Great Indian Bazaar

8/22/2019 Great Indian Bazaar

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THE

GREAT INDIANMARKET

Results from the NCAERMarket Information Survey of Households

In association with

BusinessStandard


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ii

National Council of Applied Economic Research

& Business Standard Limited, May 2005

All rights reserved, no part of this publication may be reproduced, stored in a retrieval system, or

transmitted, in any form or by any means, electronic, mechanical, photocopying, recording and /or

otherwise, without the prior written permission of the publisher.

ISBN 81-88830-08-9

Price

Rs. ..

US$ .

Published by

Sunil Sinha, Registrar and Secretary, for and on behalf of the

National Council of Applied Economic Research,

Parisila Bhawan, 11, Indraprastha Estate, New Delhi 110 002.

For details: Contact Dr. R. K. Shukla at [email protected]

Printed at

Ajanta Offset & Packagings Limited, New Delhi


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iii

Foreword

The National Council of Applied Economic Research (NCAER) initiated its series of surveysentitled the Market Information Survey of Households (MISH) in 1985-86. Conducted in

a broadly comparable and consistent framework, MISH surveys have been conducted annually

thereafter, with three missed years, with a sample size of around 300,000 households.

The original purpose of the MISH was, and remains, to gain insight into the ownership and purchase

patterns of manufactured goods (both durables and consumables) by relating them in a detailed way to

household characteristics, but with a greater frequency than the consumption surveys of the National Sample

Survey Organisation (NSSO). An additional feature of the MISH has been the presence of a question on

perceived household income. The long-time series of frequent MISH surveys, together with the large sample

size of each, accordingly provide an unmatched source of detailed, validated information on

consumption patterns, and their underlying household-level drivers.

The information contained in the MISH surveys has been presented in a number of different

publications over the years. These included individual product reports as well as longer-term overviews

in our series of reports entitled "Indian Market Demographics". The present volume serves as a companion

to our earlier publication, "The Great Indian Middle Class", which provided a detailed breakdown of the

country's income demographics right up to households with an annual income of over Rs 1 crore

(Rs. 10 million or $220,000) in the year of the survey, 2000-01.

Based on patterns of consumption, in that volume we defined middle class households as those that

earned between Rs 200,000 (2 lakh) and Rs 1 million (10 lakh )($4,444 to $22,200) annually. On this basis

we estimated that the middle class comprised 10.8 million households in 2001-02, or around 5.7 per centof that year's population. By 2009-10, this was projected to grow to 28.4 million households or 12.8 per

cent of that year's population. Details were also provided as to how many of the country's rich households

were to be found in urban and rural areas, and of those in urban areas, how many were to be found in

small towns and how many in large metros.

This volume, The Great Indian Market, describes what the Indian consumer is buying and how

this is projected to change by the end of the decade. It does so by examining the interaction between rising

household income levels and evolving consumer preferences. The volume provides demand trends for

20 categories of durable goods and seven consumer goods from actual consumption in 1995-96 to

projections for 2009-10, and details of who is purchasing these items, by income as well as occupation

groups, in different cities as well as states.

In addition, The Great Indian Market introduces various new analyses.

For example, it includes a consumption matrix that shows the relationship between purchases of

different consumer durables. How many scooter-owning households have cars/jeeps, and vice versa? Are

motorcycle-owning families more likely to switch to cars/jeeps in comparison with scooter-owning

ones? Such questions are at the heart of any marketing campaign, and the product matrix helps arrive


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at useful answers. Another first is the move toward consumption of services, such as data on the demand

for life and medical insurance, credit and debit cards and mobile phones.

The Great Indian Market also attempts to measure the market for second-hand goods, and how

this differs in the case of different durables, for different income/occupation groups, and between ruraland urban areas. It captures the prices paid for both new as well as second-hand goods by various

income/occupation groups, and provides yet another important insight into consumer behaviour.

This book is the second that NCAER has produced in association with Business Standard.

NCAER's contribution has been the detailed survey and its analysis/interpretation, while Business

Standard's contribution has been to make our work more accessible to our audience by presenting it in

well-structured and easy-to-understand chapters.

The NCAER team was led by Dr Rajesh Shukla and comprised Dr Sanjay Dwivedi, Asha

Virmani, and Charu Jain. The Business Standard team comprised Sunil Jain, Kanika Datta, and Amit

Kumar on the editorial side, Sunil Pew and Shagan Mukherjee on the design side, and Priyanka

Parashar who is responsible for all photographs used in the book. I would like to convey my thanks to

all of them. I would also like to thank T.C.A. Srinivasa-Raghavan for helping to bring the NCAER and

Business Standard together, Akila Urankar for her involvement in the marketing campaign and T.N. Ninan,

Editor, Business Standard, for his interest and personal involvement in this partnership.

SUMAN K. BERY

Director General

NCAER

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v

Contents

Chapter 1 What Indians buy .........................................................1-11

Chapter 2 Bharat forges ahead...................................................12-27

Chapter 3 Key demand centres ...................................................28-34

Chapter 4 Automotive sector ......................................................35-58

Cars/jeeps....................................................................38-43

Motorcycles ................................................................44-48

Scooters......................................................................49-53

Mopeds.......................................................................54-58

Chapter 5 Televisions...................................................................59-81

Black and white TVs (small) ........................................62-66

Black and white TVs (regular) .....................................67-71

Colour TVs (small) .......................................................72-76

Colour TVs (large) .......................................................77-81

Chapter 6 VCR/VCPs ....................................................................82-86

Chapter 7 White goods .............................................................87-106

Refrigerators ...............................................................91-96

Air conditioners ........................................................97-101

Washing machines..................................................102-106

Chapter 8 Low-cost goods ......................................................107-135

Pressure cookers .....................................................111-115

Transistors...............................................................116-120

Wristwatches ..........................................................121-125

Electric irons ...........................................................126-130

Fans ........................................................................131-135

Chapter 9 Insurance................................................................136-140

Chapter 10 Consumables ..........................................................141-145

Chapter 11 Second-hand goods ...............................................146-148

Survey concepts, definitions and methodology .........................150-153

Validation of results....................................................................154-155

Methodology for projections......................................................156-161

Annexures tables ........................................................................162-284


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Table no. Page no.

Chapter 1 What Indians buy ..........................................................................1

1 Demand for consumer durables..............................................................2

2 Ownership patterns of consumer durables .............................................2

3 Demand for consumables .......................................................................3

4 Penetration..............................................................................................3

5 Quantity of consumables per household.................................................4

6 Demand for insurance.............................................................................4

7 Urban-rural distribution of population by income and age ....................5

8 Urban rural incomes by occupation type ................................................5

9 All-India demand for major durables in 2001-02....................................6

10 Urban demand for major durables in 2001-02 .......................................6

11 Rural demand for major durables in 2001-02.........................................6

12 Correlation in 2001-02 demand for different products: all India ............8

13 Correlation in 2001-02 demand for different products: urban ...............8

14 Correlation in 2001-02 demand for different products: rural .................8

15 Growing prosperity ...............................................................................10

16 Ownership patterns of major durables in 2001-02: all India.................11

17 Ownership patterns of major durables in 2001-02: urban....................11

18 Ownership patterns of major durables in 2001-02: rural......................11

Chapter 2 Bharat forges ahead....................................................................12

