Consumer Awareness in Rural India - An Empirical Study

Project Directors

Prof. Suresh Misra Ms. Sapna Chadah

Project Associates

Dr. Amit Kumar Singh Virendra Nath Mishra

Sponsored by

Department of Consumer Affairs, Ministry of Consumer Affairs, Food & Public Distribution

Government of India, New Delhi

Conducted by

Centre for Consumer Studies Indian Institute of Public Administration Indraprastha Estate, New Delhi-110002

i

PrefacePrefacePrefacePreface

The welfare of the consumers lies in the fulfilment of theThe welfare of the consumers lies in the fulfilment of theThe welfare of the consumers lies in the fulfilment of theThe welfare of the consumers lies in the fulfilment of their normal and legitimate ir normal and legitimate ir normal and legitimate ir normal and legitimate

expectation with regards to the goods they purchases and the services they avail. In a expectation with regards to the goods they purchases and the services they avail. In a expectation with regards to the goods they purchases and the services they avail. In a expectation with regards to the goods they purchases and the services they avail. In a

country like India where all the consumer protection laws are in place, the consumers are country like India where all the consumer protection laws are in place, the consumers are country like India where all the consumer protection laws are in place, the consumers are country like India where all the consumer protection laws are in place, the consumers are

not really aware of them and the mechanism in place tonot really aware of them and the mechanism in place tonot really aware of them and the mechanism in place tonot really aware of them and the mechanism in place to redress their grievances. Those redress their grievances. Those redress their grievances. Those redress their grievances. Those

who know the laws know that the process is very slow and cumbersome. There are a who know the laws know that the process is very slow and cumbersome. There are a who know the laws know that the process is very slow and cumbersome. There are a who know the laws know that the process is very slow and cumbersome. There are a

number of steps taken to protect the rural consumer but without much impact due to the number of steps taken to protect the rural consumer but without much impact due to the number of steps taken to protect the rural consumer but without much impact due to the number of steps taken to protect the rural consumer but without much impact due to the

prevailing socio prevailing socio prevailing socio prevailing socio ---- economic conditions of the rural con economic conditions of the rural con economic conditions of the rural con economic conditions of the rural consumers. They generally base their sumers. They generally base their sumers. They generally base their sumers. They generally base their

purchasing decisions on the advertisement campaigns and promotional strategies purchasing decisions on the advertisement campaigns and promotional strategies purchasing decisions on the advertisement campaigns and promotional strategies purchasing decisions on the advertisement campaigns and promotional strategies

employed by the organizations and also lack choiceemployed by the organizations and also lack choiceemployed by the organizations and also lack choiceemployed by the organizations and also lack choice....

TTTThe he he he rural markets, which were earlier ignored by most of the big international rural markets, which were earlier ignored by most of the big international rural markets, which were earlier ignored by most of the big international rural markets, which were earlier ignored by most of the big international

market playmarket playmarket playmarket players, are now being seen as a land of great business opportunity. As the ers, are now being seen as a land of great business opportunity. As the ers, are now being seen as a land of great business opportunity. As the ers, are now being seen as a land of great business opportunity. As the

disposable income of the masses is growing, more and more corporate houses are entering disposable income of the masses is growing, more and more corporate houses are entering disposable income of the masses is growing, more and more corporate houses are entering disposable income of the masses is growing, more and more corporate houses are entering

into the rural markets with their new goods and products. Due to this marketing for rural into the rural markets with their new goods and products. Due to this marketing for rural into the rural markets with their new goods and products. Due to this marketing for rural into the rural markets with their new goods and products. Due to this marketing for rural

consuconsuconsuconsumers is becoming more complex. In a country like India, where a substantial mers is becoming more complex. In a country like India, where a substantial mers is becoming more complex. In a country like India, where a substantial mers is becoming more complex. In a country like India, where a substantial

number of the rural people are living below the poverty line, having high level of number of the rural people are living below the poverty line, having high level of number of the rural people are living below the poverty line, having high level of number of the rural people are living below the poverty line, having high level of

unemployment and poor literacy level; consumer awareness continues to remain low. unemployment and poor literacy level; consumer awareness continues to remain low. unemployment and poor literacy level; consumer awareness continues to remain low. unemployment and poor literacy level; consumer awareness continues to remain low.

Several studiSeveral studiSeveral studiSeveral studies have shown that rurales have shown that rurales have shown that rurales have shown that rural consumers are generally ignorant and also consumers are generally ignorant and also consumers are generally ignorant and also consumers are generally ignorant and also

unorganised. Under these circumstances, the sellers or the manufacturers, exploit the unorganised. Under these circumstances, the sellers or the manufacturers, exploit the unorganised. Under these circumstances, the sellers or the manufacturers, exploit the unorganised. Under these circumstances, the sellers or the manufacturers, exploit the

consumers. consumers. consumers. consumers.

Though, the consumers in India have been provided with various safety measures Though, the consumers in India have been provided with various safety measures Though, the consumers in India have been provided with various safety measures Though, the consumers in India have been provided with various safety measures

against theagainst theagainst theagainst their exploitation, still the sellers and producers are hoarding and blackir exploitation, still the sellers and producers are hoarding and blackir exploitation, still the sellers and producers are hoarding and blackir exploitation, still the sellers and producers are hoarding and black----

marketing the essential goods, resorting economic corruption and frequently cheating marketing the essential goods, resorting economic corruption and frequently cheating marketing the essential goods, resorting economic corruption and frequently cheating marketing the essential goods, resorting economic corruption and frequently cheating

the consumers. Rural markets are full of subthe consumers. Rural markets are full of subthe consumers. Rural markets are full of subthe consumers. Rural markets are full of sub----standard goods and duplicity of branded standard goods and duplicity of branded standard goods and duplicity of branded standard goods and duplicity of branded

goods is anothgoods is anothgoods is anothgoods is another major problem in rural areas. As there is no check on production and sale er major problem in rural areas. As there is no check on production and sale er major problem in rural areas. As there is no check on production and sale er major problem in rural areas. As there is no check on production and sale

of such products in the rural markets, many of these products have become health of such products in the rural markets, many of these products have become health of such products in the rural markets, many of these products have become health of such products in the rural markets, many of these products have become health

hazards. The expansion of service sector has added to the problem. Services like insurance, hazards. The expansion of service sector has added to the problem. Services like insurance, hazards. The expansion of service sector has added to the problem. Services like insurance, hazards. The expansion of service sector has added to the problem. Services like insurance,

bankinbankinbankinbanking, electricity, medical have expanded in the rural areas without any checks and g, electricity, medical have expanded in the rural areas without any checks and g, electricity, medical have expanded in the rural areas without any checks and g, electricity, medical have expanded in the rural areas without any checks and

balances and the rural consumers continue to be exploited by the service providers. balances and the rural consumers continue to be exploited by the service providers. balances and the rural consumers continue to be exploited by the service providers. balances and the rural consumers continue to be exploited by the service providers.

Deficiency in services is a major area of concern. Spurious drugs are causing major Deficiency in services is a major area of concern. Spurious drugs are causing major Deficiency in services is a major area of concern. Spurious drugs are causing major Deficiency in services is a major area of concern. Spurious drugs are causing major

health hhealth hhealth hhealth hazards. The vulnerable sections are mainly women, children and farmers. It is azards. The vulnerable sections are mainly women, children and farmers. It is azards. The vulnerable sections are mainly women, children and farmers. It is azards. The vulnerable sections are mainly women, children and farmers. It is

ii

common to find that farmers are supplied defective seeds, adulterated pesticides and other common to find that farmers are supplied defective seeds, adulterated pesticides and other common to find that farmers are supplied defective seeds, adulterated pesticides and other common to find that farmers are supplied defective seeds, adulterated pesticides and other

sub standard commodities. In the rural markets and hats spurious goods are very sub standard commodities. In the rural markets and hats spurious goods are very sub standard commodities. In the rural markets and hats spurious goods are very sub standard commodities. In the rural markets and hats spurious goods are very

common.common.common.common. The expansion of mass media has further given impetus to consumerism in the The expansion of mass media has further given impetus to consumerism in the The expansion of mass media has further given impetus to consumerism in the The expansion of mass media has further given impetus to consumerism in the

