Chapter 3

Rural Marketing Environment

After going through this lesson, you will be able to
Understand the meaning of marketing environment
Discuss about rural marketing environment
Lesson Plan
3.1 Introduction
3.2 The promising premises of rural markets
3.3 Features of marketing environment
3.4 A brief account of factors influencing rural marketing environment
3.4.1 Rural Marketing Environment A Fact File
3.4.1.a Socio- cultural environment
3.4.1.b Technological environment and infrastructural factors
3.4.1.c Economic environment
3.4.1.d Political environment
3.4.1.e Geographical factors
3.5 Summary
3.6 Chapter end questions
3.7 Lab work
3.8 Glossary
3.9 Annexure










3.1 The success of a marketer depends on ones ability to read the minds of the consumer.
On the other hand, consumer preferences and actions are influenced by external
uncontrollable constrains which include demographics, economic conditions, socio cultural
factors, ecology, technology, political forces etc which are called environmental constraints.
The marketer may have certain control over product, place price and promotion, but he must
work on the assessment of marketing opportunities and analyze changes in the marketing
environment. In this context the following factors concerning marketing environment need
special attention:
Marketing, whether rural marketing or urban marketing, requires essentially an
understanding of the environment under which the firms have to operate to render
services or deliver products in a better way.
Understanding the consumer decisions and actions implies understanding the
marketing environment.
As both present and future are equally important to arrive at a marketing decision, it
is essential to know the current developments and also the trends prevailing in the
market.
The marketing environment consists of external uncontrollable forces such as
demography, economic factors, socio cultural factors, political and legal forces,
technology, and competition consumer demand and so on.
The anticipated changes in the marketing environment should be directed towards
efficient use of firms resources.
Decisions arrived at on the basis of the marketing environment are translated into
marketing plans and policies with a view to enhance the quality of outcomes.

3.2 The promising premises of rural markets: During mid 60s, the rural marketers focused
on two areas, viz., marketing of agricultural inputs produced by the urban manufacturers in
rural areas and marketing of rural products in both urban and rural areas. With advent of
economic reforms in 1991- 92, the scope of rural markets widened. The rural marketers now
are trying and eying on consumer market (covers products such as toiletries, cosmetics,
footwear etc and durables such as televisions, two wheelers, and kitchen ware), industrial
(covers products such as seeds, fertilizers, medicines etc and durables such as tillers, tractors
etc) and services market (covers services such as repairs, transport, insurance etc).
Some of the promising elements in respect of rural markets are listed hereunder:
Road and infrastructure development which helped in removing the problem on
account of remoteness
Media revolution
Size of population
Availability of trade channels and physical distribution facilities
Development initiatives of the local and state governments
Lower cost of labour
Cheaper cost of land
Scope for development and expansion (It has not reached a point of saturation as in
urban markets)
Changes in life styles
Change in and shift in pattern of consumption
Degree of competition in urban markets has resulted in shift towards rural markets.
Rural Push Policy of the Central Government
Consecutive and positive growth in rural GDP
Hike in Minimum Support Price of Crops over last two years
Farm Loan Waiver & National Rural Employment Guarantee Scheme
3.3 Features of marketing environment: The external elements which influence the market
collectively represent the marketing environment. The salient features of marketing
environment both in rural and urban markets are highlighted hereunder:
Marketing environment consists of all the factors and driving forces which affect the
ability of a firm to maintain meaningful relationships with its target groups.
It is concerned with the external factors with which the firm operates.
The marketing environmental factors are tangible and intangible and also controllable
and uncontrollable.
The marketing environment which is uncertain keeps changing due to new opportunities,
new threats and new trends in the market.
As the changes are unpredictable, the marketing environment may either give a pleasant
surprise or a rude shock.
Understanding the environment entails identification and development of resources and
opportunities.
The constraints imposed by the environment impact the survival and growth of the
organisation.
The opportunities and threats existing in the marketing environment help the marketer to
develop an optimal marketing mix and suitable competitive strategies.
3.4 A brief account of factors influencing rural marketing environment: The following table
explains the micro and macro environmental factors influencing the rural marketing
environment.
Micro Environment: Suppliers, intermediaries, customers, competitors et al form a part of
micro environment. Micro environmental factors directly affect the marketing activities and
efforts of the firm. Various components of micro environment are explained hereunder.
Component of Micro
Environment
Particulars Significance/ Importance of
the Component with specific
reference to a rural market
Organizations own
internal factors.
All the non-monetary elements,
work force, production capacity
and capabilities which are
considered as internal resources
would directly affect the
marketing decisions.
In a rural market, the potential of
the market is assessed by the
brand managers, promotional
experts, sales representatives et
al.
Marketing proposals and plans
for the existing products and
for the new products are
devised on the basis of these
internal factors.
The strength of the organisation
with specific reference to the
internal factors shall affect the
efforts of the marketers in the
rural market.
Suppliers Firms or individuals who supply
basic raw materials and other
required inputs are called
suppliers.
Suppliers price, promptness,
service quality etc would
favourably or adversely affect the
rural markets.
The marketing team on knowing
the suppliers environment can
provide useful information to the
top management to help the out in
chalking out an effective
production plan.
The resources provided by the
suppliers would not only affect
the efforts of the rural
marketers, but also the flow of
production, production costs
and production schedule.
Changes and developments in
the suppliers market would
have a reasonably good impact
on the marketing efforts in the
rural market.
Intermediaries Intermediaries namely
middlemen, physical distribution
agencies and financial
intermediaries help the marketers
in finding customers, in stocking
and moving goods and in
providing finances, risk coverage
respectively. These measures
would enhance the outcomes in
the rural markets.
The middlemen create time
utility, time utility and
possession utility.
Physical distribution agencies
shall help the marketer in
delivery speed and safety.
Not only firm, but also
customers depend on financial
intermediaries.
Customers/Consumers It is not an exaggeration, if a
marketer tells that his job starts
and also ends with customers.
Customer satisfaction and
consumer delight are the key to
the success of a firm. Where a
The marketer tries to convert
the opportunities into profits by
giving due weightage to
customer needs and consumer
satisfaction.
The growth and survival of the
rural marketer adopts a market
oriented marketing philosophy, it
is but natural that it relies heavily
on the desires tastes and choices
of the customers for all its
marketing plans, policies and
decisions.
firm are totally dependent on
the firms ability to meet the
expectations, needs and desires
of the consumer.
Competitors The success of a rural marketer
depends heavily on his/her ability
to comprehend the competitive
environment. It is incorrect to
assume that competition exists
only between the firms in the
same industry such as textiles,
consumer goods and so on. In fact
competition exists between
dissimilar products too.
The competitive environment
in the rural market determines
the success or failure of a
product
Key group The key group consists of
Local people residents
and local welfare
organizations
Internal people workers
and other employees
Media - news papers, TV,
radio.
Financial institutions
stock brokers, banks
Citizen action groups
consumer councils,
environmentalists
The organisation can evolve its
marketing mix by coming out
with an action plan and an
incentive plan for the key
group in order to build cordial
relations with them and to build
a good name and image.
Concern for key group shall
enhance brand loyalty,
consumer delight and the
outcomes.
Government departments
sales tax dept, electricity
department..