1 Rural share in stock of consumer goods ...............................................13

2 Rural share in consumer demand..........................................................13

3 Rural share in demand for consumables ...............................................14

4 Rural share in insurance markets ..........................................................14

5 Difference in rural-urban usage patterns for durables: 2001-02...........15

6 Difference in rural-urban usage patterns for durables: 2009-10...........15

7 Difference in rural-urban usage patterns for consumables: 2001-02 ....16

8 Difference in rural-urban usage patterns for consumables: 2009-10 ....16

9 Difference in rural-urban usage patterns for insurance.........................17

10 Difference in rural-urban usage patterns for insurance.........................1711 Difference in rural-urban usage patterns for cell phones......................18

12 Difference in rural-urban usage patterns for credit cards .....................18

13 Difference in rural-urban demand: 2001-02..........................................19




List of tables


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17 Usage across income groups.................................................................21

18 Usage patterns across regions...............................................................21

19 Usage patterns across cities/states ........................................................21

20 Demand for durables across regions.....................................................22

21 Demand for durables across states .......................................................22

22 Difference in urban-rural usage of two-wheelers acrossoccupation groups ................................................................................23

23 Difference in urban-rural usage of televisions across occupation groups....23

24 Difference in urban-rural usage of other white goods across

occupation groups ................................................................................23

25 Difference in usage of low-cost goods across occupation groups ........23

26 Difference in urban-rural demand for two-wheelers across


27 Difference in urban-rural demand for other white goods

across occupation groups .....................................................................2428 Difference in urban-rural demand for televisions across


29 Difference in urban-rural demand for low-cost goods across


30 Difference in usage patterns across town classes .................................26

31 Difference in demand across town groups ...........................................26

Chapter 3 Key demand centres....................................................................28

1 Share of top 67 cities in stock in 2001-02 ............................................29

2 Usage patterns in 67 cities in 2001-02..................................................293 Income demographics of top cities, for 2001-02 ..................................30

4 Distribution of households by income ..................................................30

5 Distribution of household expenditure in Vijayawada...........................30

6 Distribution of household expenditure in Indore ..................................30

7 Distribution of household expenditure in Ahmedabad .........................31

8 Distribution of household expenditure in Bangalore.............................31

9 Distribution of household expenditure in Chennai................................31

10 Distribution of household expenditure in Delhi ....................................32

11 Distribution of household expenditure in Kolkata.................................32

12 Distribution of household expenditure in Mumbai ...............................32

13 Ownership of cars in 2001-02...............................................................33

14 Ownership of scooters in 2001-02........................................................33

15 Ownership of motorcycles in 2001-02 ..................................................33

16 Ownership of regular-sized colour TVs in 2001-02 ...............................33

17 Ownership of washing machines in 2001-02........................................33

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18 Ownership of refrigerators in 2001-02..................................................33

Chapter 4 Automotive sector.......................................................................35

1 Demand for two- and four-wheelers.....................................................36

2 Zonal distribution of automotive demand ............................................36

3 Automotive demand by income class ...................................................36

4 Ownership patterns for automotive products .......................................375 Ownership patterns by income class.....................................................37

6 Automotive demand by town class.......................................................37

Cars/jeeps.....................................................................................................................38

7 Demand for motor cars.........................................................................39

8 Urban demand for motor cars ..............................................................39

9 Rural demand for motor cars ................................................................39

10 Ownership patterns, by region..............................................................40

11 Ownership patterns, by income class....................................................40

12 Top five states, by ownership ................................................................4013 Top five states, by demand ...................................................................40

14 Urban ownership patterns, by income class..........................................41

15 Rural ownership patterns, by income class ...........................................41

16 Ownership patterns, by occupation ......................................................43

17 Demand, by occupation categories.......................................................43

Motorcycles ..................................................................................................................44

18 Demand for motorcycles.......................................................................45

19 Urban demand for motorcycles.............................................................45

20 Rural demand for motorcycles ..............................................................4521 Ownership patterns, by region..............................................................46


23 Top five states, by ownership ................................................................46

24 Top five states, by demand ...................................................................46





Scooters .......................................................................................................................49

29 Demand for scooters.............................................................................50

30 Urban demand for scooters ..................................................................50

31 Rural demand for scooters ....................................................................50

32 Ownership patterns, by region ............................................................51



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39 Demand patterns, by occupation..........................................................53

Mopeds .......................................................................................................................5440 Demand for mopeds .............................................................................55

41 Urban demand for mopeds...................................................................55

42 Rural demand for mopeds ....................................................................55






48 Rural ownership patterns, by income class ...........................................5749 Ownership patterns, by occupation ......................................................58

50 Demand, by occupation categories ......................................................58

Chapter 5 Televisions....................................................................................59

1 Demand for TVs ....................................................................................60

2 Zonal demand for TVs...........................................................................60

3 Demand by income class ......................................................................60

4 Ownership patterns for TVs ..................................................................61

5 Ownership patterns by income class.....................................................61

6 Urban demand by town size .................................................................61Black and white TVs (small)...............................................................................................62

7 Demand for small black and white TVs.................................................63

8 Urban demand for small black and white TVs ......................................63

9 Rural demand for small black and white TVs ........................................63









Black and white TVs (regular) ............................................................................................67

18 Demand for regular black and white TVs..............................................68

19 Urban demand for regular black and white TVs ...................................68

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20 Rural demand for regular black and white TVs .....................................68





25 Urban ownership patterns, by income class..........................................7026 Rural ownership patterns, by income class ...........................................70



Colour TVs (small)...........................................................................................................72

29 Demand for small colour TVs ...............................................................73

30 Urban demand for small colour TVs......................................................73

31 Rural demand for small colour TVs .......................................................73


33 Ownership patterns, by income class....................................................7434 Top five states, by ownership ................................................................74






Colour TVs (large) ...........................................................................................................77

40 Demand for regular colour TVs .............................................................78

41 Urban demand for regular colour TVs...................................................7842 Rural demand for regular colour TVs ....................................................78









Chapter 6 VCR/VCPs ......................................................................................82

1 Demand for VCR/VCPs...........................................................................83

2 Urban demand for VCR/VCPs ................................................................83

3 Rural demand for VCR/VCPs..................................................................83



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11 Demand, by occupation categories ......................................................86Chapter 7 White goods.................................................................................87

1 Demand for white goods ......................................................................88

2 Urban demand for white goods............................................................88

3 Rural demand for white goods .............................................................88





8 Urban ownership patterns, by income class..........................................909 Rural ownership patterns, by income class ...........................................90



Refrigerators .................................................................................................................91

12 Demand for refrigerators ......................................................................92

13 Urban demand for refrigerators............................................................92

14 Rural demand for refrigerators .............................................................92


16 Ownership patterns, by income class....................................................9317 Top five states, by ownership ................................................................93






Air conditioners .............................................................................................................97

23 Demand for air conditioners .................................................................98

24 Urban demand for air conditioners.......................................................98

25 Rural demand for air conditioners ........................................................98





30 Urban ownership patterns, by income class........................................100

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31 Rural ownership patterns, by income class .........................................100

32 Ownership patterns, by occupation ....................................................101

33 Demand, by occupation categories.....................................................101

Washing machines........................................................................................................102

34 Demand for washing machines...........................................................103

35 Urban demand for washing machines ................................................10336 Rural demand for washing machines..................................................103

37 Ownership patterns, by region............................................................104

38 Ownership patterns, by income class..................................................104

39 Top five states, by ownership ..............................................................104

40 Top five states, by demand .................................................................104




44 Demand, by occupation categories.....................................................106Chapter 8 Low-cost goods .........................................................................107

1 Demand for low-cost goods................................................................108

2 Urban demand for low-cost goods .....................................................108

3 Rural demand for low-cost goods.......................................................108





8 Urban ownership patterns, by income class........................................1109 Rural ownership patterns, by income class .........................................110