rural areas. rural areas. rural areas. rural areas. Therefore, now it is widely believed that the fate of the consumers cannot be Therefore, now it is widely believed that the fate of the consumers cannot be Therefore, now it is widely believed that the fate of the consumers cannot be Therefore, now it is widely believed that the fate of the consumers cannot be

left to the market forces. In view of this the Government of India has taken a number ofleft to the market forces. In view of this the Government of India has taken a number ofleft to the market forces. In view of this the Government of India has taken a number ofleft to the market forces. In view of this the Government of India has taken a number of

legal measures to protect the consumers by enlarging the scope of consumer protection. Of legal measures to protect the consumers by enlarging the scope of consumer protection. Of legal measures to protect the consumers by enlarging the scope of consumer protection. Of legal measures to protect the consumers by enlarging the scope of consumer protection. Of

the various legal remedies,the various legal remedies,the various legal remedies,the various legal remedies, the Consumer Protection Act, enacted on 24 the Consumer Protection Act, enacted on 24 the Consumer Protection Act, enacted on 24 the Consumer Protection Act, enacted on 24thththth December 1986 is December 1986 is December 1986 is December 1986 is

the principal legal remedy available to the consumers. This is an importantthe principal legal remedy available to the consumers. This is an importantthe principal legal remedy available to the consumers. This is an importantthe principal legal remedy available to the consumers. This is an important Act which Act which Act which Act which

seeks to provide better protection of the interests of the consumers.seeks to provide better protection of the interests of the consumers.seeks to provide better protection of the interests of the consumers.seeks to provide better protection of the interests of the consumers.

According to experts, the four factors which influence demand in rural India areAccording to experts, the four factors which influence demand in rural India areAccording to experts, the four factors which influence demand in rural India areAccording to experts, the four factors which influence demand in rural India are----

access, attitude, awareness and affluence. Some companies have successfully used this to access, attitude, awareness and affluence. Some companies have successfully used this to access, attitude, awareness and affluence. Some companies have successfully used this to access, attitude, awareness and affluence. Some companies have successfully used this to

infinfinfinfluence the rural market for its shampoos in sachets. The sachet strategy has proved so luence the rural market for its shampoos in sachets. The sachet strategy has proved so luence the rural market for its shampoos in sachets. The sachet strategy has proved so luence the rural market for its shampoos in sachets. The sachet strategy has proved so

successful that, according to an ORG successful that, according to an ORG successful that, according to an ORG successful that, according to an ORG ---- MARG data, 95 percent of total shampoo sale in MARG data, 95 percent of total shampoo sale in MARG data, 95 percent of total shampoo sale in MARG data, 95 percent of total shampoo sale in

rural India is by sachets. The company had developed a direct access to markets thrrural India is by sachets. The company had developed a direct access to markets thrrural India is by sachets. The company had developed a direct access to markets thrrural India is by sachets. The company had developed a direct access to markets through ough ough ough

wholesale channel and created awareness through media, demonstration and on ground wholesale channel and created awareness through media, demonstration and on ground wholesale channel and created awareness through media, demonstration and on ground wholesale channel and created awareness through media, demonstration and on ground

contact. This changed the attitude of the villagers. Today, the young and the educated in contact. This changed the attitude of the villagers. Today, the young and the educated in contact. This changed the attitude of the villagers. Today, the young and the educated in contact. This changed the attitude of the villagers. Today, the young and the educated in

the villages are already large in number and this number is increasing. Alreadthe villages are already large in number and this number is increasing. Alreadthe villages are already large in number and this number is increasing. Alreadthe villages are already large in number and this number is increasing. Already, 40 y, 40 y, 40 y, 40

percent of all those graduating from colleges are rural youth. They are the decision percent of all those graduating from colleges are rural youth. They are the decision percent of all those graduating from colleges are rural youth. They are the decision percent of all those graduating from colleges are rural youth. They are the decision

makers and are not very different in education, exposure, attitudes and aspirations from makers and are not very different in education, exposure, attitudes and aspirations from makers and are not very different in education, exposure, attitudes and aspirations from makers and are not very different in education, exposure, attitudes and aspirations from

their counterparts at least in smaller cities and towns.their counterparts at least in smaller cities and towns.their counterparts at least in smaller cities and towns.their counterparts at least in smaller cities and towns.

Consumers are explConsumers are explConsumers are explConsumers are exploited when they are cheated in any form or when not informed oited when they are cheated in any form or when not informed oited when they are cheated in any form or when not informed oited when they are cheated in any form or when not informed

adequately about the product. Consumer exploitation is in many ways. They may be adequately about the product. Consumer exploitation is in many ways. They may be adequately about the product. Consumer exploitation is in many ways. They may be adequately about the product. Consumer exploitation is in many ways. They may be

exploited by giving incomplete or wrong information. They may be exploited by sellers exploited by giving incomplete or wrong information. They may be exploited by sellers exploited by giving incomplete or wrong information. They may be exploited by sellers exploited by giving incomplete or wrong information. They may be exploited by sellers

who may weigh less or measurwho may weigh less or measurwho may weigh less or measurwho may weigh less or measure wrongly. Sometimes, a consumer may be given low e wrongly. Sometimes, a consumer may be given low e wrongly. Sometimes, a consumer may be given low e wrongly. Sometimes, a consumer may be given low

quality of goods. One of the very common and a serious problem by which a consumer quality of goods. One of the very common and a serious problem by which a consumer quality of goods. One of the very common and a serious problem by which a consumer quality of goods. One of the very common and a serious problem by which a consumer

may be exploited and cheated by the shopmay be exploited and cheated by the shopmay be exploited and cheated by the shopmay be exploited and cheated by the shop----keeper is by providing impure or adulterated keeper is by providing impure or adulterated keeper is by providing impure or adulterated keeper is by providing impure or adulterated

goods with harmful substances. Food agoods with harmful substances. Food agoods with harmful substances. Food agoods with harmful substances. Food adulteration is a serious problem in the rural dulteration is a serious problem in the rural dulteration is a serious problem in the rural dulteration is a serious problem in the rural

markets where the administrative machinery is not able to tackle this menace. As far as markets where the administrative machinery is not able to tackle this menace. As far as markets where the administrative machinery is not able to tackle this menace. As far as markets where the administrative machinery is not able to tackle this menace. As far as

the service sector is concerned a large number of complaints regarding medical services, the service sector is concerned a large number of complaints regarding medical services, the service sector is concerned a large number of complaints regarding medical services, the service sector is concerned a large number of complaints regarding medical services,

banking, insurance and electricitbanking, insurance and electricitbanking, insurance and electricitbanking, insurance and electricity go unreported as the consumer is unaware of the y go unreported as the consumer is unaware of the y go unreported as the consumer is unaware of the y go unreported as the consumer is unaware of the

redressal mechanism. Cases of medical negligence are common in the rural areas but redressal mechanism. Cases of medical negligence are common in the rural areas but redressal mechanism. Cases of medical negligence are common in the rural areas but redressal mechanism. Cases of medical negligence are common in the rural areas but

then the consumer has no choice.then the consumer has no choice.then the consumer has no choice.then the consumer has no choice.

