Demand Curve Indicus Mint Series The New Contours Of Rural Affluence
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Who are the rural rich? We use a simple definition—households having annual income greater than Rs5 lakh a year, or slightly more than Rs40,000 per month. Gujarat, due to its large cash crop ...
Who are the rural rich? We use a simple definition—households having annual income greater than Rs5 lakh a year, or slightly more than Rs40,000 per month. Gujarat, due to its large cash crop production, Uttar Pradesh because of its large size, Kerala, with its cash crops plus returning migrants, and Punjab and Haryana account for the largest number of rural rich. But if we look at the concentration of the rich, namely, the percentage share of rich households to the total households, we find a different picture. The small states of Goa and Delhi are also included in the Top 5.
Why is rural Gujarat more prosperous than UP, despite the fact that the latter has much better soil and a far better agricultural ecosystem? Gujarat has made rapid advances in rural infrastructure for the last many years, it has a high proportion of land devoted to cash crops, and its farmers have benefited from Bt cotton, a biotech crop. On the other hand, Punjab and Haryana have a stagnating agriculture with tapering or falling productivity increases. Nagaland, at the other end of the country, has taken to cash crops in a big way, cardamom being one of its rapidly growing crops. Being a small state, though, the market size is smaller than in other states, and connectivity still needs significant improvement. Still, this is one state that has been doing particularly well in agriculture in the recent past.
The district-level story yields even more interesting insights. Three districts from Kerala make it to the top of the charts. Wayanad, with its commercial crops and plantations of coffee, tea, pepper and rubber, leads in the number of rural rich households and has also become an attractive tourist destination. Midnapore in West Bengal is the only district from the east in the list. A large district with a high population density, Midnapore has seen farm production grow steadily in the last two-and-a-half decades.
But rural affluence does not stem solely from agriculture. A large number of households in Kerala benefit from remittances as well as returning migrants. Gurgaon in Haryana has seen rapid increases in land values in its urban area. With prospective developers buying up large tracts of land, many of Gurgaon’s rural inhabitants have entered the ranks of the affluent by selling their land. To some extent, the story is similar for Surat in Gujarat, one of the most rapidly growing cities of the 1990s and 2000s.
Rural affluence today is not only about agriculture, though it does have a strong role to play. In a country where the share of agriculture in the economy is falling steadily, it is but natural that many areas would have non-agriculture related stories. Yes, manufacturing, trade and construction are the new drivers of rural affluence.
Demand Curve is a weekly column by research firm Indicus Analytics Pvt. Ltd on consumer trends and markets.
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