Macro Environment: The macro environmental factors are external to the firm. These factors
do not affect the outcomes but have an indirect impact on the marketing decisions and policies of
the firm. To cite an example, a sudden technological revolution which is not fully controllable
and also which is not easily foreseeable may have an effect on the efforts of the marketers and
the results thereof. The macro-environmental factors affecting the marketing efforts and
decisions include Demographic factors, Economic factors, Physical factors, Technological
factors, Technological factors, Political and legal forces, Social forces and Cultural forces.
Component of Macro
Environment
Particulars Significance/ Importance of
the Component with specific
reference to a rural market
Demographic factors Human wants form the basis for
creation of demand and its
fulfillment. It is therefore
important for the marketer to
know about the population and its
structure of distribution.
Demographic factors such as age
wise distribution and gender wise
distribution of population, birth
rate, occupation, territorial
distribution and other factors
relating to population have an
impact on the marketing decisions
of a concern.
Demographic factors entail the
marketer to form bases for
market segmentation and help in
selection of target groups.
Introduction of a new product in
the existing market and an old
product in a market, knowing the
pulse of the market, consumer
reaction to the promotional
campaign etc for a part of
marketing research.
Demographic analysis is vital for
such analysis.
Economic factors Various factors covered under the
economic environment are
discretionary income, availability
Analyzing the economic factors
will help the marketer in
devising relevant and
of credit to both trader and
consumer, willingness of the
consumer to spend (which is often
influenced by price level changes
and expected shortages of
product), and business cycles
(which influence the product
pricing, employment, interest
rates, purchasing power and
product planning).
appropriate marketing strategies.
Physical factors Physical forces with specific
reference to marketing
environment refer to renewable
(such as forest, sea foods and
agriculture based foods) and non
renewable natural resources (such
as coal, minerals and soil).
Changes in the availability of
physical factors would influence
both consumers and marketers.
Therefore, the marketers must be
wary of shortage of raw material
and increased cost of energy. As
part of societal marketing
approach, the marketers need to
understand that there is a threat
in the form of environmental
pollution as a result of usage of
earths natural resources.
Technological factors
Evolution of new technologies
have helped the marketer in the
following ways:
Economic growth
New product innovations
Marketing research
Effective distribution and
new modes of distribution
Exploring new marketing
The marketer with the help of
technology can convert the
opportunities into favourable
outcomes.
The developments in technology
will not only affect the product
but also influence distribution,
packaging, marketing research
and most importantly decision
opportunities
Reducing the gestation
period
Changes in the life styles
and consumption patterns
of consumers.
Evolution of global
village concept.
and policy making.