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The present study has been conducted in five states of India namely Uttarakhand The present study has been conducted in five states of India namely Uttarakhand The present study has been conducted in five states of India namely Uttarakhand The present study has been conducted in five states of India namely Uttarakhand

from Nortfrom Nortfrom Nortfrom North, Maghalaya from East, Gujarat from West, Tamilnadu from South and h, Maghalaya from East, Gujarat from West, Tamilnadu from South and h, Maghalaya from East, Gujarat from West, Tamilnadu from South and h, Maghalaya from East, Gujarat from West, Tamilnadu from South and

Madhya Pradesh from Central India. The study attempts to evaluate the changing Madhya Pradesh from Central India. The study attempts to evaluate the changing Madhya Pradesh from Central India. The study attempts to evaluate the changing Madhya Pradesh from Central India. The study attempts to evaluate the changing

profile of the rural consumers in India, assess the level of awareness, of rural consumers profile of the rural consumers in India, assess the level of awareness, of rural consumers profile of the rural consumers in India, assess the level of awareness, of rural consumers profile of the rural consumers in India, assess the level of awareness, of rural consumers

on various consumon various consumon various consumon various consumer protection measures initiated by the Government of India and other er protection measures initiated by the Government of India and other er protection measures initiated by the Government of India and other er protection measures initiated by the Government of India and other

agencies, assess the rural consumers current knowledge, attitudes, behaviour and agencies, assess the rural consumers current knowledge, attitudes, behaviour and agencies, assess the rural consumers current knowledge, attitudes, behaviour and agencies, assess the rural consumers current knowledge, attitudes, behaviour and

practices while purchasing goods or availing services, examine the nature of unfair trade practices while purchasing goods or availing services, examine the nature of unfair trade practices while purchasing goods or availing services, examine the nature of unfair trade practices while purchasing goods or availing services, examine the nature of unfair trade

practices in tpractices in tpractices in tpractices in the rural areas, assess the level of satisfaction of the rural consumers on he rural areas, assess the level of satisfaction of the rural consumers on he rural areas, assess the level of satisfaction of the rural consumers on he rural areas, assess the level of satisfaction of the rural consumers on

various products and services available in the rural areas and to draw conclusions from various products and services available in the rural areas and to draw conclusions from various products and services available in the rural areas and to draw conclusions from various products and services available in the rural areas and to draw conclusions from

the study and suggest remedial measures for better protection of the rural consumers.the study and suggest remedial measures for better protection of the rural consumers.the study and suggest remedial measures for better protection of the rural consumers.the study and suggest remedial measures for better protection of the rural consumers.

We wouWe wouWe wouWe would like to acknowledge the support extended by the Department of ld like to acknowledge the support extended by the Department of ld like to acknowledge the support extended by the Department of ld like to acknowledge the support extended by the Department of

Consumer Affairs, GoI in conducting this study. We are particularly thankful to Shri. Consumer Affairs, GoI in conducting this study. We are particularly thankful to Shri. Consumer Affairs, GoI in conducting this study. We are particularly thankful to Shri. Consumer Affairs, GoI in conducting this study. We are particularly thankful to Shri.

Rajiv Agarwal, Secretary, Shri Rakesh Kakkar, Additional Secretary and Shri G.N Rajiv Agarwal, Secretary, Shri Rakesh Kakkar, Additional Secretary and Shri G.N Rajiv Agarwal, Secretary, Shri Rakesh Kakkar, Additional Secretary and Shri G.N Rajiv Agarwal, Secretary, Shri Rakesh Kakkar, Additional Secretary and Shri G.N

Shreekumaran, Joint SecreShreekumaran, Joint SecreShreekumaran, Joint SecreShreekumaran, Joint Secretary, Department of Consumer Affairs, GoI for their help. We tary, Department of Consumer Affairs, GoI for their help. We tary, Department of Consumer Affairs, GoI for their help. We tary, Department of Consumer Affairs, GoI for their help. We

would also thank Dr. Rakesh Hooja, Director IIPA, New Delhi for his encouragement and would also thank Dr. Rakesh Hooja, Director IIPA, New Delhi for his encouragement and would also thank Dr. Rakesh Hooja, Director IIPA, New Delhi for his encouragement and would also thank Dr. Rakesh Hooja, Director IIPA, New Delhi for his encouragement and

guidance. Our thanks are due to our colleagues in the Centre for Consumer Studies guidance. Our thanks are due to our colleagues in the Centre for Consumer Studies guidance. Our thanks are due to our colleagues in the Centre for Consumer Studies guidance. Our thanks are due to our colleagues in the Centre for Consumer Studies

particularly Amit, Virendraparticularly Amit, Virendraparticularly Amit, Virendraparticularly Amit, Virendra and Pankaj for not only providing valuable inputs and and Pankaj for not only providing valuable inputs and and Pankaj for not only providing valuable inputs and and Pankaj for not only providing valuable inputs and

rendering support in completing the study but also in taking up most of the field work.. rendering support in completing the study but also in taking up most of the field work.. rendering support in completing the study but also in taking up most of the field work.. rendering support in completing the study but also in taking up most of the field work..

We also acknowledge the use of data from various sources for which appropriate references We also acknowledge the use of data from various sources for which appropriate references We also acknowledge the use of data from various sources for which appropriate references We also acknowledge the use of data from various sources for which appropriate references

are given.are given.are given.are given.

We are conWe are conWe are conWe are confident that this report will be useful to various stakeholders and policy fident that this report will be useful to various stakeholders and policy fident that this report will be useful to various stakeholders and policy fident that this report will be useful to various stakeholders and policy

makers to reorient policies and programmes for better protection of the rural consumers. makers to reorient policies and programmes for better protection of the rural consumers. makers to reorient policies and programmes for better protection of the rural consumers. makers to reorient policies and programmes for better protection of the rural consumers.

Unless the consumer movement reaches the village, the consumers will continue to be Unless the consumer movement reaches the village, the consumers will continue to be Unless the consumer movement reaches the village, the consumers will continue to be Unless the consumer movement reaches the village, the consumers will continue to be

exploitedexploitedexploitedexploited....

Suresh MisraSuresh MisraSuresh MisraSuresh Misra Sapna ChadahSapna ChadahSapna ChadahSapna Chadah

20.9.200920.9.200920.9.200920.9.2009 New DelhiNew DelhiNew DelhiNew Delhi

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Contents

Page No.

Preface i-iii

1. Chapter I Introduction 1-14

2. Chapter II Profile of Rural Consumers 15-42

3. Chapter III Level of Awareness among Rural Consumers 43-84

4. Chapter IV Findings & Recommendations 85-91

5. Annexure 92-94

1

CHAPTER I

INTRODUCTION

Globalisation, liberalisation and privatisation have transformed the Indian

economy into a vibrant, rapidly growing consumer market. As a result the markets

are flooded with different kinds of goods and services, substantially effecting and

changing the purchasing pattern of the consumers. The rural markets, which were

earlier ignored by most of the big international market players, are now being seen

as a land of great business opportunity. As the disposable income of the masses

is growing, more and more corporate houses are entering into the rural markets

with their new goods and products. Due to this marketing for rural consumers is

becoming more complex.

In a country like India, where a substantial number of the rural people are

living below the poverty line, having high level of unemployment and poor literacy

level; consumer awareness continues to remain low. Several studies have shown

that rural consumers are generally ignorant and also unorganised. Under these

circumstances, the sellers or the manufacturers, exploit the consumers. Though,

the consumers in India have been provided with various safety measures against

their exploitation, still the sellers and producers are hoarding and black-marketing

the essential goods, resorting economic corruption and frequently cheating the

consumers. Rural markets are full of sub-standard goods and duplicity of branded

goods is another major problem in rural areas. As there is no check on production

and sale of such products in the rural markets, many of these products have

become health hazards. The expansion of service sector has added to the

problem. Services like insurance, banking, electricity, medical have expanded in

the rural areas without any checks and balances and the rural consumers continue

to be exploited by the service providers. Deficiency in services is a major area of

concern. Spurious drugs are causing major health hazards. The vulnerable

sections are mainly women, children and farmers. It is common to find that farmers

are supplied defective seeds, adulterated pesticides and other commodities. In the

rural markets and hats spurious goods are very common. The expansion of mass

2

media has further given impetus to consumerism in the rural areas. Therefore, now

it is widely believed that the fate of the consumers cannot be left to the market

forces. In view of this the Government of India has taken a number of legal

measures to protect the consumers by enlarging the scope of consumer protection.

Of the various legal remedies, the Consumer Protection Act, enacted on 24th

December 1986 is the principal legal remedy available to the consumers. This is

an important Act which seeks to provide better protection of the interests of the

consumers.

In the present situation, consumer protection, though as old as consumer

exploitation, has assumed greater importance and relevance. Now there are laws

and policies which focus on consumer protection and welfare. Special emphasis is

being given to consumer education so that people become aware about their rights

and responsibilities as consumers and how to redress their grievances. In India

various Acts intended to protect the consumers directly or indirectly against

different forms of exploitation were enacted from time to time. However, except for

the Monopolies and Restrictive Trade Practices (MRTP) Act, 1969, all the other

Acts were mainly punitive and preventive in nature. Inspite of these Acts the

consumers did not have any effective mechanism or institutional arrangements for

the speedy redressal of their grievances and also the lack of effective popular

movement isolated the consumer and his plight only increased. Seeing the

pressure mounting from various consumer protection groups and the consumers

themselves the Parliament enacted the Consumer Protection Act in 1986.

