Corporate India’s Rural Strategies

by Indra

March 22, 2007

Many bigger business houses in India are taking rural initiatives for getting into enormously large market of CK Prahalad’s ‘the bottom of the pyramid’ as well as to carry out their social responsibility.

Rural India is having more than 742 million people (or about 65 per cent of India) with rising incomes and aspirations. According to IRS data, over half of the 145 million rural homes in India earn between Rs 1,000-Rs 5,000 per month. Estimates put the rural market in India at Rs 80,000 crore.

It will be interesting to know about some of the Corporate India endeavors for rural India. And a state like Bihar can take a proactive approach to invite these companies to operate in the state.

New Delhi-based DCM Shriram started the Shriram Krishi Vikas Centres in 1997 to do some value-additions to its primary business of selling urea, fertilisers and sugar manufacturing — all dealing with farmers. The centres offer the services of agronomists to local farmers across 100 villages in India. These centres are hooked to a regional centre in Alwar (Rajasthan), which, in turn, can plug into Delhi and several rural research institutes. The average number of queries the centre gets could run into thousands. For instance, in Punjab, farmers were not using potash as a fertiliser because of a three-year-old government advisory that stated that there was enough potash in the soil. Tests showed that this was not true any longer, and, therefore, productivity was dropping.

The first Hariyali Kisan Bazaar was born in July 2003. That meant stocking all brands of urea and fertiliser (besides its own) and tying up with fuel companies such as BPCL. As consumers started demanding more, the whole product range kept expanding to several non-agri products. These could be anything from apparel to schoolbags, Tata-Sky’s DTH service or insurance (ICICI-Lombard for weather and ICICI-Prudential for life insurance). There is currently a huge demand for banking services, but licensing issues hold the group back. Soon it will be rolling out the National Commodities Exchange (NCDEX) services to make future trading available to farmers. It has today a 54-outlet strong chain of rural supermarkets that offer everything the people there may need on a farm, and more. By the end of two years, the target is to have 250 Hariyali Kissan Bazaars nationally — each servicing an area within a radius of 15-20 km.

Godrej Aadhar outlets are also working on the same line. Farmers can get their soil tested for Rs 50 or pick up fertilizers or soil nutrients, in addition to buying groceries. Today some 31 Aadhar centers in India service 15-25 villages each. The plan is to take the numbers of the outlets to 1,000 in five years to service 20,000 villages. ITC’s Choupal Sagar outlets are extension of the same idea. Almost all these corporate houses are trying to eliminate the intermediaries to provide the best value to the farmers directly and avoid risk of cheating the rural illiterate lot. I wish they didn’t become too greedy soon.

Along with the Department of IT and Microsoft (and in some places, Hughes), the Indian government is setting up 100,000 (CSCs) common service centers across India. The kiosk is a computer center. A trained local runs it. These e-kiosks will offer everything from crop prices and insurance to tele-medicine and education. It will give the villagers daily inputs about the weather, prices, etc. The idea is to have one centre for six villages, so the government plans to reach all of India’s 600,000 villages by March 2008. Microsoft is working at tying in banks, financial institutions and other companies that might want to offer their products and services through these kiosks.

The FMCG majors HLL with Shakti, and ITC with e-Choupal have already made its presence felt in rural India. Kodak, Shell, Reliance Industries, Microsoft, Dhanuka Sugars, Hughes, HDFC, ICICI, HPCL, Nokia and Tata Teleservices are plugging into rural India in their quest for growth.

Nokia has commissioned the Bangalore-based Centre for Knowledge Societies to look at how their new mobility could be used by villagers to jump over the social and digital divide between rural and urban India. As the 60 per cent of all growth in subscribers is now going to come from rural areas, almost every major operator — Reliance, Airtel, BSNL — has adopted a village to revolutionise communication. Tata Teleservices (TTSL) has started training programmes for teachers from villages to help them teach locals about telecommunication in UP. A few months back, TTSL launched the parivar offer (family plan), in Punjab. It allows one family, of 3-10 people, to connect to each other through a common network at a minimum cost of 10 paise per minute.

Several agri-product companies such as Mahindra & Mahindra or Dhanuka Sugars — previously content to sell just urea, fertilisers or tractors — are working on the same line in different forms. Reliance was forced to look at rural markets because its license for petrol retail was granted on those grounds. Reliance has specially designed small sized fuel pumps costing about Rs 4 lakh-7 lakh against the usual Rs 40 lakh-1.5 crore in cities. Each was designed to service an area within the radius of 10 km. The first of 60 pumps, covering 720 villages, was set up in 2005 in Tanna (Gujarat).

In a significant move to help the farmers of Uttar Pradesh, the State Bank of India and NABARD have joined hands to establish a “Farmers’ Club”. The club aims at enhancing the bargaining power of the farmers and artisans besides reaching out to the rural masses.

As everything from self-help groups to banks and the government get together, a network of physical and other services is beginning to find its way into rural India. If the initiatives of all these agencies are coordinated properly, the rural India will transform in next five years.
 

Return to previous Page