Pressure cookers...........................................................................................................111

12 Demand for pressure cookers .............................................................112

13 Urban demand for pressure cookers ...................................................112

14 Rural demand for pressure cookers.....................................................112








22 Demand, by occupation categories ....................................................115

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Transistors .................................................................................................................116

23 Demand for transistors .......................................................................117

24 Urban demand for transistors .............................................................117

25 Rural demand for transistors...............................................................117


27 Ownership patterns, by income class..................................................11828 Top five states, by ownership ..............................................................118






Wristwatches...............................................................................................................121

34 Demand for wristwatches ...................................................................122

35 Urban demand for wristwatches.........................................................12236 Rural demand for wristwatches ..........................................................122








44 Demand, by occupation categories ....................................................125Electric irons ...............................................................................................................126

45 Demand for electric irons....................................................................127

46 Urban demand for electric irons .........................................................127

47 Rural demand for electric irons ...........................................................127








55 Demand, by occupation categories ....................................................130

Fans ..........................................................................................................................131

56 Demand for fans .................................................................................132

57 Urban demand for fans.......................................................................132

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58 Rural demand for fans ........................................................................132





63 Urban ownership patterns, by income class........................................13464 Rural ownership patterns, by income class .........................................134



Chapter 9 Insurance....................................................................................136

1 Demand for insurance policies (2001-02) ...........................................137

2 Urban demand for insurance policies (2001-02) .................................137

3 Rural demand for insurance policies (2001-02)...................................137

4 Ownership patterns, by region (2001-02) ...........................................138

5 Ownership patterns, by income class (2001-02) .................................1386 Top five states, by ownership (2001-02) .............................................138

7 Top five states, by demand (2001-02).................................................138

8 Urban ownership patterns, by income class (2001-02) .......................139

9 Rural ownership patterns, by income class (2001-02).........................139

10 Ownership patterns, by occupation (2001-02)....................................140

11 Demand, by occupation categories (2001-02) ....................................140

Chapter 10 Consumables..............................................................................141

1 Demand for consumables ...................................................................142

2 Rural share in demand for consumables .............................................1433 Ownership of consumables in 2001-02...............................................143

4 Usage of consumables in 2001-02......................................................143

5 Ownership of consumables in 2009-10...............................................143

6 Usage of consumables in 2009-10......................................................143

7 Difference in rural-urban usage patterns (2009-10)............................144

Chapter 11 Second-hand goods...................................................................146

1 Share of second-hand goods to overall purchases in 2001-02............147

2 Price of second-hand purchase ...........................................................147

3 Financing of purchases of durables.....................................................147

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HE RAPID RISE IN THE COUNTRYSmiddle and high income classes1 is likely tolead to an even sharper rise in the demand

for both consumer durables and consumables.Between 1995-96 and 2001-02, the

demand for automobiles, for example, roseby 9.8 per cent annually and is projected torise 1.5 times faster between 2005-06 and2009-10 to nearly touch 13 million unitsby the end of the decade.

Demand growth rates for TVs are ex-pected to more than double during the twoperiods (from 4.6 to 9.7 per cent annually)to touch the 17.5 million mark, while that for

other white goods such as refrigerators,washing machines, and air-conditioners is ex-pected to rise, but not dramatically.

Demand growth for low-cost items likeelectric irons, transistors and wrist watches is alsolikely to increase by a third (from 6.9 per centannually to 9.2 per cent) between the 1995-96

to 2001-02 and the 2005-06 to 2009-10 periods.Demand growth for consumables,

however, is expected to decline till the end

of the decade. While demand for edibleoils grew by 7.3 per cent per annum between1995-96 and 2001-02 to touch seven milliontonnes, it is projected to grow at a lower 5.6per cent per annum between 2005-06 and2009-10 at which point demand will bearound 10.6 million tonnes. Health beverageslike Horlicks are expected to see a mar-ginal slowing in growth and likely to cross315,000 tonnes. Demand for shampoos,which grew at over 21 per cent in the 1995-

96 to 2001-02 period, is likely to slow dra-matically to just around 11 per cent annuallybetween 2005-06 and 2009-10.

Insurance: This is the first time that theNational Council for Applied EconomicResearch (NCAER) household survey has

The Great Indian Market 1

Chapter 1

What Indians buy

T

The consumer


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tried to capture data on insurance, credit cards orcellular phones and so there is no past data to examine

trends. What we have, therefore, is the stock, orthe number of households that have such products.In the case of insurance, however, that number alsotranslates into demand since most policies are renewedeach year. So, barring the new policies that werebought in 2001-02, this was also the demand forinsurance in that year.

Significantly, even if you examine the demandfor 2001-02 without going into trend analysis, the

demand for life insurance (only from LIC in 2001-02) far exceeds the purchase (in volume terms,not value) of any durable product. While the demandfor two- and four-wheelers was 4.7 million in 2001-02, the demand for insurance was more than 18times as high. Indeed, as will be seen in the sectionthat cross-tabulates demand, many more LIC

2 The Great Indian Market

The consumer

Table1: Demand for consumer durables(In 000s)

Durables 1995-96 1998-99 2001-02 2005-06 2009-10

Scooters 1,111 1,253 902 851 780

Motorcycles 760 1,346 2,599 4,663 8,369

Mopeds 536 636 404 313 244

Cars 276 479 788 1,560 3,466

Automotive 2,683 3,713 4,694 7,386 12,860

Small B&W TVs 5,159 6,887 4,863 2,845 1,608

Regular B&W TVs 1,745 1,535 1,132 700 482

Small colour TVs 293 720 1,159 2,195 5,411

Regular colour TVs 1,785 3,212 4,580 6,295 9,957

All TVs 8,981 12,353 11,733 12,035 17,458

Refrigerators 1,850 2,394 3,006 4,335 6,774

Washing machines 1,114 1,614 1,913 2,919 4,389

VCR-VCPs 307 434 513 597 650

Vacuum cleaners 167 220 305 413 549

Air conditioners n.a. 220 287 463 787

Other white goods 3,437 4,882 6,024 8,727 13,149

Table fans 4,364 5,915 7,678 10,557 14,532

Ceiling fans 9,743 13,348 18,045 27,402 42,914

All fans 14,107 19,264 25,723 37,960 57,446

Bicycles 11,021 13,779 18,092 26,424 38,286

Electric irons 4,166 5,605 7,570 10,440 14,147

Transistors 8,885 10,815 13,211 17,441 23,107

Pressure cookers 6,567 8,376 10,919 16,264 24,512

Wristwatches 19,681 22,967 25,317 31,236 44,463

Other items 50,319 61,541 75,109 1,01,8061,44,515

Table 2: Ownership patterns of consumer durables(Number of households owning goods per 000 households)

Durables 1995-96 1998-99 2001-02 2005-06 2009-10

Scooters 60.02 73.40 78.62 83.11 86.28

Motorcycles 29.27 42.15 70.78 147.56 282.62

Mopeds 34.05 42.81 49.44 59.00 70.93

Cars 16.08 22.03 30.03 50.16 91.38

Automotive 139.42 180.39 228.86 339.83 531.21

Small B&W TVs 154.59 201.46 210.24 185.20 162.32

Regular B&W TVs 85.41 78.02 71.67 64.41 56.26

Small colour TVs 6.92 14.79 25.54 48.70 102.14

Regular colour TVs 71.95 106.58 145.62 212.96 314.01

All TVs 318.88 400.85 453.07 511.27 634.73

Refrigerators 86.05 120.37 134.03 160.68 224.88

Washing machines 34.49 54.63 72.40 105.34 153.98

VCR-VCPs 14.82 17.85 18.78 20.67 24.16

Vacuum cleaners 7.07 8.42 11.42 17.09 24.61

Air conditioners 7.00 8.42 10.47 15.36 24.10

Other white goods 149.43 209.69 247.09 319.14 451.73

Table fans 176.17 220.08 249.49 307.22 378.85

Ceiling fans 367.07 466.87 555.23 758.43 1,067.33

All fans 543.24 686.95 804.71 1,065.65 1,446.18

Bicycles 516.70 580.16 654.36 801.41 934.14

Electric irons 164.33 203.47 219.41 259.51 309.26

Transistors 431.54 488.75 516.79 585.82 648.65

Pressure cookers 252.80 308.59 360.64 464.52 601.77

Wristwatches 1,011.95 1,114.44 1,092.54 1,221.08 1,527.36

Other items 2,377.32 2,695.40 2,843.74 3,332.33 4,021.19


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policy-owning households tend to haveTVs compared to those that own atwo- or a four- wheeler.

