The rise in rural incomes in India is a recent development that is set to sustain the growth of the emerging economy for the next 10 to 15 years, according to Sundaram Asset Management head of global business development Viju Rananathe Rao.
The jump in rural incomes has come about through a government initiative to involve the 60 per cent of the country's population living in rural areas in infrastructure projects underway in these regions.
"Normally a rural person, a farmer, works on the farm for about 100 to 150 days in a year. The balance of days he doesn't earn any money because he doesn't do any work. Now the government is coming with this policy which means it is guaranteeing 100 days of work to these farmers and also giving them a higher income everyday. They give them about 100 rupees a day minimum," Rao told attendees at the Fiducian India Fund Roadshow in Sydney yesterday.
"What it means is today a rural farmer in addition to his farm income is also getting a non-farm income because of government led projects," he said.
"We are seeing a rural consumption increase because of this where people are buying more television sets, more two-wheelers and more mobile phones."
New discoveries of oil and gas in India is another recent development that will also play a significant part in sustaining the country's impressive rate of economic growth for the years to come, Rao said.
The natural resource finds mean India will be able to reduce its reliance on imports for its oil and gas needs over the next five to 10 years, replacing the overseas items with the cheaper domestic substitutes.
According to Rao this will further strengthen the domestic consumption story of India that sustains the strength of its economy.
"We see these are the themes that will work in India for the next 10 to 15 years," Rao said.
