"Raring to spend" or struggling to survive, India's rural poor

Having ridden the wave of economic boom, India's middle class is feeling the pain of slowdown. Corporate India is turning elsewhere to fill the gap; recent reports suggest rural India is ready; by contrast, World Bank offers a different perspective.

Rural spending potential

Four years of agricultural growth - for the first time in 40 years - subsidies and state aid guaranteeing 100 days work per year sees per capita income in rural India grow 4% year on year.

According to some, India's 600 - 700 million rural poor have spending potential, Goldman Sachs optimistically describe them as "raring to spend". In support, 50% of India's consumption expenditure comes from lower income consumers.

Immune from boom and bust

This mass of people don't have loans and mortgages, won't speculate on the Sensex but they do have job security. What income they have is spent on basic goods and services.

Mobile phone providers expect rural India to account for 60% of mobile phone users by 2012 and FMGC sector forecasts rural area sales to grow 40% versus urban 20%.

A differing views

While corporate's feel there is money to be made, World Bank paints a different picture. In late 2008, they concluded India is home to 1/3 of the World's poor and that 828 million people - 76% total population - live on US$ 2 or less per day. In their opinion there is more poverty in India than sub-Saharan Africa.

Two extremely different views of the same segment of society, time will tell whether they are consumers or survivors.

February 14, 2009 Add a comment