Demand for medical insurance wasaround 2.5 times the demand for two-and four-wheelers (again, this is in termsof volume, not value). Here, too, thedemand for medical insurance is moreclosely related to the number of households owning TVscompared to those owning two- or four-wheelers.

PENETRATION RATES

Consumer durables: The proportion of householdsthat own various consumer durables (per thou-sand households) is not expected to grow as rapidlyas demand. In other words, the rise in demand willemerge more from the growth in the number of

households in different income seg-ments than from an increase in con-sumption by households within eachincome category.

In the case of automobiles, forinstance, penetration rates will growby around 12 per cent annuallybetween 2005-06 and 2009-10

compared with demand which is forecast torise at nearly 15 per cent per annum duringthis period.

Similarly, while demand for TVs is expectedto rise by around 10 per cent annually between2005-06 and 2009-10, penetration is likely to rise byonly around 5.5 per cent in this period, a ratethat is actually lower than it was in the period1995-96 to 2001-02. Penetration growth rates inother white goods and fans are also expected to pick

The consumer


Table 3: Demand for consumables(Figures in 000 tonnes)

1995-96 2001-02 2005-06 2009-10

Edible oils 4,582 6,977 8,514 10,586

Health beverages 68 135 202 316

Packaged biscuits 526 896 1,231 1,719

Shampoos 7 21 33 50

Toilet soaps 688 894 1,030 1202

Washing cakes 1,358 1,892 2,287 2,784

Washing powders 1,190 1,977 2,596 3,364

Table 4: Penetration(Number of households using consumables per 000 households)

1995-96 2001-02 2005-06 2009-10

Edible oils 912.7 998.3 999.0 999.6

Health beverages 108.7 166.4 214.3 288.8

Packaged biscuits 305.0 383.0 442.7 520.2

Shampoos 182.1 391.7 480.7 583.2

Toilet soaps 983.6 1,000.0 1,000.0 1,000.0

Washing cakes 932.3 987.4 988.1 980.9

Washing powders 607.4 693.0 745.6 809.6

Though thedemand will rise,the growth formost consumableswill fall significantlyover the nextfive years


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up marginally.Consumables: While the penetration rates of con-sumables per household is all set to increase till theend of the decade, the growth seen between 1995-96 and 2001-02 is projected to decline quite signif-icantly in the period 2005-06 to 2009-10. Aftergrowing at 1.5 per cent per annum, penetration ofedible oils per thousand households will be roughlythe same till the end of the decade. While usershipof shampoos is projected to rise by nearly half between2001-02 and 2009-10, growth rates are likely to fall

to around a third between 1995-96 to 2001-02 and2005-06 to 2009-10.

Of course, what matters more than just thenumber of consumers for consumables is the amountused by each household doubling the amount ofshampoo used per household, for instance, has thesame impact on demand as doubling the number of

households that use shampoo. In the case of edible oils,while the consumption per household rose from30.7 kg per year in 1995-96 to 37.1 in 2001-02, it isexpected to rise to 47.7 kg by the end of the decade.Usage of shampoo is expected to remain poor basedon current trends, going up to around 400 ml by theend of the decade per household per year. Washingcakes are an item for which growth rates of thequantity consumed per household are expected to rise,from 2.3 per cent between 1995-96 and 2001-02 to3.1 per cent between 2005-06 and 2009-10.

Insurance:A little under 8.5 per cent of all Indianhouseholds owned an LIC policy in 2001-02, withthe proportion quite low in the lower income classes

and going up in the higher income classes. While justaround 2.5 per cent of households with an annualincome of under Rs 45,000 in 2001-02 owned an LICpolicy, this went up to 7.7 per cent in the next incomegroup of those earning between Rs 45,000 and Rs90,000 a year, and reaching as high as 18.5 per centin the case of those in the top income bracket of overRs 1,80,000 in 2001-02.

Just a little over 1 per cent of Indian householdsowned a medical insurance policy in 2001-02, afigure that is certainly much lower than the number

of car/jeep owners and is equal to the number of fam-


The consumer

Table 5: Quantity of consumables per household(Figures in kg)

1995-96 2001-02 2005-06 2009-10

Edible oils 30.7 37.1 41.7 47.7

Health beverages 3.3 3.7 4.0 4.4

Packaged biscuits 9.7 11.6 12.8 14.2

Shampoos 0.2 0.3 0.3 0.4

Toilet soaps 4.3 4.7 5.0 5.4

Washing cakes 8.9 10.2 11.4 12.9

Washing powders 11.9 15.0 16.9 18.7

Demand for insurance(Figures in 000 for 2001-02)

Life insurance 86,007

Medical Insurance 11,654

Table 6:

Usage of insurance(Number of households owning insurance

policies per 000 households in 2001-02)

Life insurance 83.9

Medical insurance 11.4


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ilies that own a vacuum cleaner this, though, is not a sign of a corre-lation between demand for the twoproducts since just a little over 1 percent of households that own medicalinsurance also own a vacuum cleaner.

Since around 20 per cent of allhouseholds in the country owned amotorised two wheeler in 2001-02,this means that all those owning two-wheelers do nothave insurance policies. And with over 45 per cent

households owning televisions in that year, it clearlymeans all TV-owning households do not own in-surance policies either.

Cellular phones: Since cellular phone prices, bothof the instruments as well as for talk time, had notcrashed in 2001-02, the demand for these goods were

quite modest in that year with justaround 8.3 million Indians owningthem. As a proportion of the numberof households, just around 0.8 percent of households owned a cellularphone in 2001-02 the figure wasaround 4 per cent in the case ofhouseholds that earned over Rs1,80,000 a year and around 6 per cent

for households in the same income group that werelocated in urban areas.

Debit/Credit cards:Around 0.4 per cent of all house-holds owned a debit/credit card in 2001-02, while thisproportion was around 2 per cent for households withan annual income of over Rs 1,80,000 and around3 per cent for those of these households that were lo-cated in urban areas. How low this is can be judged


The consumer

Table 8: Urban rural incomes by occupation type

Share of population Per capita incomeOccupation group Urban Rural Urban Rural

(figures in per cent) (Rs p.a. in 2001-02)

Cultivators 0.7 11.7 78,763 31,486

Professionals 1.3 0.5 92,432 35,556

Retired 2.8 1.7 52,490 38,882

Wage earners 4.3 10.0 34,123 20,427

Self-employed 10.3 4.2 87,887 43,503

Others 11.2 14.7 15,898 1,869

Salar y earners 16.7 7.0 1,01,413 61,819

Housewives 23.1 21.9 798 235

Students 29.8 28.2 148 28

Table 7: Urban-rural distribution of populationby income and age

Population Per capita incomeAge group Urban Rural Urban Ruralin years (per cent of total) (Rs per annum

in 2001-02)

< 15 25 31 734 182

16-25 22 23 10,209 6,780

26-40 28 25 46,402 22,855

40-60 20 17 58,312 27,864

>60 5 4 28,784 15,794

There is a largedifferencebetween urbanand rural incomes,both across all agegroups as wellas differentoccupations


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from the fact that just a little over 6 per cent of all two-wheeler owning households owned a credit card in

2001-02, and the figure was under 14 per cent in thecase of car/jeep owners.