Consumer Awareness in India

The Consumer Protection Act enacted on 24th December, 1986 is a

benevolent, unique and highly progressive piece of social welfare legislation

providing for simple, speedy and less expensive remedy for the redressal of

consumer grievances in relation to defective goods and deficient services.

Consumer Protection Act is a weapon in the hands of consumers to fight against

exploitation by traders, manufacturers and sellers on one hand and providers of

services on the other. The Act provides effective, people oriented, broad based

and efficient remedy to consumers against unfair dealings and exploitation. It was

3

enacted with an objective to provide better protection of the interests of the

consumers and to make provision for the establishment of Consumer Councils and

other authorities for the settlement of consumer disputes. Unlike other laws, which

are basically punitive or preventive in nature the provisions of the Act are

compensatory. It is a matter of great satisfaction that we can legitimately boast that

we now have in our country a statute, which provides more effective protection to

the consumers than any corresponding legislation in force in countries, which are

considered to be much more advanced and industrialised.

The Act contemplates establishment of adjudicatory and advisory

structures in the form of consumer fora and council structure respectively for the

protection of consumers rights. It extends to the whole of India except the State of

Jammu and Kashmir which has its own Consumer Protection Act. The Act applies

to all goods and services unless any good or service is expressly excluded by the

Central Government by notification. The Act extends to all sectors -public, private

or cooperative. The Consumer Protection Act is an alternative and additional

remedy to the remedies already available to the aggrieved persons/consumers by

way of civil suit.

To provide cheap, speedy and simple redressal to consumer disputes, three

tier quasi-judicial machinery is set up at each District, State and National levels

called District Forums, State Consumer Disputes Redressal Commission and

National Consumer Disputes Redressal Commission respectively. At present,

there are 662 District Forums, 35 State Commissions with apex body as a National

Consumer Disputes Redressal Commission (NCDRC). These quasi-judicial bodies

are required to follow summary procedure and Principles of Natural Justice to

provide quick and speedy justice to the consumers.

After the enactment of the Consumer Protection Act, 1986, the first

independent evaluation study of the implementation of this Act was done through a

study conducted by IIPA in 1994. It was found that large majority of the consumers

belonging to various categories and income groups were completely ignorant of

the existence of the CPA and the redressal agencies created under it. Eleven

4

years later, according to a survey commissioned through ORG Centre for Social

Research by the C&AG, the position had improved only marginally. The survey

was conducted in July-August, 2005 in 25 States/ UTs covering 48,732

consumers, 6237 complaints, 249 manufacturers / service providers, 39 NGOs and

34 laboratories. The report of ORG-MARG revealed that: 1

Sixty-six percent of the consumers interviewed were not aware of consumer rights and 82 percent were even unaware of the Act.

Nearly 49 percent of the aware consumers had come to know about the Act only in the last 4 years though the Act had been in existence for the past 18 years.

Overall, only 13 percent of the consumers reported to have been aware of the existence of any redressal agency.

A majority of the complainants came to know about the redressal agencies through electronic media (48 percent), print media (61 percent) and friends/relatives (68 percent,), NGOs were not a popular source of awareness as only 4.9 percentage of the complainants attributed their awareness to the work of NGOs.

The consumers were not aware of the features of the simple and inexpensive system of lodging complaint in the absence of any focused awareness programme launched by the Ministry or the States in this regard. The beneficiary survey carried out by ORG MARG revealed that 78 percent of the respondents were carrying a negative opinion of the efforts made by the government or had no idea about the same and were not aware that they could directly represent themselves in the Consumer Forums. It is pertinent to note that lack of awareness in this regard had deprived the consumers of the benefit of the adjudication mechanism as out of the total expenditure of ` 3387 incurred by the consumers on each case in the Consumer Forum on an average, as much as ` 2787 (82 percent) was the expenditure on advocates.

Therefore, one of the major hindrances in the consumer movement in the

country is the lack of awareness among the consumers. The consumers apart from

being unorganized do not have the mechanism to understand their rights and

responsibilities. These studies reveal not only lack of awareness but lack of

consumer education as well. A lot more needs to be done on this front. The right to

consumer education has been recogonised under the Consumer Protection Act,

1 CAG, Performance Audit of the Implementation of the Consumer Protection Act and Rules-Report

of the Comptroller and Auditor General of India for the year ended March 2005, Union Government (Civil), Performance Audit, 2006, p. 9

5

1986. However, unless awareness increases realizing the rights to the consumers,

consumer education remains a distant dream.

Need for Consumer Education

The need for consumer education has increased over time as today the

consumers operate in an increasingly complex marketplace and are faced with

increasing amounts of information and an expanding choice of complex products

and services. As a consequence they are more exposed to fraud and require a

wider range of skills and knowledge than ever before. Consumer education is a

potent tool for empowering consumers as it equips consumers with information and

skills necessary to meet challenges posed by the markets. Through education,

consumers obtain information about the products and the services and empower

them and makes them aware of their rights and responsibilities and helps to

ensure their welfare.

Consumer education improves the position of the consumers in the

marketplace and helps them make informed choice and thereby enhance their

welfare. It also contributes to the well functioning of the markets by promoting

effective competition. It is thus in the common interest of governments, consumers

and businesses to empower the individual consumer as much as possible through

awareness of his/her rights, knowledge of how to defend himself against various

pitfalls and to cope with the subsequent consequences, as well as the ability to act

proactively in the marketplace. According to Wells and Atherton consumer

education can be defined as:

a process of gaining skills, knowledge and understanding needed by individuals in a consumer society such that they can make full use of consumer opportunities presented in todays complex marketplace. 2 Most countries consider consumer education as an important tool for

consumer protection. However, the scope of consumer education differs

significantly among countries depending on the socio-economic and cultural

conditions prevailing there. Yet it generally covers one or more of the following

2 Wells, J and Atherton, M., Consumer Education : Learning for Life, Consumer 21, Autumn,

1998,pp. 15-20,

6

areas: consumer protection, consumer skills to help them make more informed

decisions and protection of public interest which relates to environmental and

social issues. Countries have articulated consumer education objectives in various

ways, such as laws on consumer protection; education on trade; government

programmes and strategies; and school and college curricula. High quality

programmes focused on stimulating relevant issues can engage the interest of

consumers and help equip them with the skills and knowledge to make better

choices and to resolve problems when things go wrong. Empowered consumers

are knowledgeable, confident, assertive and self reliant. Consumer education has

an important role to play in supporting those with less developed consumer

knowledge and skills. By demanding high standards from business, consumers

help promote vigorous, competitive, markets. As a tool for empowerment,

consumer education is therefore important to make markets work well for

consumers.

Structure of Consumer Education

Available literature indicates that consumer education takes many forms

and takes place in many different settings, from formal courses in schools or

universities to informal experience in families, communities and workplaces. Three

forms of consumer education are being implemented in OECD member countries

and some non-member economies which are as follows: 3

Formal education refers to learning through a programme of instruction in

an educational institution, adult training centre or in the workplace, and is generally

recognized by a qualification or a certificate. All countries acknowledge that

children and young people are particularly important targets of consumer education

as theses age groups account for an ever-increasing share of family consumption.

At the same time they are likely to be particularly vulnerable to making unwise

decisions and or falling victim to aggressive marketing. The fact that both parents

often work outside the home has led to a change in the role of parents in consumer

training. With this in mind, many countries have made consumer education

3 OECD, Promoting Consumer Education Trends, Policies and Good Practices, OECD, 2009 pp.

11-31;

7

compulsory in primary, secondary and in some countries in upper-secondary

grades. The objectives include helping pupils to: gain knowledge of what it means

to act as informed consumers; develop and understand societys function as a

whole and specific role of consumers; master skills to function as informed and

responsible consumers; recognize the importance of being an informed consumer.

