Changing Rural India

Increased telecom broadband penetration, clean energy investments, Foreign Direc

t Investment (FDI) in rural development, PURA (Providing Urban Facilities in Rur
al Areas), growth in food processing industry and several new initiatives are se
t to transform India rural and make it an even bigger market place for the globa
l corporates to pounce upon.
Several management studies have proven the strength of rural markets over urban.
Rural market potential in India is so huge that a mere one percent increase in I
ndia s rural income translates to Rs 100,000 million of buying power, according to
a study quoted in Marketing to Rural Consumers- Understanding and tapping rural
market potential by Sanal Kumar Velayudhan and Gudha Sridhar (Excel Books). Rural
market is already bigh for FMCG (53%) and durables (59%). Money available to sp
end on FMCG products by urban India in 2001 was Rs 495,000 mn as against Rs 635,
0000 mn in rural India, the book quoting another research study said.
Telecom Infrastructure
R Chandrasekhar, Secretary, Telecom recent told an Assocham conference that the
government is committed to provide broadband in every panchayat by 2012. He said
that broadband will provide ample opportunities for growth to the new players a
nd is the next major challenge for the industry.
Chandrashekar added that broadband as a service is a leading indicator of socio-
economic development of the nation. He said that the government needs to create
the broadband facility and then offer the Value Added Services thereafter.The se
rvices offered under the ambit of broadband are entertainment, education, health
, financial inclusion, e-commerce etc.Expanding broadband will offer growth pote
ntial for equity and commodity futures markets. It may help farmers to get acces
s to global information on crops and prices. Brokerages need to develop solution
s to tap the potential that will come out of this enhanced telecom infrastructur
e in rural.
FDI in Rural
Recently, Dr C.P. Joshi, Rural Development Minister had advocated allowing FDI f
or developing over 2.44 lakh panchayats all over the country that will open the
vistas of opportunities and ensure inclusive growth. At a recent ASSOCHAM confer
ence, he said FDI may be allowed in agriculture, food processing sectors that wi
ll contribute to the agriculture growth of the country, he pointed out.
The potential for private investment including FDI in rural areas has remained u
ntapped for far too long. About 19% of rural households lived in katcha structur
es and about 50% lived in pucca structures. The reaming 31% of rural households
lived in semi-pucca structures. The central government has launched certain key
programmes which aim at overcoming the physical and social infrastructure proble
ms faced in the rural development. 11th five year plan has estimated shortage of
a total 73.96 million housing units, of which 47.43 million unites pertain to r
ural housing alone. This is an area where private investment would be most valua
ble, said Dr. Joshi.
Dr. Arvind Mayaram, Additional Secretary & FA Department of Rural Development Ra
j points out that FDI in rural retail chains would benefit producters as they ge
t higher and remunerative prices but such investments can also improve logistics
and infrastructure. It can help in the growth of allied industries such as tech
nology driven packaging and grading industry.
Dr. Mayaram also highlighted the potential of benefiting from FDI in the rural a
reas is the agri business value chain, including agriculture marketing infrastru
cture. FDI would be most desirable is the creation of additional food storage ca
pacity in the country. He indicates that there are 65miliion tones (MT) of food
buffer stocks but the total warehousing capacity in the country is only 40MT, le
aving a storage deficit of 25MT. Investment of 10-15,000 crore is required to pr
ovide the additional storage capacity. So, there is also an urgent need to induc
t state of the art technologies in this sector.
PURA
Providing Urban Amenities In Rural Areas (PURA) would provide $150 bn business o
pportunity for the Indian industry, according to former President, APJ Abdul Kal
am. It was Kalam s brain child and is now part of the development programme for 6,
00,000 villages. The former President has now proposed an enterprise network for
this programme.
This enterprise network has to be evolved with the technical collaboration from a
multi-dimensional array of technological and managerial institutions , Dr. Kalam
told the Knowledge Summit of industry body ASSOCHAM. This network would work in
close synchronization and integration with institutions or organizations of repu
te, he further said.
Promotion of innovation at the grassroots level is already producing results in
affordable renewable energy, healthcare, energy and water resources, according t
o T Ramaswamy, Secretary, Science and Technolo gy
The National Innovation Foundation has so far received 140,000 ideas and 260 pat
ents have been registered, five of them in the US... , according to Prof Anil K
Gupta , executive vice-chairman who claimed that in future India will resolve its
problem solving through network mind calling it celebration of creativity at the g
rass roots.
Social Venture Capitalists
The new breed of social venture capitalists who are focused on promoting project
s in rural areas in the field of healthcare, education, housing, water and energ
y, have so far invested $140 mn in social startups, according to a report in Bus
inessworld. Already seven pure play social venture capitalists are active in the
country promoting new rural projects.
The early success of some of their investments has given social VC funds the fire
power to emerge from the shadow of mainstream VC. Startups such as Vaatsalya, wh
ich runs 10 affordable hospitals for rural and semi-urban citizens, d.light desi
gn, which has sold 220,000 solar lamps benefiting 1.1 million people, and Comat
Technologies, which has enabled 10 million rural people to digitise land and oth
er records, are worthy examples of profitable firms that address rural markets.
They have played a critical role in attracting high-profile investors such as In
dian-American billionaire venture capitalist Vinod Khosla and eBay founder Pierr
e Omidyar to the folds of social VC, the Businessworld report said.
More importantly, mainstream VC funds such as Draper Fisher Jurvetson (DFJ), Nex
us Venture Partners, IndoUS Ventures and Seedfund are now betting on such busine
sses. About $1 billion, according to broad estimates, is in the pipeline to be i
nvested in Indian social startups over the next five years. This will come both
from pureplay social VC funds and mainstream investors. Social VC is at a tippin
g point in India, the report added. (