Political and legal
forces
Some of the political and legal
environmental factors include:
General laws of land
Policies of the
government/public policy
Ideologies of political
parties
Public policy environment or
legal environment would affect
the pricing policy, place of
establishment of the firm,
remuneration policy, product
design, procurement of raw
material and other important
marketing decisions of the firm.
Social and cultural
forces
Some of the socio-cultural factors
include lifestyles, knowledge base
of the consumers, values, beliefs,
traditions, attitude towards health,
morals, customs, opinions,
behavioural attitude and so on.
Social forces forced the
marketers to take initiatives in
eliminating socially harmful
products and supply multitude of
quality goods and services.



Rural marketing environment consists of both micro and macro environmental factors
which are depicted in the following charts:
Public
Competitors
Customers
Intermediaries
Suppliers
Organisational
Micro-
Environment


Macro Environment
o Demographic forces
o Social forces
o Cultural forces
o Economic forces
o Physical forces
o Technological forces
o Political and legal forces
3.4.1 Rural Marketing Environment A Fact File: The empirical and non- empirical facts
about rural marketing environment are highlighted hereunder.
3.4.1. a Socio-cultural Environment: Understanding the social environmental factors is the key
to the success of a marketer. It is a fact that efforts of the rural marketers are dependent on
culture, beliefs, and values of people living in the rural areas. The social environmental factors
and their understanding shall help the marketer in knowing two things, viz., what people will
consume and how they will buy.