The ultimate goal is for consumers to act spontaneously in informed, educated and

responsible ways. 4

In most countries, consumer education is integrated into the school

curriculum in an interdisciplinary way. Subjects that may include consumer

concepts are economics, mathematics, biology, chemistry, language, arts,

business education and home economics. These subjects cover a variety of issues

which are important for consumers in contemporary society, including the effects of

consumption on the environment, production and consumption in a global

perspective, health and food, product quality and safety, and financial

management. Relevant issues are thus addressed in cross-curricular themes such

as home economics, citizenship, civic education or social studies.

In addition, a variety of non-formal education tools or activities (i.e. not

included in the curriculum) complement more traditional methods. These are

websites, videos, exercise books, school magazines as well as theme days, school

competitions and contests, consumer clubs, national fairs for teachers and pupils

and special educational programmes. These non-formal teaching tools are mostly

produced by consumer associations in co-operation with parent-teacher

associations, and in some countries with other stakeholders. Consumer education

generally focuses on the primary and secondary school curriculum. However, in

some countries it also takes place in universities.

Lifelong education- There is wide consensus that learning, which is of

significance to individuals as well as to communities and societies, must extend

beyond formal education. Lifelong education covers all purposeful learning activity

4 Bannister, R. and C. Monsma, Classification of Concepts in Consumer Education NASSP

Bulletin, 1982

8

from the cradle to the grave which aims to improve the knowledge and

competencies of all individuals who participate in learning activities. A prerequisite

for lifelong learning is a sound foundation in basic educational competencies

acquired in formal education and opportunities for further learning once persons

leave initial education and training. Practically, this includes education available at

community centres as well as loosely organized education. Lifelong learning may

take place at the individual level (e.g. self-directed learning) or at the group level

(e.g. at the workplace or within the family).

One of the fundamental features of lifelong learning is a systematic and

interconnected approach to the organization of learning rather than a fragmented

approach in which separate policies are implemented for each stage of education.

This is appropriate for consumer education, since consumers knowledge and

information needs to be frequently updated, and the attainment of informed and

knowledgeable consumption is a cumulative process. The adult consumers face a

more complex environment than young consumers, the range of knowledge they

need also becomes broader and more complex as they grow older.

Targeted education- It refers to a range of educational activities designed

for particular consumer groups that are considered vulnerable (e.g. women, the

disabled and the poor) to help protect them against fraudulent or deceptive

practices in the marketplace or other specific consumerrelated issues. Specific

groups which are targeted in various countries in their major initiatives are: young

children, the elderly, women, people with a limiting or longstanding illness or

handicapped, populations in rural areas, unemployed persons and tourists.

These three concepts are not mutually exclusive. Lifelong education is a

broad concept that encompasses both formal and targeted education. At the same

time, several countries implement formal and/or targeted education but do not

support the lifelong learning concept. Lifelong and targeted consumer education

may be non-formal or informal:

9

Non-formal learning takes place through a programme but is not usually evaluated and does not lead to certification.

Informal learning is learning from daily work-related, family or leisure activities.

Framework for Consumer Education

Most countries have a centralized institutional framework for consumer

education, under which the central government develops consumer education

policies which reach local areas through local governments or through regional

networks. In many countries, local governments implement policies which are

adjusted to the regional environment but they lack discretionary power. A few

countries operate consumer education policies in a decentralized way. In this case,

the central government sets the overall policy framework but major initiatives are

developed and delivered at local levels.

Other market players and stakeholders actively involved in consumer

education include:

Consumer organizations and other civil groups whose objective is to promote consumer education.

Industry and trade associations and individual companies.

Universities and educational institutions.

Teachers associations, practitioners, teachers and instructors.

Family and parents associations.

Media

As the scope of consumer education has broadened and become more

proactive, more groups have been involved and there has been a greater focus on

influencing consumption behaviour in more conscious and critical ways. The

respective roles of the public and private sectors in enhancing consumer education

vary among jurisdictions, depending in part on their statutory situation. In general,

the provision of information and advice relating to consumer protection is mainly

the task of government and consumer organization. Yet the objective of raising

consumer awareness involves a broader range of stakeholders.

10

Key Issues and Challenges in Consumer Education

Basically consumer education faces five main challenges: 5

Lacks of overall strategies- Most countries do not have an overall

consumer education strategy. Even in countries where lifelong consumer

education has been endorsed, little appears to have been done to

implement programmes to support such learning.

Need to enhance the quality of education provided- According to the

country responses, the quality of consumer education could be

enhanced in terms not only of content, but also of delivery.

Limited opportunities for education in school settings- Because of

the limited time available in the school curriculum, it is not easy to find a

place for consumer education. In addition, responses indicate that the

relevant governmental institutions do not always fully see the importance

of consumer education and that school teachers hesitate to include

consumer education in their classes.

Lack of coherence in education initiatives- Although consumer

education in taught, there is a general lack of cohesiveness with other

relevant education policies, and it is implemented in a fragmented way.

Lack of sufficient self-motivation for both the educated and the

educator- Some responses suggest that it is difficult for policy - makers

to promote consumer education because both the educators and the

educated are not very motivated to find and profit from the relevant

educational opportunities and information.

Limited resources- All of these challenges require additional resources

but these are limited in many countries.

Need of the Study

Since 1986, consumer education and awareness has attracted the attention

of the Government of India. The laws can only give certain rights to the consumers,

but its functioning and implementation largely depends on the awareness and

5 OECD, Promoting Consumer Education Trends, Policies and Good Practices, OECD, 2009 pp.

39-40

11

efforts of the consumers themselves. The problem is more acute in the rural areas.

In fact, an educated and aware person is an empowered consumer. Education

equips a person with the skill to make discerning choices, to sort out problems

effectively and to seek further information and help appropriately.

In this backdrop of ongoing efforts of Government of India to disseminate

the consumer rights to the people and to protect them from the exploitation of

market forces, the focus of the present research work is to evaluate the level of

consumers awareness in different parts of rural India. The reports of National

Commission for Applied Economic Research clearly reveal that the rural growth

rates have already outpaced urban ones and will continue to do so through the

next decade. Rural India accounts for more than 50% of the GDP. Out of 62.97

million households of India those are getting more than 5 lakhs per annum, nearly

28.68 million households (46%) live in Rural India. The rural market in India is

projected to be bigger than the urban market for fast moving consumer goods;

rural consumption expenditure is accounted for around 60 percent of the country's

total consumption expenditure. Hence, it is imperative to analyse the social, legal

and other measures taken in rural areas to protect the interest of consumers, as

more and more companies will try to sell their goods and products in rural markets.

The rural consumers need to be educated about their rights and adequate steps

are taken to ensure that they get the value for their money as consumers.

Objectives of the Study

The main objectives of the study are as follows:

1. To evaluate the changing profile of the rural consumers in India 2. To study the level of awareness, of rural consumers on various consumer

protection measures initiated by the Government of India and other agencies.

3. To evaluate the rural consumers current knowledge, attitudes, behaviour

and practices while purchasing goods or availing services.

4. To examine the nature of unfair trade practices in the rural areas.

12

5. To assess the level of satisfaction of the rural consumers on various products and services available in the rural areas.

6. To draw conclusions from the study and suggest remedial measures for better protection of the rural consumers.

Methodology

The present study is an empirical research based on both primary and

secondary data. It is a blend of both descriptive and analytical methods of study.

The secondary data was collected from government publication, books, journals,

newspapers and various prominent Voluntary Consumer Organisations working in

this area. The information regarding level and satisfaction, awareness, attitude and

behaviour of rural consumers at individual and household level was gathered

through primary surveys. For the purpose an interview schedule was prepared.

Besides focus group interaction was also done. The questionnaire was subjected

to reliability by pre-testing the constructed tools by administering it to 100

consumers randomly. The questionnaire was modified based on the responses got

from the consumers.

The sample areas were selected in a way that they can best represent the

entire geographical regions of the country. Consequently, five states from different

regions of India were selected for the study. They were: Uttarakhand from North,

Maghalaya from East, Gujarat from West, Tamilnadu from South and Madhya

Pradesh from Central India. It is true that geographical location may not

necessarily be the influencing factor of peoples awareness but such a selection is

necessary to know the level of awareness among consumers, from all the parts of

the country. The sample was selected from these five states using the random

sampling technique. From each State two Districts and from each district two

blocks were randomly selected. From each block four villages were randomly

selected. It was not difficult to identify a consumer as everyone is a consumer and

either buys a product or avails of a service for consideration. The households from

these villages were selected by random sampling technique. Total sample of 2000

households was taken for investigation from 80 villages (25 household from each

village) spreading across ten Districts of five selected states. The data so collected

13

was analyzed and tabulated. Appropriate statistical methods were applied to

classify and analyze the data, collected on the subject.

