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Abstract

Role of Organized Retail Trading in Rural Development of India


Dr. Deepa Rawat
*
,
Deepti
**

The Indian economy is basically an agrarian economy. Although, the share of
agriculture and allied services in the GDP has come down to 14.6 in 2009-10,the
dependence of nearly two third of the population directly on agriculture makes this
sector important in terms of employment and income generation. Agricultural
activities are mostly rural based, as such the overall development of rural areas is
crucial for the development of agriculture, in particular and GDP in general.
Although, the overall average annual growth rate of agriculture and allied
activities has remained about 2.9 per cent during 1991-2009, non-farm activities have
expanded many folds in rural areas. Retailing is an important non-farm activity that is
expected to increase at a very fast pace in the coming years due to continuous surge in
the demand in agriculture inputs and consumer products. It is one of the sunrise
sectors of the economy and is expected to yield high returns and provide employment
to a large number of people in the future in both urban and rural areas. Indian
companies as well as some major multinationals have established themselves in urban
areas and some are penetrating into rural areas to tap the high potential in terms of
sales in the market.
Indian retail market is the fifth largest retail destination globally. It is estimated
to grow from $427 billion in 2010 to $637 billion in 2015. Although the share of
organised retailing is only 4 to 5 percent with the rest 94-95 percent in the
unorganised sector, the organized sector is expected to grow at the rate of 25 percent
per annum and is estimated to reach `100000 crore in 2010.
Besides the changing scenario in urban areas, the rural landscape in also
changing fast. The rural population dominates the Indian market with over 742 million
consumers spread across 0.63 million villages. 53 percent FMCG and 59 percent
durables sales come from rural India. Moreover there has been an increase in the rural

*
Associate Professor & Head, Department of Economics Agra College, Agra.
**
Research scholar, Department of Economics Agra College, Agra.
income in the last few years due to higher agricultural production, agricultural loan
waiver scheme, NREGA, Bharat Nirman etc.,all these add up to great opportunity for
the organized retailers in rural markets.
All the rural retailing initiatives like Hariyali Kisaan Bazar, TKK, Shakti etc.
are not only being developed as consumer markets but they are also being developed
as a cost effective supply chain to bring down the transaction costs. The expansion of
organised rural retailing will benefit both the retailers as well as the farmers, as it will
bring about a change in the rural environment. Improvement in rural infrastructure,
better roads and an efficient transport system, technological up gradation, increase in
literacy, awareness of rural people, development of communication system through
phones, internet etc., increase in agricultural productivity, more disposable incomes
etc. are some of the positive changes that will occur in unison with expansion of rural
retailing. This is turn will lead to all round rural development.