The Hindu Business Line : A definite attempt of redress neglect to agriculture

THE 2004-05 Budget is a definite attempt to redress the neglect of the agriculture and rural sectors in recent years. Though 58 per cent of India's work force is engaged in agriculture, this sector today contributes only 22 per cent of GDP because of inadequate availability of agriculture credit, lack of crop diversification from staple wheat and rice to more profitable cash crops and restrictions on agri marketing.

The Finance Minister hopes to correct this situation by announcing a series of measures — doubling of agriculture credit in the next 3 years (RRBs/Coperative banks will be revamped), increasing expenditure on rural infrastructure to Rs 8,000 crore in the current year, leveraging the SHG microfinance programme to ensure that 5.7 lakh of the 10.79 bank linked groups take up micro enterprises and thereby enhance their incomes (read purchasing power) and increasing Budget allocation on accelerated irrigation programme to Rs 2,800 crore (last year Rs 2,200 crore). Simultaneously, the Rural Infrastructure Development Fund set up under NABARD in 1994-95 and discontinued last year, is being revived to give a fillip to infrastructure development in our rural areas.

Although the per capita income in rural is less than half of urban, the rural sector already accounts for 53 per cent of FMCGs and 59 per cent of durables bought in India. However, rural penetration and consumption levels for most product categories are much lower than urban because of limited purchasing power with villagers. Improved irrigation facilities, infrastructure, better roads, free trading in agri produce, removal of excise duty on tractors, agri implements; and the insurance scheme for farmers announced in the Budget should all give a boost to the rural economy and generate greater demand for corporate products.

However, to benefit from this new opportunity, urban marketers will have to gain a better understanding of rural lifestyles, needs and aspirations and design appropriate products. Corporates will need to extend their distribution reach to service this new segment living in 6 lakh odd villages, offer smaller packs at lower price points and communicate in the local idiom to connect with rural audiences. A pan rural India marketing strategy will not work. Corporates will have to think local, also act local.

Through this Budget the Government has made its intensions clear to build a strong Bharat. The take for Corporates is clear. The treasure of the Indian market in the coming years will extend much beyond the 30 cities. Go to the small towns and villages, Bharat Shining. Remember small is not only beautiful, it will be profitable too.

(The author is Director, Marketing and Research Team (MART))