Sample Area

State District Two blocks randomly selected from each district

Ahmedabad Daskroi Bavla Gujarat Junagarh Veraval Talala

Bhopal Phanda Berasia Madhya

Pradesh Jabalpur Sihore Kundam

East Khasi Hills Mylliem Mawryngkneng Meghalaya Ribhoi Umsning Umling

Kanyakumari Agasteeswaram Thovalai Tamilnadu Viudhnagar Aruppukottai Kariapatti

Nainital Bhimtal Dhari Uttarakhand Pauri Garhwal Pauri Kot

All India (2000)

Tamilnadu (400)

Mehalaya (400)

MP (400)

Gujarat (400)

Two Districts from each State

(2x5 =10)

Two Blocks from each District

(2x10 = 20)

Uttarakhand (400)

Four Villages from each Block

(4x20 = 80)

25 HH from each village

(25x4 = 100)

14

Work plan and its phasing:

Work Plan Months

1 2 3 4 5 6

Phase 1- Identification of District and Villages and Resource Planning

Phase 2- Collection of Primary and Secondary Data

Phase 3- Data Analysis and Report writing

Phase 4- Final Report Preparation and Plan formulation

15

CHAPTER II

PROFILE OF RURAL CONSUMERS

Introduction

India lives in numerous villages, scattered throughout the country. Rural

areas currently are home to nearly 70 percent of Indias population and have

historically accounted for more than half of Indian consumption. Even with

increasing urbanization and migration, it is estimated that 63 percent of Indias

population will continue to live in rural areas by 2025. In terms of economic output,

rural India accounts for almost half (48%) of the countrys economy, and the rural

markets have the potential to reach $500 billion by 2020. Thus rural areas will

continue to remain vitally important to the Indian economy. However, it is

unfortunate truth that a large percentage of this population lives in high risk and

unpredictable environment. Large section of the population lacks even basic

services like education, health, drinking water, sanitation and employment.

Providing rural India with better access to services, technology, education and

health care will reduce inequality, alleviate poverty for hundreds of millions of

Indias citizen and add an additional engine of growth to Indias bulging economy.

The rural population in India comprises the core of Indian society and

represents the real India. According to the 2001 census, there are 5, 80,779

villages in India and about 74% of Indian population lives in these villages. The

number of people living in each of these villages also varies considerably. It is

found that most of the Indian villages have a population of less than 10,000 while

there are only a few villages where more than 10,000 people live (Table 1). The

country opened up its economy in 1992 and since then due to globalisation and

liberalisation the market is flooded with new products and services. Technological

revolution and information explosion have also given tremendous boost to

consumer culture. The consumers have been sucked into the market economy and

today the market determines the needs and preferences of the consumers. This

16

consumer culture and the changing consumption pattern is now not only confined

to the urban areas but is going deep down to the rural markets. The rural markets

are the new hunting grounds for the business.

Table 1 Location and Concentration of Rural Population

Population Range (No of

Persons) Number of

Villages Proportion to Total Village

Proportion to total Rural Population

Less than 200 103952 17.9 1.7 200 to 499 141143 24.3 7.8

500 to 9991 144998 25 16.8 1000 to 1999 114395 19.7 25.7 2000 to 4999 62915 10.8 29.8 5000 to 9999 10597 1.8 11.2

10000 and above 2779 0.5 7.0 Total 580779 100 100

Source: Census of India, 2001

Given the rapidity with which urban population is growing, the share of rural

population may come down to 70 percent by the turn of this century. While a

quarter (25.70 percent) of population of India is classified as urban (in 1991), only

20.83 percent of the labour force lives in cities. Rural areas thus sustain four-fifth

of the total labour force (main workers) of the country. More than two thirds (63.2

percent) of the working population is engaged in agriculture and allied activities (as

cultivators, agricultural labourers and live-stock farmer, etc. (Table 2 and Figure 1)

Table 2 Occupational Pattern of Rural population

Occupation Proportion to Total Rural Population (in %)

Agricultural 50 Agricultural labour 27 Business 10 Non-agricultural labour 9 Salary earners 2 Not gainfully employed 2 Total Rural Population 100

Source: Census of India, 2001

17

Though large parts of rural India continues to be abjectly poor and

dependent upon unprofitable agriculture business, yet there is a new emerging and

expanding rural India as well. This rural India is prosperous and has money power,

consisting of self employed people. Thus rural India with significant income growth

and employment diversity is a potential market for business to capture. The rural

consumers have now started demanding life improving products and services of

real quality and durables that enhance productivity and increase earning. Though

the penetration of most products in rural India is still very poor, however, a small

penetration of a large population results in a very large actual market size. Thus

rural markets are and will continue to remain attractive and important.

Figure 1

Occupation of Rural Population

Source: Census of India, 2001

PROFILE OF RURAL CONSUMERS

Sources of Rural Income

The share of rural activities in the gross National Product of the country is,

however, secularly declining. Agricultures share in the GDP in 1951 was 65

percent; it declined to 45 percent in 1971. In 1990-91, the contribution of

agriculture towards Gross Domestic Product (GDP) output was at 32%, which has

18

decreased to 20% by 2005-06. If this trend continues, the output would be

expected to decrease further. This makes us think about the fact that the Indian

economy is mainly dependant on agriculture, but in the future it would contribute to

only 10-15% of the GDP. We need to look into the reasons for this worrying trend.

Agriculture is undoubtedly the most important sector from the point of view of

inclusion, since it is the primary source of income for about half the population

even today. (Table 3 and Figure 2) The slowing down of agriculture growth to less

than 2 percent per annum, since the late 1990s has undoubtedly been the root

cause of much of the rural distress. Naturally then, the per capita income of rural

population is far lower than that of its counterpart living in urban areas.

Table 3

Source of Income of Rural Population

Sources of income Proportion to Total Rural income

Agricultural 59 Agricultural wage 16 Business & Craft 9 Non-agricultural wage 7 Salaries 3 Current transfers 2 Others 4 Total 100 Source: Census of India, 2001

Figure 2 Sources of Income of Rural Population

Source: Census of India, 2001

19

There are more poor in rural than in urban areas whether one looks at

poverty in terms of absolute number or in terms of percent of population below the

poverty line. A substantial number of urban poor have deep roots in rural areas.

When we look at the question of poverty in terms of access to work opportunities

and basic needs, the rural parts of India are in far worse situation. Self reliance

which made rural people meet their basic needs in most adverse circumstances

stands totally destroyed. Government, which professed and promised to uplift them

from the miserable living conditions, has failed to do much, if the records of the last

five decades are any indicator.

Land in its broadest sense is the most vital resource of rural India. Its

importance further increases in the context of rapid growth of population

particularly in rural areas. The first task of any meaningful rural development policy

is to ensure access to land for all those who were denied the same. Another major

task would be to diversify the rural economy to such an extent that dependence of

the people on agriculture declines. Agricultural census returns have consistently

shown iniquitous distribution of arable land in India. In 1971, the country had 71

million operational holdings which increased to 105 million in 1990-91. The

average size of holdings, however, declined from 2.28 ha in 1970-71 to 1.57 ha in

1990-91 indicating increasing pressure of population on land resources. When we

look at the size of distribution of holdings, we find that 69.9 percent of holdings

were small i.e. less than 2 ha in 1970-71. The proportion increased to 78.9

percent in 1990-91. The share of marginal holdings (less than one ha) also

increased from 51 percent to 59 percent. In 1970-71, almost 70 percent (69.90

percent) of the total operational holdings accounted for only 20.9 percent of the

area operated.