The facts pertaining to various parameters with specific reference to social environment are
discussed hereunder:
Parameter/Lens Factual data Opportunities for the rural
marketer
Number of
members per
household unit
The average household size in rural India
is 5.08 as against the national average of 5
and 4.81 in urban India
Incentives/ bonanza schemes
can be formulated on the basis
of the size of households.
Distribution of
population across
different income
categories of in
India
Share of rural population in low income
states is about 81 percent as against 55
percent high income states.
Segmentation for certain
products can be made on the
basis income levels.
Number of females
per 1000 males
It is 933 females per 1000 males at the
national level. Women and men are in
equal numbers in almost all the states in
the southern part of the country.
An awareness programme
regarding the products
available for male and female
consumers may be arranged
Number of income
earning members
per household.
It is interesting to note that there is more
number of earning members per
household in rural India than the
households in urban India. The number of
income earning members per household is
1.43 and 1.34 respectively in rural and
urban India.
There is scope for the
development of retail sector as
it gives a twin benefit to the
people living in the rural areas
in the form of employment
and access to wide variety of
goods.
Literacy levels 26 percent of the earning segment of rural
population in India is illiterates as against
the national average of about 21 percent.
All the promotional
programmes of the rural
marketer can be planned in
vernacular languages.
Media scene TV ownership in rural India is 33 percent
as against 75 percent in urban India.
Radio listenership in rural India (about 19
percent) is almost equal to Radio
As there is more number of
black and white Television
sets in the rural market, there
is scope for expanding the
Colour TV market in rural
listenership in urban India ((about 19
percent).
India.
Radio can be used as a vehicle
for advertising in rural areas
as it is cost effective when
compared to other modes of
advertising.
Usage of internet can be
increased if the applications
are made accessible in
regional languages.
3.4.1.b Technological Environment and infrastructural facilities: Technology has assumed
importance on account of cost effectiveness, enhanced quality, simpler methods of production,
greater access to markets, improved production and productivity. The facts pertaining to various
parameters with specific reference to technological environment are highlighted hereunder:
Parameter/Lens Factual data Opportunities for the rural
marketer
Power and Energy About 83.1 percent of the villages in India
and 100 percent of the villages in India
have electricity.
The following initiatives were taken by
the government for the growth in rural
electrification:
The establishment of Rural
electrification Corporation in 1969
Introduction of Kutir Jyothi
Scheme in 1989
Enactment of electricity Act,2003
The marketers may establish
plants for the production of
electricity from biomass and
agricultural waste which
enables them to provide
employment opportunities
and also generate
electrification in rural areas.
Research and development
should be carried out in
renewable energy
technologies
Information
technology
revolution
Some of the initiatives with reference to
digital base in rural areas are
e-seva and mee seva in Andhra
Pradesh
Information village project in
Pondicherry
Taraahat e marketing services in
rural areas
Village information centres
There is scope for market
penetration and market
modification through
information intensive
economy.
Postal services There are about 130000rural post offices
which offer services such as sale of post
cards, national savings certificates,
accepting small savings etc.
The post offices have to seek
new avenues which help the
rural(product) marketers,
transporters etc.
Telephones There are about 140 million mobile users
in rural India
There are about 0.2 million public call
Offices (PCOs) in rural areas.
Service providers such as
BSNL are partnering with
other agencies such as HCL.
Rural penetration is gradually
increasing.
Other Infrastructural factors: Infrastructural facilities such as roads, communication,
warehousing, electricity etc are not adequate in Rural India. This makes the physical distribution
not only very costly but also very difficult. Many parts of the rural areas in India remain
unconnected to the rail network. Many parts of the rural India have kuchcha roads, which get
adversely affected during rainy season. Public warehousing needs to be addressed and also
redressed. Nearly 30 percent of the villages are not connected by road. I n
3.4.1.c Economic Environment: Some of the factors pertinent for a marketer with specific
reference to economic environment are capital formation, savings potential of the people, rate of
economic growth, inflationary trend, income, price, purchasing power, tax rates , cost of labour
and other inputs and so on. There is a direct relationship between fulfillment of demand and the
economic environment. The facts pertaining to various parameters with specific reference to
economic environment are highlighted hereunder:
Parameter/Lens Factual data Opportunities for the rural
marketer
Occupation About 75 percent of the population is self
employed in agriculture (about 41)
percent and labour (about 35 percent).
The marketers may chalk out
plans to establish outlets for
agricultural inputs.
Per capita income The per capita income of rural households
is Rs 10227 as against Rs 19335 in urban
areas.
The marketers may try to
penetrate into FMCG market
as the FMCG are in the reach
of the rural consumer.
Income range About 66 percent of the people living in
rural areas less than Rs 2000 per month
Marketers may try to come out
with a twin programmed that
provides better employment
opportunities to the rural
people. This initiative would
enhance their purchasing
power.
Savings and
investment
Out of the surplus income, about 10
percent is invested in financial assets and
about 25 percent is invested in physical
assets and the remaining 65 percent is
savings in cash. Emergencies, childrens
education old age etc are the prime
motivating factors for rural people.
The marketers should try to
convert the savings of the
rural people into investments
An effort should also be made
to have a tie up with rural
credit institutions.
3.4.1.d Political Environment: The political environment in a country would affect the
marketing decisions of a firm in an indirect and direct manner. Consumer protection, economic
policies of the governments, subsidies, balanced regional development, employment generation
etc form a part of the economic environment. The facts pertaining to various parameters with
specific reference to political environment are highlighted hereunder:
Parameter/Lens Factual data Opportunities for the rural
marketer
Government
departments
The government has set up various
departments and autonomous bodies to
look into the rural development activities.
Department of Drinking Water
Supply
Department of Land Resources
Department of Rural Development
National Institute of Rural
Development
These initiatives of the
government shall help the
marketer to avail better
infrastructural facilities. The
agro industries also would
develop as a result of these
industries as the agricultural
productivity also is expected
to improve.
Other initiatives Foreign direct investment and
encouraging people to invest in the bonds
of NABARD are aimed at encouraging
private investment.
Self help groups are encouraged.
There is scope for enhanced
competition and expansion of
retail sector on account of FDI
in retail sector.
Rural employment In order to provide wage employment to
the rural unemployed the Government has
started NREGP (National Rural
employment guarantee Act)
The initiatives would help the
rural people to improve their
per capita income and
purchasing power.