RURAL-URBAN INCOMES:

There is a large difference in the income levelsin urban and rural areas, and this varies across

both age groups as well as occupation segments. Forinstance, in 2001-02, while the average annual in-

come for a person in the 16-25 years age group inurban areas was Rs 10,209, it was Rs 6,780 forrural areas. Also, while an average professionalearned Rs 92,432 in urban areas in 2001-02, his ruralcounterpart earned just Rs 35,556. Similarly, whilethe average wage earner had an annual income ofRs 34,123 in urban areas, his rural counterpart


The consumer

Table 9: Demand for major durables in 2001-02(Figures indicate per cent of demand emanating from households in each income class at the all India level)

Household income Households Cars/jeeps Scooters Motorcycles Mopeds Colour TVs ACs Refrigerators(Rs 000 per annum) (figures in

per cent)

Deprived


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earned only Rs 20,427.While there is little difference between urban

and rural areas when it comes to the age distributionof population, there is a large difference when itcomes to the occupation profile of citizens. Culti-vators, expectedly, comprise well under 1 per centof urban population but account for around 12per cent of rural population. Wage earners ac-count for under 5 per cent of urban population butdouble this in rural areas. Around 17 per cent of theurban households comprise salary earners while thisgroup accounts for just 7 per cent in rural areas (dif-ferences in their consumption patterns are dis-cussed in chapter 2).

CORRELATION BETWEEN DEMAND FORDIFFERENT PRODUCTS

For marketers, an interesting ex-ercise is to see the relationship be-tween purchases of different goodsbelonging to broadly the same category.This also addresses the issue of what isknown as category collide, essen-tially marketing jargon for demandfor one good falling due to demand for

an entirely different good. With the de-mand for mobile phones rising byaround two to 2.5 million a monththese days, this means roughly threecrore new mobile connections in thenext one year. At even Rs 3,000 or soapiece, the cost of the mobile phones themselves willbe around Rs 9,000 crore that is Rs 9,000 crore lessto spend on colour TVs and so on. Add to this a verynominal phone bill of Rs 250 per month, and that isanother Rs 9,000 crore that cannot be spent on

other goods. We look at the demand correlationof some of the categories below.

Scooter owners:According to the NCAERs survey,for every 100 households that owned scooters in2001-02 at the all-India level, around 10 also ownedmopeds, 23 owned motorcycles and around 15

owned cars/jeeps. Not surprisingly, nearly 70 ownedTVs (mostly colour). Just 27 owned refrigerators, 24owned washing machines, five vacuum cleanersand four owned air conditioners. While this ispartly because several households own more thanone scooter, the other reason is that many more fam-ilies own scooters in comparison with those owningother durables. At the all-India level, around 8percent families owned scooters in 2001-02 comparedto five for mopeds, 45 per cent for televisions andaround 1 per cent each owning air conditioners andvacuum cleaners.

While the correlations with vacuumcleaners/VCRs/air-conditioners get slightly better ifyou look at just urban areas, the difference is not too

significant. For every 100 urban scooter-owningfamilies in 2001-02, the number owning mopeds risesto 12, motorcycles remain broadly the same, around

20 families own cars, and 77 ownTVs. The number owning washingmachines rises marginally to 31,VCR/VCPs to a little over 12 andvacuum cleaners to 7.6. In ruralareas, for every 100 households thatown scooters, a little over four ownmopeds, 24 own motorcycles, less

than three own cars/jeeps and just 49own TVs.

What is even more interesting isthat for every 100 families that ownedcars in 2001-02, 40 had scooters al-ready and 35 motorcycles that is,

two-wheeler owners form a natural conversionmarket for car manufacturers to target. Equally in-teresting, of every 100 families that owned washingmachines in 2001-02, 43 had scooters once again,the conclusion is that washing machine manufac-

turers would do better to target scooter ownersthan, say, those owning mopeds since just 16 ofevery 100 washing machine owning families alsoowned a moped in 2001-02.

A curious finding is that while many morecar-owning households have washing machinescompared to scooter-owning households, of the


The consumer

For every 100households thatowned scooters in2001-02 at the all-India level, around10 also ownedmopeds, 23 owned

motorcycles andaround 15 ownedcars/jeeps. Justfour owned airconditioners


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households that have washing machines manymore tend to have scooters than cars. This, ofcourse, is probably due because there are morethan 2.5 times more scooter owning families in the

country than there are car-owning ones.Interestingly, many more car owning families

tend to have LIC policies in comparison with thosewho own scooters or any two-wheeler for that matter while just 35 per cent of all scooter-owning fami-lies have life insurance policies, close to 55 per centof all car-owning families have life insurance policies.

A similar difference in magnitude can be seenin the case of both cellular phones and credit cards 11 per cent of all scooter-owing families have acellular phone compared to 27 per cent for car-

owning families. Yet, this does not hold true inthe case of medical insurance policies indeed, aslightly larger proportion of scooter-owning fami-lies tend to have medical insurance compared to car-owning families.

Car owners: For every 100 families that owned


The consumer

Table 12: Correlation in 2001-02 demand for different products: All India(Per cent of households owning various durables)

Product Two wheelers Cars/jeeps Televisions Refrigerators Air conditioners LICs Cell phones Credit cards

Two wheelers 100.0 12.3 62.1 21.8 3.6 30.7 9.2 6.2Cars/jeeps 70.9 100.0 81.8 83.8 15.1 54.0 26.6 13.9Televisions 41.6 8.8 100.0 26.3 2.5 24.6 5.8 4.1Refrigerators 68.8 18.6 86.6 100.0 5.2 40.1 12.7 8.3Air conditioners 75.0 54.6 97.7 85.9 100.0 61.2 30.4 19.7LIC policies 41.8 12.8 62.6 43.2 4.0 100.0 10.0 7.4Cell phones 59.2 29.7 69.5 64.5 9.4 47.3 100.0 20.8Credit cards 16.2 2.8 31.0 12.9 0.8 12.1 2.5 100.0Note: For every 100 houses owning two-wheelers, 12.3 owned cars, 62.1 televisions and 30.7 life insurance policies

Table 14: Correlation in 2001-02 demand for different products: Rural(Per cent of households owning various durables)


Two wheelers 100.0 1.8 45.8 9.2 0.3 20.2 5.1 3.8Cars/jeeps 62.2 100.0 63.1 17.1 0.8 27.9 29.6 3.1Televisions 41.9 1.6 100.0 8.7 0.2 17.5 3.0 2.3

Refrigerators 74.6 4.5 81.9 100.0 0.4 31.8 11.6 7.8Air conditioners 62.9 4.7 85.9 31.6 100.0 23.9 4.7 6.5LIC policies 28.2 1.1 39.7 17.7 0.2 100.0 5.6 4.9Cell phones 39.8 6.7 37.4 35.8 0.2 30.9 100.0 29.1Credit cards 10.0 0.3 16.2 4.0 0.0 7.1 1.3 100.0Note: For every 100 houses owning two-wheelers, 1.8 owned cars/jeeps, 45.8 televisions and 20.2 life insurance policies

