Mahatma Gandhi once said that “India lives in her Village”. This stands true today as well. Rural India is two-thirds of a country of billion-plus people. And living in 6,40,867 villages in India according to the 2011 census. The rural population is considered a huge contributor to Indian economic growth. The most important thing about the rural economy is that it is very large, almost co-terminus with the Indian Economy. The rural economy is composed of many and a large variety of economic activities in India. The growth of the rural economy depends on various industries established in rural areas. The rural segment is growing at a healthy pace of 8-10% per annum. And is expected to add the US $ 100 bn in consumption demand by the end of this year.
The rural economy in India is wholly agriculture-based and it is of tremendous importance because it has vital supply and demand links with the other Indian industries. Agriculture is the mainstay of the Indian economy. As it constitutes the backbone of rural India which inhabits more than 70% of the total Indian population. Today, the rural economy in India and its subsequent productivity growth is predicated to a large extent upon the development of its approx 800-million strong rural population. The Ministry of Agriculture, the Ministry of Rural Infrastructure. And the Planning Commission of India is the main governing body that formulates and implements the policy related to the rural economy in India. And its subsequent development for the overall growth of the Indian economy.
About modernizing its economy
India has come a long way in modernizing its economy, reducing poverty, and improving living standards for a large segment of its population. In developing rural economy many sectors, as well as many initiatives are taken by the government. Are in the areas of employment generation, easy access to finance, the exemption in agricultural incomes, infusion of funds to help underserved sectors like MFIs, cleantech, renewable sources, online payment, etc.
In recent times, many MNC companies, PE/VC funds. AIFs have started investing in the rural sector and contributed to the growth of the rural economy. Telecommunication players have also played a critical role in terms of connecting rural with urban areas. But especially with their internet services. Still, it is a long way to go for reaching out to the last mile. Online portals are being viewed as key channels for companies trying to enter and establish themselves in the rural market. Market research firm Nielsen expects India’s rural FMCG market to reach a size of US$ 100 billion by 2025. Another report by McKinsey Global Institute forecasts the annual real income per household in rural India to rise to 3.6 percent in 2025, from 2.8 percent in the last 20 years.