3.4.1.e Geographical factors: Geographical factors are related to regions, population density
and climate. The marketers have to devise the marketing programmes to alter their products,
where necessary and also to come out with advertising and promotional strategies to cater to the
requirements of geographical units.
The facts pertaining to various parameters with specific reference to geographical factors are
discussed hereunder:
Parameter/Lens Factual data Opportunities for the rural
marketer
Population There are about 103 crore people in India
out of which rural population is nearly 70
percent
The marketers should take
advantage of lower cost of
labour cheaper cost of land
while developing their
pricing/ cost and revenue
strategies.
Number of
households
There are about 21 crore households in
India out of which 70 percent rural
households.
There is scope for
development of trade channels
and physical distribution
facilities.
Climatic
conditions
The climatic conditions in different parts
of India vary invariably.
Climate of India
4
cannot be categorized
in one climatic Zone due to its largeness
and diversity of geography and geology
across different parts of the country. As
India lies above equator, most of Southern
India falls in temperate climate zone and
the Peninsular India witnesses Maritime
Climate due to closeness of sea on all
three sides.
There is scope for
development of new product
lines based on the climatic
conditions of the region.
3.5 Summary: Better rural marketing strategies can be evolved by the marketers, if they can
understand the various market environmental factors affecting the marketing decision relating to
STP (Segmentation, Targeting and Positioning). The markets in the urban India reached to a
saturation level and thus understanding the rural marketing environment assumed significance.
The marketers in the rural markets can think about the opportunities in the offing such as
innovating new products processes and services, exploring new markets, evolving suitable
promotional mix and so on. This requires an in depth and thorough understanding the
environment in the rural market. The relevant factors in this regard are political environment,
social environment, economic environment and technological environment. An easy way to
remember the factors affecting rural environment is to remember the word in an acronym form,
that is, PETS (Political, Environmental, Technological and social environmental factors).
Understanding these environmental factors would help the marketer in estimating the demand,
price and the degree of Competition prevailing in the market. Besides these decisions regarding
product and place also can be taken.
3.6 Questions
Short questions
1. Micro environment
2. Macro environment
3. List out any four development initiatives of the government to develop rural market.
Essay type
1. Elucidate the role of economic factors in the rural environment.
2. Explain the usefulness of understanding social environment to the rural marketer.
3. Discuss the changes in the economic scenario of rural India with a few facts to support to
your discussion.
4. What do you know about rural marketing environment?
5. Explain the following:
a. Economic factors influencing the rural marketing operations
b. Socio- cultural factors influencing the rural marketing operations
3.7 Lab work
1. Prepare a chart showing the role of socio cultural factors in rural marketing operations
2. Assess the influence of sociological factors in the form of a chart to understand the rural
marketing environment of India.
3. Explain the influence of economic factors in rural market in the form of a chart.
4. Show the influence of invisible forces in rural markets in the form of a chart.
5. Explain the role of exposure factor in rural markets in India in the form of a chart.
6. Show the role of external environment in rural markets in India.
7. Prepare a chart indicating the infrastructural factors.
8. Describe the factors that are contributing to rural marketing in the form of a chart.
9. Draw a chart indicating the various factors influencing the rural marketing environment.
10. Explain the role of print media in rural marketing in the form of a chart
11. Compile data about NREGP
12. Prepare a report on invisible forces influencing the rural markets in India.

3.8 Glossary
Climate: The average daily and seasonal weather for a region; including temperature,
precipitation, wind, and sunshine.
Infrastructure: The basic structures such as roads, power supplies required for the operation of
a society or an economy
Rural: Having to do with country rather than town
Culture: The arts, customs, and institutions of a nation, people or group.

References
1. Marketing Management - G. Sathyanarayana Apollo Publishers.
2. Marketing Management S.A. Sherleker Himalaya Publishing House.
3. Rural marketing C.S.G. Krishnamacharyulu and Lalitha Ramakrishnan Pearson
Education.
4. http://www.indiaonline.in/About/profile/geography/Climate/index.html
5. Compact Oxford Dictionary Oxford University Press 2001





3.9 Annexure
Table 1 Scope for Products and services in the rural market
Market
zone/area
Target group Consumable goods Durable goods Services
Consumer
goods
Individuals
Households
Foods products
Toiletries
Cosmetics
Textiles & Garments
Foot Wear
Watches Bicycles
Radio and T.V.
Kitchenware
Furniture
Sewing machines
Two Wheelers
-------
Industrial
goods
Agriculture and
allied sector
Seeds
Fertilizers
Pesticides
Animal feed Fishnets
Medicines
Petrol/Diesel
Tillers
Tractors
Pump sets
Generators
Boats
-------
Services Individuals
Households
Industrial units
------- ------- Repairs
Transport
Banking
Credit
Insurance Health
care Education
Communication
Power
There is a wide scope for consumable and durable goods and also services in the rural
markets.
The rural marketers can try to introduce new products in the rural market which need lot
of marketing efforts.
There is lot of scope for the development of service sector in the rural market.




Table 2: Population and Decadal Variation

1971 1981 1991 2001
Total population (million) 548.2 683.3 848.3 1026.9
Rural population (million) 524.0 628.8 741.6
Rural Proportion to total population (%) 80.1 76.7 74.3 72.2
Decadal Variation - 19.8 16.7 15.2
Source: Census of India 2001

o There is a gradual decrease in the rural population
o There is decrease in the decadal variation


Table 3: Pattern of Housing

House Type 1981 1991 2001
Pucca (%) 22 31 41
Semi-Pucca (%) 37 36 36
Kuccha (%) 41 33 23
Total 100 100 100
Source: Census of India 2001

o There is an increase in the percentage of pucca houses perhaps due to the efforts
of the weaker sections housing corporations.