Table 13: Correlation in 2001-02 demand for different products: Urban(Per cent of households owning various durables)


Two wheelers 100.0 20.2 74.5 31.3 6.1 38.6 12.3 7.9

Cars/jeeps 71.6 100.0 83.3 89.0 16.2 56.0 26.4 14.8Televisions 41.4 13.0 100.0 36.7 3.9 28.8 7.5 5.2Refrigerators 67.2 22.6 88.0 100.0 6.6 42.4 13.0 8.4Air conditioners 75.5 56.7 98.2 88.2 100.0 62.8 31.5 20.2LIC policies 51.6 21.2 79.1 61.5 6.8 100.0 13.2 9.3Cell phones 69.9 42.5 87.4 80.4 14.5 56.5 100.0 16.2Credit cards 32.4 9.3 69.3 36.1 2.7 25.1 5.5 100.0Note: For every 100 houses owning two-wheelers, 20.2 owned cars, 74.5 televisions and 38.6 life insurance policies


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cars/jeeps in 2001-02, around 40 already ownedscooters, 18 owned mopeds and 36 motorcycles.Eighty-two per cent of car owning families hadTVs (69 per cent regular sized colour ones).

Around 85 per cent had refrigerators and 73 per centwashing machines. A little over 15 per cent of all car-owning families own air conditioners, though of every100 air-conditioner owners almost 55 per centhave cars/jeeps and around 75 per cent have onetwo-wheeler. Over a fourth of carowners have a cellular phone and 14per cent a credit card.

There are huge differences be-tween rural and urban car owners. Forevery 100 urban households that own

cars/jeeps, 72 have two wheelers whilethe figure is 62 for rural areas. Around83 per cent of urban car-owners haveTVs while just 63 per cent of rural car owners ownTVs. A fifth of urban car owners have vacuumcleaners while there are none in rural India, andwhile 16 per cent of urban car/jeep owners have an airconditioner, less than 1 per cent of rural car/jeepowners have an air conditioner in their homes.

Credit cards: While credit cards sales are increasing

by leaps and bounds in the country, no significantcorrelation can be seen in ownership of cards withany one consumer durable that is, credit cardownership is quite independent of what durables ahousehold owns. This is partly because banks offerdebit/credit cards to most account holders, so creditcards are not necessarily linked as strongly to higherlevels of income.

Just a little over 16 per cent of all credit card-holding families owned a two wheeler in 2001-02,under three had a car/jeep indeed, 60 per cent

of such families owned a bicycle and over 51 per centa transistor. A little over 12 per cent of credit cardowners had an life insurance policy and around athird had medical insurance policies. Only 2.5 percent had cellular phones at the all-India level.

For urban areas, not surprisingly, the own-ership correlations are a lot stronger. Close to a third

of all urban credit card owners had two-wheelers(compared to 16 per cent at the all-India level)and 9 per cent had cars/jeeps (2.8 per cent at the all-India level). Over 70 per cent had televisions (31 percent all-India), a fourth had life insurance policies(12 per cent all-India) and 6 per cent cellularphones (2.5 per cent at the all-India level).

Cellular phones: Close to 60 per cent of those whoowned cellular phones in 2001-02owned a two-wheeler as well and an-other 30 per cent owned a car/jeep.Nearly 70 per cent had TVs, mostlyregular-sized colour ones, two-thirdshad refrigerators, half had washing

machines and 15 per cent vacuumcleaners. Around 47 per cent of cellularphone owners had life

insurance policies, 48 per cent medical insurance andaround a fifth had credit cards.

In urban areas, close to 70 per cent of cellularphone owning households had a two-wheeler in2001-02 and over 42 per cent owned a car/jeep.Over 87 per cent owned a TV (63 per cent a regular-sized colour one), 80 per cent a refrigerator andover 70 per cent a washing machine. Over 56 per cent

had an life insurance policy and 45 per cent a medicalinsurance policy.

Medical insurance policies:A fourth of all house-holds that have at least one medical insurancepolicy own a two wheeler, and 45 per cent own TVsets and under 4 per cent own cars/jeeps. Of thosewho own cars/jeeps, however, 45 per cent have a med-ical insurance policy in the household. Just a fifth ofthose owning a medical insurance policy own re-frigerators and a tenth washing machines. Under a

tenth of all medical insurance policy-holding fami-lies have a life insurance policy, though over afourth of all those with life insurance have medicalinsurance as well. Close to half of the countrys cellphone-owning families have medical insurancethough under 4 per cent of all medical insuranceowning families have cell phones.


The consumer

For every 100urban householdsthat owncars/jeeps, 72 havetwo wheelers

while the figure is62 for rural areas


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THE ANTICIPATED RISE IN DEMAND FOR CONSUMER

durables is largely driven by changing pattern of demand

between one income class and another in comparison

with the rise in the number of households in each in-

come group. As estimated in The Great Indian Middle Class,

(NCAER, 2004) while India had just 5,000 families that

earned over Rs 1 crore a year in 1995-96, this rose four times

by 2001-02 and this is projected to go up to 1,40,000 by the

end of the decade.

The number of families with an annual income of be-

tween Rs 50 lakh and Rs 1 crore was just 11,000 in

1995-96, rose to 40,000 in 2001-02 and is projected to rise

to 2,55,000 by the end of the decade. As a result, Indias

income demographics are going to be unrecognisable by

the end of the decade. In 1995-96, 80 per cent of Indian

families earned less than Rs 90,000 a year; this fell to 72

per cent by 2001-02 and is projected to fall to 51 per cent

by the end of the decade. Just 3 per cent of families

earned between Rs 2 lakh and Rs 10 lakh per year in 1995-

96 and this doubled by 2001-02 and is forecast to rise to

13 per cent by the end of the decade. Those earning over

Rs 10 lakh per year were just 0.2 per cent of the popula-

tion, 0.4 per cent in 2001-02 and will rise to 1.7 per

cent by the end of the decade.

How does this translate into buying patterns?

To take the case of two-wheelers first, while just a little

over 7 per cent of those in the deprived category1, or those

who had an annual household income of under Rs 90,000,

had a two-wheeler in 2001-02, the figure went up to a

whopping 47 per cent in the next income category of

aspirers or those who had an annual household income

of between Rs 90,000 and Rs 2,00,000.

Similarly, in the case of colour TVs, just 5 per cent of

the population in the deprived category owned such

durables in 2001-02, but the ownership proportion was

nearly 40 per cent in the income category just above this one.

For refrigerators, the rise in ownership levels was

from under 4 per cent to nearly 35 per cent. And in the case

of cars/jeeps, while no households earning below Rs 90,000

a year owned cars/jeeps in 2001-02, close to 30 per cent of

those who earned between Rs 2 lakh and Rs 5 lakh a

year owned cars/jeeps. In other words, as a lot more house-

holds migrate to higher income classes over the next few years,

the demand for most goods will get an added push.

