Bharat forges ahead

By the end of the decade, 11% of car demand will come from rural areas.

Thanks to the rapid rise projected in rural incomes over the next few years, especially in the upper income groups, the share of demand from the rural areas is projected to rise steadily — by the end of the decade, roughly 11 per cent of the country’s demand for cars/jeeps will come from rural areas.

While some part of this is clearly due to the fact that rural areas are home to the majority of the country’s population, the gap between rural and urban usage patterns is also projected to decline significantly, according to the National Council of Applied Economic Research’s (NCAER) latest The Great Indian Market, based on its all-India sample survey of over 300,000 households.

At the aggregate level, nearly a tenth of all urban households owned a car/jeep in 2001-02 compared to a mere 0.3 per cent in rural areas. By the end of the decade, while urban usage will grow to 26 per cent, rural usage will increase to 1.2 per cent.

That is, in 2001-02, urban usage was nearly 34 times as large as rural usage but by the end of the decade, this will fall to under 22.

In the case of scooters, this difference is projected to fall from 5.9 to 4.7, from 2.5 to 1.8 in the case of motorcycles and from 3.4 to 2.5 in the case of mopeds. In the case of the upper income groups (those who earn more than Rs 180,000 per annum in 2001-02 prices), the change is even more stark.

In 2001-02, the urban to rural usage of cars was 7.3 but by 2009-10, this is projected to fall to 5.3 times in the top income group.

As a result, while roughly 2 per cent of 1995-96 demand came from rural areas and this rose to 8 per cent in 2001-02, this is expected to rise to just under 11 per cent in 2009-10.

For regular-sized colour TVs, this rose from 29 per cent in 1995-96 to 39 per cent in 2001-02 and will rise to around 43 per cent by the end of the decade. Rural consumers already account for a third of the country’s refrigerator purchases and this is not expected to change much.

In the case of air conditioners and vacuum cleaners, the rural share is expected to remain negligible, around 2 per cent or so.

While there is not too much of a difference between rural and urban areas when it comes to consumption of edible oils, there is a large difference in the case of items like health beverages (Horlicks, for instance).

While just 42 per cent of upper income households in rural areas consumed such drinks in 2001-02, the corresponding figure for urban areas was 82 per cent.

Even the consumption was different: 4.6 kg per year for rural households in the topmost income bracket versus 5.2 for the urban ones.

As in other areas, these differences are also projected to come down by the end of the decade. Around 38 per cent of households in the lowest income group (those earning below Rs 90,000 per annum) in urban areas used shampoo in 2001-02 as compared to 13.6 in rural areas (a difference of 2.8 times).

By the end of the decade this difference will fall to 2.6 times. In the topmost income group, it will fall from 2.2 times to 2 times.