According to the NSS Report No. 492 on Some Aspects of Operational

land Holdings in India, 2002-03, released in 2006 there were 101.3 million

holdings operated during the kharif season of 2002-03 and 95.7 million holdings

operated during the rabi season of the same agricultural year. The average area

operated per holding in 2002-03 was 1.06 hectares compared to 1.34 hectares

20

during 1991-92 and 1.67 hectares in 1981-82. Marginal holdings (of size 1 hectare

or less) in 2002-03 constituted 70% of all operational holdings, small holdings (size

1 to 2 hectares) constituted 16%, semi-medium holdings (2 to 4 hectares) were

9%, medium holdings (4 to 10 hectares) were 4%, and large holdings (over 10

hectares) less than 1%. The share of marginal holdings in total operated area

climbed by 6-7 percentage points since 1991-92 to reach 22-23%, drawing level

with the shares of the semi-medium and medium holdings, which had the largest

shares in 1991-92. Tenant holdings, that is, holdings with partly or wholly leased-

in land, formed about 10% of operational holdings during 2002-03 compared to

11% in 1991-92. On an average, a tenant holding operated 0.7 hectares of

tenanted land in 2002-03. The share of leased-in land in total operated area, which

has been declining more or less steadily from 10.7% in 1960-61, was 6.5% for the

kharif season of 2002-03. Today land has become the most valuable asset for the

rural inhabitants due to lack of employment as a result there are serious protests

as a result of land acquisition.

The report of the global Hunger Index 2007 from International Food Policy

Research Institute (IFPRI) has ranked India 94th, well behind neighboring China

and Pakistan, in its overall list. Worse, while much is being made out of India being

a young country, the report said that 40 percent of the worlds underweight children

below five years live in India while more than half of all children with low birth

weight are born in South Asia. The report said that though India has improved its

score of 25.03 on the index compared to 33.73 in 1990, it is lagging behind China

and Pakistan ranked at 47 and 88 respectively, in the list of 118 countries. The

index is primarily based on a comparison of the undernourished out of the total

population of a country and prevalence of under weight children below five years.

One in seven people go to bed hungry every day, which counts up to 854 million

people worldwide. Hunger is one of the worlds major problems and therefore one

of its most important challenges, the report states.

Besides, Indias score on the progress indicator of the Global Hunger Index

is 0.496. It reduced hunger by 8.7 since 1990 whereas the reduction target was

21

17.6 for the period from 1990-2015. In India where a large majority of the South

Asias population lives, economic growth in the agricultural sector has lagged

considerably behind the growth in other sectors in recent years. This has a

negative effect on the progress in alleviating poverty and hunger in rural areas,

the report stated. Further, it added that members of the lower castes and certain

ethnic minorities continue to be discriminated against in the society and are

therefore in a disadvantageous position in regard to educational opportunities and

the labour market. The report published by the National Commission for

Enterprises in the Unorganized Sector (NCEUS) in August 2007 had come out with

similar findings. The NCEUS report had stated that agricultural labourers are

among the most marginalized group among the rural poor, at the lowest rung of

poverty levels.

On malnutrition in the South Asian Region, the IFPRI report said that in

some parts of India, for instance, male and women make do with the leftovers. This

results in children of undernourished and anemic mothers too have a higher risk of

being born underweight.

Rural Consumers

The rural consumer is generally seen as the less affluent, as compared to

his urban cousin but things are changing in rural India over the last ten years. Like

any market that has seen a demand and awareness boom, rural India has also

been witnessing considerable rise in purchasing power. A change in consumption

patterns and access to communication media have made rural market a vital cog in

the sales-growth wheel, especially with demand for many categories of products

and services plateau in the urban markets. In spite of increasing number of rural

consumers, provisions for consumer protection and welfare are often based on the

general standard and circumstances of those living in big cities and towns.

Although consumers as a whole are in an equal bargaining position, there are

certain recognizable groups which are disadvantaged in more ways than the

others. Disadvantaged consumers are those who are less able to assert their rights

and rural consumers comprise one such group. Rural consumers remain

disadvantaged as their right to information, choice, redress, and consumer

22

education are not sufficiently fulfilled. Consequently such consumers need support

in maintaining their rights so that they can bargain equally with the producers or

the service providers.

Marketing and Research Team, (MART) an organization involved for

decades in rural marketing research, has over the years built up a veritable trove of

research on rural consumers and their consumption patterns. Some of the findings

were presented by the President, MART at the Rural Marketing and

Communication Conference organized by the Federation of Indian Chamber of

Commerce and Industry (FICCI) at Delhi held in 2003. The following are the

findings of MART:

1. The rural consumer may not be very educated, but he is certainly astute,

with a lot of common sense and practical experience of handling the

vagaries and uncertainties of life. He displays great ingenuity and

adaptability as evidenced by his learning to repair his tractor, hand pump

and motorbike, and finding a host of local solutions in everyday life.

2. Though low on economic resources, he does not go in for only 'cheap

products but looks for value for money. Perception of a premium product

is not yet relevant in rural markets, with consumers more concerned with

functionality than unnecessary frills with a consumer durable. Too many

features with a product tend to confuse the rural consumer.

3. Rural consumers are generally mistrustful and wary of urbanities and

turned off by their patronizing attitudes. It is not easy for a rank outsider

to get the rural consumer to spend money.

4. Brand adherence is high among village consumers. This may not

necessarily be on account of loyalties. Limited access to alternatives and

lack of information about possible choices do make them 'stick' to tried

and tested brands.

23

5. Brand recognition is often on the basis of logos, symbols, colours rather

than the exact brand name. This tendency is partly responsible for the

widespread menace of spurious products in rural markets, as it is easy

to deceive the rural consumer with look-alikes.

6. A very high degree of involvement characterizes purchase of expensive

products like consumer durables. A lot of checking and counterchecking

is done to seek reassurance on the soundness of the buying decision.

Marketers must embody reassurance and provide opportunity to 'see

and touch' the product in their marketing communication processes.

7. Routine is important to a rural consumer's life as a lot of time consuming

activities characterize his everyday life. The routine is governed by

nature and seasons, not by the calendar or the clock. Sunday is not

typically a holiday. In buying processes, the consumer is not in a hurry

and cannot be pushed into a hasty purchase for these segments.

8. Rural incomes show a great seasonality for the segment of large

farmers. The segment of petty farmers, farm labour, non farm workers

and the salaried class show a greater regularity of income patterns so

the consumption cycles are also more regular and predictable.

9. On account of far higher degree of inter personal communication

characterizing village life and relatively low penetration of mass media,

word of mouth is a very effective medium of influence generation.

Existing users, dealers, village influential, youth studying or working in

urban locations are all consulted before making purchases.

10. Among the households with TV ownership, TV viewing is the highest

among women and children who in contrast to the traditional, household

head dominated decision scenario are fast emerging as demand

generators for the household goods. Decisions on durables like radio,

TV and two wheelers are still male dominated decisions, taken in

consultation with other people in the community.

24

11. The rural youth are increasingly becoming more exposed to urban

lifestyles on account of their frequent visits to urban locations either for

higher education or for work. Their media exposure to television is also

much higher. This makes urban lifestyles an inspirational model for them

and their preference for national brands is on the rise.

12. While culture and social norms have a greater hold on rural consumer

than urban ones, perceptions, traditions and values vary from state to

state, sometimes from region to region. It is, therefore, difficult to work

with a pan rural Indian communication package. Two step flow of

communication, using opinion leaders and mass media both, seems to

work better in rural settings. These observations made on the basis of a

host of research based inputs make it very clear that rural marketing

effort cannot be visualized as a simple extension of the urban marketing

process. It is a different market and presents a different set of premises

on the basis of which suitable marketing.

Impact of globalisation

The impact of globalisation is being felt in rural India as much as in urban.

But it is slow. However, in the long run it will have its impact on target groups like

farmers, youth and women. In some states the affluent farmers, today 'keep in

touch' with the latest information and maximise both ends. Animal feed producers

no longer look at Andhra Pradesh or Karnataka. They keep their cell phones

constantly connected to global markets. Surely, price movements and products'

availability in the international market seem to drive their local business strategies.

On youth its impact is on knowledge and information and while on women it still

depends on the socio-economic aspect.