Table 4
Population Density (Urban + Rural) (Per Sq. Km.)
1971 1981 1991 2001
Population Density (Total) 177 216 267 312
Rural 171 214 253
The increase in population density may be attributed to conversion of agricultural lands into
non- agricultural lands.
Table 5
Distribution of Towns and Villages
1991 2001
No. of Towns 3,697 5,161
No. of inhabited Villages 580,779 593,154
Total no. of Villages 634,321* 638,588*
* The total number of Villages also includes non-inhabited Villages.
Source: Census of India 2001

Table 6
Per capita consumption expenditure (Rs. Per
month)
Rural Urban
1983 112 166
1991 281 458
2001 486 855
Source: NSSO





Table 7
Composition of rural per capita consumption
expenditure
Food Non-Food
1983 66 34
1991 63 37
2001 59 41
Source: NSSO

Table 8
Estimated Annual Size : Rural Market
FMCG Rs. 65000 Crore
Durables Rs. 5000 Crore
Agri-inputs (incl. tractors) Rs. 45000 Crore
2/4 Wheelers Rs. 8000 Crore
Total Rs. 1,23,000 Crore
Source: Francis Kanoi 2002

Table 9
Population below the poverty line (Rural)
Period No. of Persons
(Million)
% of Persons Poverty line
(Rs.)
1983 252 46 89.5
1993-94 244 37 206
1999-2000 193 27 328
Source: Human Development Report, 2001



Table 10
Agriculture and Rural Development

Head of
Development
Seventh
Plan
Eighth Plan Ninth Plan Tenth Plan
(1985-90) (1992-97) (1997-2002) (2002-07)
Agriculture 105 225 372 589
Rural Development 89 344 890 1,219
Source: Planning Commission 2002


Table 11
Percentage share of the different sectors in GDP (at 1993-94 prices)
Year Primary
(Agriculture and
Allied)
Secondary
(Manufacturing)
Tertiary
(Services)
Total
1950-51 57.2 14.8 28.0 100.0
1980-81 39.7 23.7 36.6 100.0
2001-02 23.9 26.6 49.5 100.0
Source: National Account Statistics, 1951-2001


Table 12
Rural-Urban Income Comparison
Sector Bottom (30%) Middle (40%) Top (30%) All Classes
Rural Urban Rural Urba
n

Rural Urban Rural Urban
Average
Consumption
Expenditure
(Rs./Annum)
3,270 4,580 5,110 8,15
0

9,400 18,720 5,830 10,260
Population (Million) 223 86 297 114 223 86 742 285
Source: NSS 55
th
Round (1999-2000), Census 2001

Table 13 Total Population (in Crore)
2001 2011 Difference
India 102.9 121.0 18.1
Rural 74.3 83.3 9.0
Urban 28.6 37.7 9.1
Source: Census 2011&Data Dissemination -
unstats.un.org/unsd/statcom/statcom_2012/seminars/.../I ndia.pptx
For the first time since Independence, the absolute increase in population is more in
urban areas that in rural areas
Rural Urban distribution: 68.84% & 31.16%
Level of urbanization increased from 27.81% in 2001 Census to 31.16% in 2011 Census
The proportion of rural population declined from 72.19% to 68.84%

Table 14
Literacy Rate - Male/Female (in %)
2001 2011 Difference
Males
India 75.3 82.1 +6.8
Rural 70.7 78.6 +7.9
Urban 86.3 89.7 +3.4
Females
India 53.7 65.5 +11.8
Rural 46.1 58.8 +12.7
Urban 72.9 79.9 +7.0
Source: Census 2011&Data Dissemination -
unstats.un.org/unsd/statcom/statcom_2012/seminars/.../I ndia.pptx
Improvement in female literacy is more than males in both rural and urban areas
The gender gap in literacy has come down from 24.6 in 2001 to 19.8 in 2011 in rural
areas and from 13.4 in 2001 to 9.8 in 2011 in urban areas