There is, of course, a large difference in demand

patterns between rural and urban areas. While 8 per cent

of deprived households owned scooters in urban areas

in 2001-02, the figure was a much lower 2 per cent for rural

areas. Even in the case of those who earned over Rs 50 lakh

per annum in 2001-02, rural consumption is lower a

fourth of all such urban households owned a scooter, but

the figure was just 6 per cent for rural areas.While those in this Rs 50 lakh-plus income category

have similar consumption patterns for televisions and re-

frigerators in both rural and urban areas, usage habits

differ significantly for lower income groups. Over 55 per cent

of urban aspirer households who had an annual house-

hold income of between Rs 90,000 and Rs 2 lakh in 2001-

02 had a colour TV compared to just 23 per cent in the case

of their rural counterparts. For refrigerators, the figures are

53 per cent and just 15 per cent respectively.

This sharp hike in the number of rich households,

of course, is what will drive up demand. If you look at justthe number of households that earn Rs 5-10 lakh per

annum, or Rs 60,000 per month, these are projected to

rise from 1.7 million is 2001-02 to 6.2 million in 2009-

10. In these days of low-cost consumer financing, the fillip

this will give to consumer demand of items like two or

four wheelers is truly large.

Sources of demand

Table 15: Growing prosperity(Income figures in Rs 000 per annum at 2001-02 prices,

households in 000 numbers)

Classification Income class 1995-96 2001-02 2009-10

Deprived 10000 5 20 141Total 164,876 188,192 221,945

The consumer



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DEMAND BY INCOME CLASSES:

Though usage patterns are low in the lower income

classes, the higher number of households in these groups en-

sures that the total demand patterns are quite different fromwhat one could expect based on examining just the usage

or penetration levels. So, while just 4 per cent of all aspirer

households with an annual income of between Rs 90,000

and Rs 200,000 in 2001-02 owned a car/jeep (8 per cent for

urban areas and one for rural areas), close to 30 per cent of

the all-India ownership of cars/jeeps is in this income group

in both rural and urban areas.

While it is desirable to analyse demand patterns

going up to as high an income level as possible, later

chapters do so till an income level of just Rs 1,80,000. This

is so as analysing demand at the level of each state becomesproblematic since the size of the sample of households with

incomes of over Rs 1.8 lakh tends to become too small when

it is broken up into rural/urban areas. This also serves a dual

purpose it allows the data to be comparable with that

from 1995-96 onwards, so that readers can observe a

long time series instead of just one slice in time.

Table 16: Ownership patterns of major durables in 2001-02(Figures indicate per cent of households in each income class that own durables)

Household income Households Cars Scooters Motorcycles Mopeds Colour TVs ACs Refrigerators(Rs 000 per annum) (Figures in

per cent)

Deprived


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URAL CONSUMERS ARE EXPECTED TOmaintain their dominant share in thecountrys consumer durables market even by

the end of the decade, and thanks to thehigher income growth in rural areas com-pared to urban ones, the importance ofsuch consumers is projected to increase.

Consumer durables: Rural consumers ac-counted for around 60 per cent of the totalownership (stock) of low-cost items like bi-cycles, pressure cookers and wrist watches in1995-96; this remained true in 2001-02,and is not expected to change much in2009-10 either.

While rural consumers accounted for 46per cent of the countrys stock of motorcyclesin 1995-96, this share rose to 50 per cent in2001-02 and is projected to rise to over 55per cent by the end of the decade. In the caseof cars/jeeps, the rural share of stock re-mained at around 7 per cent from 1995-96

to 2001-02 but is likely to rise to over 9 percent by the end of the decade.What is expected to increase, however, is the

rural share in demand for high-value itemslike motorcycles and even automobiles (Ta-bles 1 and 2). In the case of scooters, roughlya third of 1995-96 demand was from ruralconsumers. This rose to around 40 per centby 2001-02 and is expected to remain atthis level by the end of the decade. Theshare in demand for motorcycles fell from 47per cent in 1995-96 to 40 per cent by 2001-02 and this is projected to rise to 48 percent by 2009-10.

It is in cars/jeeps, however, that a hugesurge is expected. The share of rural con-sumers in total demand rose from 2 percent in 1995-96 to over 8 per cent in 2001-02 and is projected to rise to almost 11 percent by the end of the decade.

The rural share in demand for reg-


Chapter 2

Bharat forges ahead

R

Sectoral demand


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ular-sized colour TVs rose almost 10percentage points, from 29 per cent in1995-96 to 39 per cent in 2001-02

and this is forecast to rise further to 43per cent by the end of the decade.Rural consumers already account for athird of the countrys sales of refrig-erators and this is not expected tochange much. The rural share in thestock of other white goods (washingmachines, VCR/VCPs) is around 16per cent, though in terms of annual de-mand the share is slightly higher. In the case ofgoods like air conditioners and vacuum cleaners, the

rural market comprises barely 2-3 per cent of the all-India demand.

Consumables: As in the case of consumerdurables, the rural share in consumables like edibleoils and toilet soaps is quite high, and is likely to in-crease by the end of the decade. There is, however,a large difference in the share for different goods,

ranging from around 27 per cent inthe case of health beverages like Com-plan and Horlicks in 2001-02 to over

71 per cent in the case of washingcakes (Table 3).

While the rural share in goodslike health beverages is likely to staythe same even by the end of thedecade, and will actually decline in thecase of packaged biscuits, it is pro-

jected to rise in the case of washingcakes and detergents.

Insurance: While rural markets account for alarge proportion of total demand for insurance as in

the case of items like motorcycles and toilet soaps, therural share of the market for medical insurance ismuch smaller. Less than a third of all mediclaim poli-cies that were in force in 2001-02 came from thoseliving in rural areas (Table 4).

Cellular phones: Unlike fixed phone lines wherethe rural share is tiny, rural areas accounted for

Sectoral demand

Table 1: Rural share in stock of consumer goods(Share in all India in per cent, stock in 000)

Stock 1995-96 Share in 2001-02 Share in 2009-10 Share in(In 000) per cent (In 000) per cent (In 000) per cent

Scooters 2,496 25.2 4,416 29.8 6,125 32.0Motorcycles 2,210 45.8 6,710 50.4 34,724 55.4Mopeds 2,096 37.3 3,930 42.2 7,333 46.6Cars/jeeps 197 7.4 389 6.9 1,876 9.3Automotive 6,999 30.5 15,445 35.9 50,058 42.5Televisions 21,411 40.7 40,605 47.6 63,295 44.9Other white goods 3,337 13.5 7,766 16.7 16,730 16.7All fans 37,990 42.4 74,673 49.3 1,57,237 49.0Other low-cost items 2,26,952 57.9 3,13,892 58.7 5,21,999 58.5

Table 2: Rural share in consumer demand(Share in all India in per cent, demand in 000)

Demand 1995-96 Share in 2001-02 Share in 2009-10 Share in(In 000) per cent (In 000) per cent (In 000) per cent

Scooters 368 33.1 355 39.4 311 39.9Motorcycles 359 47.3 1,036 39.8 4,045 48.3Moped 283 52.7 235 58.2 141 57.7Cars/jeeps 6 2.1 63 8.0 376 10.9Automotive 1,016 37.9 1,689 36.0 4,873 37.9Televisions 4,852 54.0 6,400 54.5 7,712 44.2Other white goods 819 23.8 1,439 23.9 3,120 23.7All fans 7,050 50.0 14,627 56.9 32,561 56.7Other low-cost items 29,228 58.1 45,139 60.1 88,607 61.3

The share of ruralconsumers in totalcar/jeep demand

rose from two percent in 1995-96 toover eight per centin 2001-02 and isprojected to riseto almost 11 percent by the endof the decade


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around a fourth of all cellular phonesin the country in 2001-02. Such ruralareas, however, are those situated closeto urban agglomerations and the pen-etration of mobile phones remains as

poor as fixed ones in rural areas thatare further away.

