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Country’s poor rural power infrastructure has proved to be a stumbling block for the consumer durables industry, according to a Crisil research report.
It estimated that nearly 12 million additional rural households in Uttar Pradesh and 4 million more in rural Bihar would have owned electric fans by 2009-10, had there been better access to electricity.
Each of these two states would have had 5 million more households owning a television set. In contrast, an improvement in road connectivity between 2004-05 and 2009-10 appears to have resulted in a sharp pick-up in ownership of two-wheelers in several states including Bihar, Orissa and Rajasthan.
“In times to come, in addition to higher income, improved access to electricity and roads will be key determinants of demand for consumer durables in rural areas across many states. Access to finance will also be a critical enabling factor as household demand for higher value items sees a pick-up”, said a Crisil study.
It further said: “This will especially hold in states such as Bihar, West Bengal and Uttar Pradesh where higher incomes, in addition to improvement in infrastructure will be key drivers of potential demand”.
It predicted that rural households in richer states, such as Kerala and Punjab, were likely to move further up the ladder, and purchase more high-end durables -- refrigerators, air-coolers, four-wheelers, and digital cameras.
The study pointed out that for the first time in nearly 25 years rural spending outpaced urban spending between 2009-10 and 2011-12.
Through a follow-up insight, Crisil explored the inter-state differences in the two most critical factors, influencing rural demand for consumer durables. These are discretionary (non-food) household spending and access to infrastructure (electricity and road connectivity).
It said rural India accounted for about 68 per cent of total households, but had only 42 per cent penetration in televisions in 2009-10 (against 76 per cent in urban), 55 per cent in electric fans (91 per cent in urban), 14 per cent in two-wheelers (33 per cent in urban) and mere 1 per cent in motor cars/jeeps (7 per cent in urban).
“Therefore, if rural income/wages grow at a similar pace, as seen over last few years, these markets should offer significant opportunity to durable manufacturers,” the study observed.
>jayanta.mallick@thehindu.co.in
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