Table 15
Growth Rate of Population (in %)
1991-2001 2001-2011 Difference
India 21.5 17.6 -3.9
Rural 18.1 12.2 -5.9
Urban 31.5 31.8 +0.3
Source: Census 2011&Data Dissemination -
unstats.un.org/unsd/statcom/statcom_2012/seminars/.../I ndia.pptx
The slowing down of the overall growth rate of population is due to the sharp decline in the
growth rate in rural areas, while the growth rate in urban areas remains almost the same.
Table 16
Sex Ratio
2001 2011 Difference
Overall
India 933 940 +7
Rural 946 947 +1
Urban 900 926 +26
0-6 years
India 927 914 -13
Rural 934 919 -15
Urban 906 902 -4
Source: Census 2011&Data Dissemination -
unstats.un.org/unsd/statcom/statcom_2012/seminars/.../I ndia.pptx
The improvement in overall sex ratio is largely in urban areas
Though the Urban Child sex ratio is far worse than in the rural areas, the fall in Child sex
ratio in rural areas is around 4 times that in urban areas. In fact the decline is more
gradual in urban areas.
There is a decline of 8.9 million children in rural areas, while in urban areas has shown
increase of 3.9 million.






Table 17
Distribution of Population across States (2004 05)
Factors LI States MI States HI States All India
Estimated population (mn) 493 314 220 1,027
Estimated households (mn) 91.7 69.6 44.3 205.6
Average household size 5.38 4.51 4.97 5.00
Per capita income 9,747 14,543 18,172 13,018
(Rs per annum)
Share of rural population (%) 80.7 68.2 54.5 71.2
Source: The MAX NCAER India Financial Protection Survey, 2008.
Table 18
Education Levels of Chief Earners (per cent) (2004 05)
Education level rural Urban All India
Illiterate 26.0 7.9 20.6
Primary 22.5 11.5 19.2
Middle 19.2 14.1 17.7
High school 17.2 22.3 18.7
Higher secondary 8.1 15.0 10.1
Graduate 7.0 29.2 13.7
Total 100.0 100.0 100.0
Source: The MAX NCAER India Financial Protection Survey, 2008.
Table 19
Distribution of Households by Occupation (Percentages), 2004 05
Source Rural households Urban households
Regular salary / wages 10.5 36.9
Self employment in non agricultural fields 11.5 32.5
Labour 34.6 22.9
Self employment in agriculture 41.3 3.1
Others 2.1 4.6
Source: The MAX NCAER India Financial Protection Survey, 2008.




Table 20
Income Distribution Across Population (Population in millions)
Annual Income size (Rs) Urban Rural
>1,000 k 11 4
500 to 1,000 k 18 10
300 k to 300 k 51 22
150 k to 300 k 119 111
75 k to 150 k 84 239
>75 k 49 428
Source: Indicus Analytics, Available at www.indicus.net
Table 21
Estimate of Investment and Savings (Figures in Rs/ Annum/Household) (2004 05)
Urban Rural All India
Surplus income 26,762 100.0 11,613 100.0 16,139 100.0
Financial investment 3,757 14.1 1,198 10.3 1,961 12.2
Physical investment 5,754 21.5 2,841 24.5 3,713 23.0
Savings in cash 17,246 64.4 7,574 65.2 10,465 64.8
Source: The MAX NCAER India Financial Protection Survey, 2008.
Table 22
Minimum Household Income (MH) (Percentages)
Levels of MHI (in Rs) Urban Rural
Upto 500 1.0 4.1
501 to 1,000 4.7 20.1
1,001 to 1,500 8.7 17.5
1,501 to 2,000 12.2 21.4
2,001 to 3,000 20.1 16.9
3,001 to 4,000 12.7 8.2
4,001 to 5,000 7.6 2.4
5,001 to 6,000 8.8 2.2
6,001 to 8,000 8.8 2.2
8,001 to 10,000 5.7 0.4
10,001 to 12,000 1.8 0.3
Above 12,000 to 1,00,00 4.9 1.5
Source: IRS 2007 R2 Hansa Research, The Marketing White book (New Delhi: Business world,
2009 2010).


Table 23
Estimation of Routine and Non routine Expenditure (Figures in Rs/Annum/Household),
(2004 05) (Figures in Parentheses are Percentages)
Rural Urban All India
Expenditure on food (routine) 18,404 (45.7) 26,858 (38.9) 20,930 (42.8)
Expenditure on non food items (routine) 14,835 (36.8) 32,272 (46.7) 20,046 (40.9)
Non routine expenditure 7,070 (17.5) 9,935 (14.4) 7,926(16.3)
Expenditure 40,309 (100.0) 69,065(100.0) 48,902 (100.0)
Source: The MAX NCAER India Financial Protection Survey, 2008.
Table 24
Distribution of Routine Expenditure (2004 05)
Item Rural
(%)
Urban (%) All India
(%)
Food 55.4 45.4 51.1
Housing 3.8 4.6 4.7
Health care 4.7 5.9 4.7
Transport 10.0 11.1 10.5
Education 6.4 8.7 7.4
Clothing 7.1 6.8 6.9
Durables 4.9 5.0 5.0
Others 7.7 12.5 9.8
Source: The MAX NCAER India Financial Protection Survey, 2008.

