India,  the Economy in the fourth quarter of the fiscal year (January-March 2009), the economy grew 5.8% against expectations of less than 5%.

Is rural India’s growth a short term anomaly or a secular trend that is going to aid India’s long term growth?  Let’s look at some numbers.  12.2% of the world’s consumers live in India and rural households form 72% of the total households. This puts the rural market at roughly 720 million customers.  According to the Wharton article, total income in rural India (about 43% of total national income) is expected to increase from around US$220 billion in 2004-2005 to US$425 billion by 2010-2011, a CAGR (Compounded annual growth rate) of 12%.  This is the main reason why the companies are marketing to the rural India.