Rising Rural Prosperity

Rural consumers have acquired importance as India is now seeing a

dramatic shift towards prosperity in rural households. Rural India with its traditional

perceptions has grown over the years, not only in terms of income but also in

terms of thinking. The purchasing power in rural India is on steady rise and it has

25

resulted in the growth of the rural markets. The market has been growing at 3-4

percent per annum adding more than one million consumers every year. According

to a study by the National Council for Applied Economic Research (NCAER), there

are as many middle incomes and above households in the rural areas as are in the

urban areas. Moreover, there are almost twice as many lower middle income

households in the rural areas as in the urban areas. At the highest income level

there are 2.3 million urban households against 1.6 million households in rural

areas. As per the NCAER projections, the number of middle income and high

income households in rural India was expected to grow from 80 million to 111

million by 2007. In urban India, the same is expected to grow from 46 million to 59

million. Thus, the absolute size of rural India is expected to be double that of urban

India. The rural households constitute 72.6 percent with a population of 74.6

percent while 27.4 percent constitute the urban households with a population of

25.4 percent.

Table 4 Percentage Distribution of Households

Source: Social Changes and the growth of Indian Rural Market: An Invitation to FMCG Sector by S. John Mano Raj & Dr. P Selvaraj

Table 5 Income-wise Distribution of Population

2001-02 2006-07 Income groups

Total Rural No. % Total

Rural No. %

High 1.48 0.41 27.7 2.96 0.7 23.6

Middle 69.18 4.83 64.8 90.25 59.85 66.3

Low 32.29 29.52 91.42 20.41 95.8 95.7

Total 102.95 74.76 72.6 114.52 80.96 70.7

Source: NCAER cited in Social Changes and the growth of Indian Rural Market: An Invitation to FMCG Sector by S. John Mano Raj & Dr. P Selvaraj

Area Households Population

Rural 72.6 74.6

Urban 27.4 25.4

All-India 100 100

26

Figure 3 Growth of Rural Population by Income Groups

Growth of Rural Population by Income Groups 27.7

64.8

91.4

2

72.6

23.6

66.3

95.7

70.7

0

20

40

60

80

100

120

High Middle Low Total

Income Groups

2001-02

2006-07

Figure 4 Growth in the Number of Rural Households

Growth in the number of rural households (%)

12

113

35

76

75

185

119

32-

51-

11-

2009-10 to 2015-16**

2004-05 to 2008-09

Upper-middle

Highest

Middle

Lowe-middle

Lowest

27

Figure 5

Age wise Growth of Rural Population

(All Figure in Million)

119. 5

233. 3

90. 7

82. 1

141. 9

104

73. 3

31. 1

70.6

108.5

239.1

0

109.0

0

90.2

0

156.6

0

121.6

0

85.7

0

26.4

0

62.3

0

0

50

100

150

200

250

300

0-4

5 t

o 1

4

15

to

19

20

to

24

25

to

34

35

to

44

45

to

54

55

to

59

60

+

Age Group

1996

2001

Source: Registrar General of India

Gone are the days when the rural consumer went to the nearby city to buy

branded products and services. The rural consumer is growing and the global

players in the market are trying to grasp the market share whether it is into

FMCGs sector or retail sector. Some FMCG products like toothpaste, hair oil and

other like shampoos have done much better in rural areas than in the urban and

the semi urban areas. The estimated annual business from rural markets is around

1, 23000 crores, comprising 65000 crores of FMCG ` 5000 crores of durables, `

45000 crores of agricultural inputs including tractors and ` 8000 crores of two

wheeler and four wheelers. Similarly the retail sector has a huge potential for

growth and the opportunities in retail sector is expected to touch $43 billion by the

year 2010.

28

Growth of Rural Markets

In recent years rural markets have acquired significance in countries like

India and China as the overall growth of the economy has resulted into substantial

increase in the purchasing power of the rural community. On account of

globalization and liberalization the rural areas are consuming a large quantity of

industrial and urban manufactured products. Rural market has witnessed a high

demand both for products and services. For several product categories, rural

markets account for well over 60 percent of the national demand. It is the rural

segment of the market that contributes more profit than its urban counterparts. The

general impression is that only agricultural inputs like seeds, fertilizers, pesticides,

cattle feeds and agricultural machinery have a potential for growth in the rural

market. However, there is a growing market for consumer goods now. It has been

estimated that the rural market is growing at the rate of five times its urban

counterpart (Tables 6, 7, 8, 9, 10, 11 and Figure 7)

Table 6 Comparison of Average Rural and Urban Monthly Per capita

Consumer Expenditure of Major States in 2007-08

Average MPCE (````) State Rural Urban

Andhra Pradesh 816 1550

Assam 799 1452 Bihar 598 1080 Chhattisgarh 582 1503 Gujarat 875 1471

Haryana 1034 1628 Jharkhand 592 1395 Karnataka 819 1668 Kerala 1383 1948 Madhya Pradesh 634 1190

Maharashtra 868 1709 Orissa 559 1438 Punjab 1273 1633 Rajasthan 801 1265 Tamil Nadu 834 1410

Uttar Pradesh 680 1121 West Bengal 702 1452 All India 772 1472

Source: NSSO, Ministry of Statistics and Programme Implementation, Govt. of India, 2007

29

Table 7

Size of Rural Markets

States Market Size (Crores)

Rural population (Millions), 2001 Census

Market Size per Capita (`)

Gujarat 86,451 31,740,467 27,237

Tamilnadu 61,422 34,921,681 17,589

Madya Pradesh 51,102 44,380,878 11,514

Uttrakhand 14,796 6,310,275 23,447

Mizoram 773 447,567 17,271

Andhra Pradesh 130,611 55,401,067 23,576 Assam 36,880 23,216,288 15,885 Arunanchal Pradesh 1,831 870,087 21,044 Andman & Nicobar 623 239,954 25,963 Bihar 57,062 74,316,709 7,678 Chhttisgarh 33,859 16,648,056 20,338 Chandigarh 525 92,120 56,991 Delhi 4,944 944,727 52,333 Dadar & Nagar Haveli 349 170,027 20,526 Daman & Diu 545 100,856 54,037 Goa 4,292 677,091 63,389 Himachal Pradesh 18,404 5,482,319 33,570 Haryana 53,455 15,029,260 35,567 Jharkhand 37,721 20,952,088 18,003 Jammu & Kashmir 15,307 7,627,062 20,069 Kerala 60,327 23,574,449 25,590 Karnataka 70,044 34,889,033 20,076 Lakshadweep 349 170,027 20,526 Maharashtra 126,313 55,777,647 22,646 Manipur 3,845 1,590,820 24,170 Nagaland 4,078 1,647,249 24,756 Orissa 57,254 31,287,422 18,299 Punjab 39,867 16,096,488 24,768 Pondicherry 814 325,726 24,990 Rajasthan 62,082 42,292,813 14,340 Sikkim 1,278 480,981 26,571 Tripura 6,593 2,653,453 24,847 Uttar Pradesh 146,528 131,658,339 11,129 West Bengal 122,703 57,748,946 21,248 Source: Indicus analytics

30

Table 8 Average Monthly Expenditure per person (`) at Current Prices

(in `) Rural Urban

Years Fo

od

No

n-f

oo

d

To

tal

Fo

od

No

n-f

oo

d

To

tal

27th round (oct1972-sept 1973) 32.16 12.01 44.17 40.84 22.49 63.33 32th round (July 1977 to June 1978) 44.33 24.56 68.89 57.67 38.48 96.15 38th round (January 1983 to December 1983) 73.63 38.68 112.31 97.31 68.49 165.8 43rd round (July 1987 - June 1988) 100.82 57.28 158.1 139.73 110.18 249.91 50th round (July 1993 - June 1994) 177.8 103.6 281.4 250.3 207.7 458 55th round (July1999 to June 2000) 288.8 197.36 486.16 410.84 444.08 854.92 61th round (July 2004-June 2005) 307.6 251.19 558.79 447.14 604.95 1052.09

Source : Source: NSS Report No.508, Level and Pattern of Consumer expenditure, 2004-05

Figure 6

(a) (b)

Expenditure on Food Items

32.16 44.33

307.6

57.67

97.31

139.73

250.3

177.8

100.8273.63

288.8

40.84

410.84447.14

0

100

200

300

400

500

600

700

800

900

1000

27th

ro

un

d

32th

ro

un

d

38th

ro

un

d

43rd

ro