Table 25
Tele density (Number of Telephones per 100 population) (In %)
Year Urban Rural Total
1995 to 1996 3.95 0.29 1.28
2000 to 2001 10.37 0.93 3.58
2005 to 2006 38.28 2.34 12.74
2006 to 2007 48.1 5.89 18.31
2007 to 2008 72.25 9.43 26.22
Source: Department of Telecommunications, Annual Report, 2007 08.






Table 26
Education Levels of Chief Earners (per cent) (2004 05)
Education level rural Urban All India
Illiterate 26.0 7.9 20.6
Primary 22.5 11.5 19.2
Middle 19.2 14.1 17.7
High school 17.2 22.3 18.7
Higher secondary 8.1 15.0 10.1
Graduate 7.0 29.2 13.7
Total 100.0 100.0 100.0
Source: The MAX NCAER India Financial Protection Survey, 2008.
Table 27
Distribution of Households by Occupation (Percentages), 2004 05
Source Rural households Urban households
Regular salary / wages 10.5 36.9
Self employment in non agricultural fields 11.5 32.5
Labour 34.6 22.9
Self employment in agriculture 41.3 3.1
Others 2.1 4.6
Source: The MAX NCAER India Financial Protection Survey, 2008.
Table 28
Income Distribution across Population (Population in millions)
Annual Income size (Rs) Urban Rural
>1,000 k 11 4
500 to 1,000 k 18 10
300 k to 300 k 51 22
150 k to 300 k 119 111
75 k to 150 k 84 239
>75 k 49 428
Source: Indicus Analytics, Available at www.indicus.net






Table 29
Minimum Household Income (MH) (Percentages)
Levels of MHI (in Rs) Urban Rural
Up to 500 1.0 4.1
501 to 1,000 4.7 20.1
1,001 to 1,500 8.7 17.5
1,501 to 2,000 12.2 21.4
2,001 to 3,000 20.1 16.9
3,001 to 4,000 12.7 8.2
4,001 to 5,000 7.6 2.4
5,001 to 6,000 8.8 2.2
6,001 to 8,000 8.8 2.2
8,001 to 10,000 5.7 0.4
10,001 to 12,000 1.8 0.3
Above 12,000 to 1,00,00 4.9 1.5
Source: IRS 2007 R2 Hansa Research, The Marketing White book (New Delhi: Business world,
2009 2010).
Table 30
Estimate of Investment and Savings (Figures in Rs/ Annum/Household) (2004 05)
Urban Rural All India
Surplus income 26,762 100.0 11,613 100.0 16,139 100.0
Financial investment 3,757 14.1 1,198 10.3 1,961 12.2
Physical investment 5,754 21.5 2,841 24.5 3,713 23.0
Savings in cash 17,246 64.4 7,574 65.2 10,465 64.8
Source: The MAX NCAER India Financial Protection Survey, 2008.
Table 31
Estimation of Routine and Non routine Expenditure (Figures in Rs/Annum/Household),
(2004 05) (Figures in Parentheses are Percentages)
Rural Urban All India
Expenditure on food (routine) 18,404 (45.7) 26,858 (38.9) 20,930 (42.8)
Expenditure on non food items (routine) 14,835 (36.8) 32,272 (46.7) 20,046 (40.9)
Non routine expenditure 7,070 (17.5) 9,935 (14.4) 7,926(16.3)
Expenditure 40,309 (100.0) 69,065(100.0) 48,902 (100.0)
Source: The MAX NCAER India Financial Protection Survey, 2008.




Table 32
Distribution of Routine Expenditure (2004 05)
Item Rural
(%)
Urban (%) All India
(%)
Food 55.4 45.4 51.1
Housing 3.8 4.6 4.7
Health care 4.7 5.9 4.7
Transport 10.0 11.1 10.5
Education 6.4 8.7 7.4
Clothing 7.1 6.8 6.9
Durables 4.9 5.0 5.0
Others 7.7 12.5 9.8
Source: The MAX NCAER India Financial Protection Survey, 2008.

Table 33
Tele density (Number of Telephones per 100 population) (In %)

Year Urban Rural Total
1995 to 1996 3.95 0.29 1.28
2000 to 2001 10.37 0.93 3.58
2005 to 2006 38.28 2.34 12.74
2006 to 2007 48.1 5.89 18.31
2007 to 2008 72.25 9.43 26.22
Source: Department of Telecommunications, Annual Report, 2007 08.