Due to some special features rural markets were not considered by companies or industries for the sale of their products. But recently many changes have been taken place in rural economy due to trade liberalization policy, banking facilities, raise in agri-business, increased exports etc. These changes are now inspiring several big companies as well as foreign companies to enter into rural markets. Various factors contributing to the growth of rural markets are:
1. New Trade Policy
Trade policy changes in India at domestic as well as foreign level have brought several changes in rural markets. The new industrial policy resolution, 1991 has initiated liberalization, privatization and globalization in India. Policy changes have changed the business scenario. Especially rural areas have been merged with world markets with Agreement on Agriculture (AOA). This led to expansion of rural markets.
2. State Intervention in Agri-business
The agri-business was facing several problems due to middle men system. But since the government realized its role in correcting this defect there is an improvement in agri-business. In this context the Central government set up a Small Farmers Agri- business Consortium to encourage agricultural production and to develop marketing facilities. With the association of RBI, NABARD(National Bank for Agriculture and Rural Development), Industrial Development Bank of India, Ministry of Agriculture, Co- operative banks, Nationalized commercial banks the government supported agriculture marketing. These supportive activities and policies made growth in agri-business.
3. Raise in Production
During the planning period the growth of agriculture sector in case of food grains, oil seeds, sugarcane, cotton and jute etc., has been taken place. This growth of agricultural production also promoted agri-marketing.
4. Improved Infrastructural Facilities
Under several rural development schemes the infrastructural facilities have been improved in rural areas. Financial support to the rural areas, communication and transportation facilities in rural areas have connected them with domestic as well as foreign markets. This resulted into expansion of rural markets. Especially transportation facilities have contributed more in developing rural markets.
5. Employment Schemes
Both Central and State governments have introduced various rural employment schemes like IRDP(Integrated Rural Development Programme), JRY (Jawahar Rozgar Yojana), TRYSEM (Training for Rural Youth for Self Employment), EGS (Employment Guarantee Scheme) etc. These programmes have generated employment opportunities and improved the income and consumption levels.
6. Banking Facilities
Nationalization of commercial banks initiated branch expansion in rural areas. It also provided long term, medium term and short term loans to the rural public. The credit facilities extended by the banking sector helped the farmer to purchase seeds, fertilizers and pesticides on installment basis and also improved marketing scope.
7. Co-operative Markets
The growth of rural markets was mainly initiated by the co- operative market system. To protect the farmer from the clutches of money lenders and middie men the co-operative markets were originated. These markets provided better marketing facilities with collective bargaining power and holding capacity of the commodities with ware housing facilities. This improved the income levels of the farmers as well as consumption and given scope for market expansion.
8. Role of Panchayat Raj Institutions
In rural development social and political intervention is necessary. The supportive programmes should be initiated and implemented through political motivation. Hence the role of local self-government becomes primary factor for rural development. In recent year political awareness of rural public has been increased. It has insisted the changes in rural administrative and political conditions. In this context the Panchayat Raj system providing several government supporting programmes for rural development and to improve the living standards of rural public.
Generally rural areas categorized as less consumption areas. It is because majority of rural public depends on agriculture in which the income is not regular and consistent. But now it is interesting to note that the expenditure pattern of rural areas has undergone various changes. Due to raise in income levels, migration, changing preferences of rural public and increasing awareness among rural public about various products contributed raise in expenditure and also rural markets.
The communication facilities like telephones, mobile phones, Tele Vision, Radio, newspapers are playing an important role in rural areas. These facilities improved the awareness, consumerism among the rural public which further resulted into rural market expansion.
11. Exports of Agri Products
From the beginning of planning period the agricultural products play an important role in international trade. Products like tea, sugar, oilseeds, tobacco, spices etc., are main items of exports. Broadly speaking the proportion of agricultural products exported of our exports is 50 percent and 20 per cent exports are related with manufactures with agricultural content. The tenth plan estimates that agriculture contributes 14.7 per cent of total export earnings. The growing exports also increased the rural incomes.
12. Active participation of Companies and MNCs
Big Companies like HCL, Colgate Britannia are focusing on rural marketing. Consumer durables like Samsung and LG are designing products targeted at rural customers. These companies are changing the life styles of rural Indians.