Credit cards: Rural share incredit/debit cards was as high as 30per cent and the bulk of this is to befound in northern India. The spreadof credit/debit cards in rural areas aswell as in low income households mayhave more to do with the spread of banking facilitiesand banks offering such cards to account holders thanit does with the spread of the credit card culture in

rural India.

RURAL URBAN USAGE DIFFERENCES

Consumer durables: Despite the high, and in-creasing, share of rural consumers in total demandin the country, there is a large difference in theusage/ownership patterns of consumer goods inrural and urban areas.

While nearly a fifth of all urban householdsowned a scooter in 2001-02, the figure was a little over

3 per cent for rural areas (Table 5). Over 12 per centof all urban families owned a motorcycle in thesame year compared to less than five for ruralIndia, and in the case of cars/jeeps the figures were10 and 3 per cent respectively.

Nearly 85 per cent of all urban Indians owned TVsets in 2001-02 compared to a mere 30 per cent for their

rural counterparts, and it was 73 per centversus under six in the case of whitegoods like refrigerators, washing ma-chines, VCR/VCPs, vacuum cleanersand air conditioners. For low-cost goods

like bicycles, electric irons, transistors,pressure cookers and wristwatches, eachrural household had almost 2.3 itemscompared to 4.1 for urban areas in2001-02 (Table 5).

The difference is equally starkin the case of different income groupsin rural and urban areas. A little over

2.5 per cent of those in the lower middle incomegroup, or those that earn between Rs 45,000 and Rs90,000 a year in rural areas, owned scooters in

2001-02 compared to over 11 per cent for thesame income group in urban areas.

Nearly 11 per cent of those in the middle incomegroup, or those that earned between Rs 90,000 andRs 1,35,000 in 2001-02, owned motorcycles in ruralareas compared to over 13 per cent in urban areas.

Sectoral demand

Table 3: Rural share in demand for consumables(Share in all India in per cent, demand in 000 tonnes)

1995-96 Share in per cent 2001-02 Share in per cent 2005-06 Share in per cent 2009-10 Share in per cent

Edible oils 2,947.5 64.3 4,681.6 67.1 5,598.0 65.7 6,662.4 62.9Health beverages 19.6 28.6 37.0 27.3 55.5 27.5 88.9 28.1Packged biscuits 189.0 36.0 294.4 32.8 386.2 31.4 521.6 30.3Shampoos 1.8 27.2 6.7 31.9 10.8 32.9 16.3 33.0Toilet soaps 342.3 49.8 469.4 52.5 555.8 54.0 657.7 54.7Washing cakes 933.3 68.7 1,351.7 71.4 1,656.9 72.4 2,104.5 75.6Washing powders 599.6 50.4 1,005.2 50.8 1,353.7 52.1 1,847.8 54.9

Table 4: Rural share in insurance markets(Number of policy holding households and per cent to all-India in 2001-02)

Life insurance Medical insuranceNumber 45,269 3,806

Per cent 52.6 32.7Rural share in cellular phone markets(Number of cell phone owning households in 2001-02)

Number 2,143 Per cent 25.9

Rural share in credit card markets(Number of credit card owning households in 2001-02)

Number 1,080 Per cent 30.0

There is a largedifference in therural share ofgoods, rangingfrom around 27 per

cent in the case ofhealth beverageslike Complan andHorlicks in 2001-02to over 71 per centin the case ofwashing cakes


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The difference between ruraland urban usage is expected to con-tinue to be high especially for high-value goods, but will shrink by the endof the decade. In the case of scooters,for instance, rural penetration rateswere 17 per cent of those for urbanareas and this is expected to rise toover 21 per cent by 2009-10.

In the case of cars/jeeps, ruralusage rates were 3 per cent those of

urban areas and this is likely to rise to nearly 5 per cent(Table 6). In the case of TVs, the ratio of rural to urbanusage will probably stay the same even at the end ofthe decade.

In the lowest income group, or those house-holds that earn under Rs 45,000 per annum,rural usage of scooters was around 12 per cent of

urban usage in 2001-02 and this islikely to rise to nearly 15 per cent.For TVs, rural usage was around 17per centin the lowest income group in 2001-02and this is likely to be unchangedin 2009-10.

Consumables: There is a large dif-ference in the per capita usage of con-sumables across rural and urban areas,and across income groups within these

areas. In the case of edible oils, where there is little dif-ference, even the per capita amount used does not varytoo widely across income classes in rural and urbanareas. While the annual consumption of edible oil inthe lowest income class in rural areas was 30.6 kg in2001-02, it was 29.7 in urban areas and while the figurewas 51.6 for the top rural income group it was 54.9 in


Sectoral demand

Table 5: Difference in rural-urban usage patterns: 2001-02(Number of households owning durables per '000 households in that income class)

Low Lower middle Middle Upper middle High TotalUrban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural

Scooters 38.4 4.5 111.2 26.7 246.1 75.2 268.9 150.2 350.2 182.3 194.0 32.8

Motorcycles 19.0 5.9 51.6 29.0 134.3 109.0 212.9 255.6 261.5 399.6 123.6 49.8

Mopeds 33.1 6.0 84.8 26.7 142.2 77.4 148.6 101.9 89.7 113.6 100.5 29.2

Cars/jeeps 0.0 0.0 0.0 0.0 31.4 1.6 142.1 14.9 428.3 58.8 98.4 2.9

Automotives 90.6 16.3 247.7 82.4 553.9 263.1 772.5 522.6 1,129.7 754.4 516.5 114.7

Televisions 547.7 95.8 827.4 356.2 942.8 616.3 929.1 705.5 866.4 797.3 834.9 301.4

Other white goods 64.0 4.3 258.8 30.2 704.6 128.9 1,236.7 333.2 1,782.1 478.3 724.2 57.6

Fans 851.4 209.9 1,251.9 622.4 1,489.4 1,001.0 1,728.0 1,391.0 1,968.1 1,689.0 1,435.3 554.3

Low-cost goods 3,240.6 1,709.6 4,217.3 2,518.1 4,548.3 3,090.2 4,319.5 3,619.4 4,023.7 4,032.9 4,137.0 2,330.2

Table 6: Difference in rural-urban usage patterns: 2009-10(Number of households owning durables per '000 households in that income class at 2001-02 prices)

Low Lower middle Middle Upper middle High TotalUrban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural

Scooters 34.2 5.0 97.6 20.3 201.9 54.0 186.2 113.3 255.1 136.3 188.2 40.1

Motorcycles 42.0 16.7 112.6 61.9 320.7 250.9 497.6 740.5 634.9 1,153.1 404.6 227.3

Mopeds 38.0 6.3 92.1 25.6 169.5 73.9 183.0 120.0 92.9 142.4 121.5 48.0

Cars/jeeps 0.0 0.0 0.0 0.0 52.2 3.5 209.0 32.6 615.0 115.7 266.0 12.3

Automotives 114.2 28.0 302.3 107.7 744.3 382.3 1,075.8 1,006.4 1,597.8 1,547.6 980.3 327.7

Televisions 556.7 97.1 878.5 296.0 1,258.9 561.3 1,353.4 850.1 1,150.3 1,087.3 1,121.1 414.4

Other white goods 86.2 5.7 367.4 26.8 974.0 131.3 1,413.5 379.9 1,901.9 530.0 1,207.1 109.5

Fans 1,251.2 353.3 1,847.3 786.8 2,207.0 1,293.6 2,471.5 1,953.2 2,869.9 2,550.1 2,366.1 1,029.4

Low-cost items 4,154.8 2,423.3 5,696.2

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