NEW DELHI: A Report on India’s wealth by consultancy firm Karvy has revealed that a steady but quiet revolution gained pace across the countryside in 2017 and that it is the ‘Bharat’ and not ‘India’ which is driving the country’s growth story.
After a lull of about three years, rural India and smaller cities are booming again and has the potential to power the country’s economic engine forward. Be it mobile phones or internet usage, automobiles or FMCG, rural consumption is ascending. The Report read that the government’s financial inclusion initiative is the main reason behind this.
The report talks about a bountiful monsoon, and how the government’s financial inclusion drive and increasing penetration of banking financial services insurance companies into the smaller cities are driving demand for a wide range of financial services.
As per the report, the government’s drive to bring larger sections of the population into the banking system has spurred huge penetration of financial services across the countryside. According to RBI, the total balance in ‘Pradhan Mantri Jan Dhan Yojana’ stood at Rs 69,026 crore by November last year with 18 crore accounts from rural areas. Besides, the RBI’s move to grant small bank licences to microfinance institutions (MFIs) is increasing penetration of the formal banking system in rural areas, and creating a demand for a wider bouquet of financial services.
This robust rural growth is reflected across the board, even beyond Jan Dhan accounts. Banks have recorded a substantial rise in deposits in current, savings and term deposits in the last one year. Deposits in rural and semi-urban areas grew at a pace faster than in urban branches. Penetration of life insurance industry rose to 2.72% in FY17 with premium growth of 8% during this period.
Inflows into mutual funds, too, are on the rise across India. According to Association of Mutual Funds in India data, MFs have seen their assets under management (AUM) soaring by 30 per cent in 2017. AUM in rural cities increased to `3.79 lakh crore by September-end last year, a growth of 38 per cent as compared to 2016.
The highest growth in AUM has come from smaller cities such as Ranchi, Madurai, Siliguri, Jabalpur, Bhavnagar, Gorakhpur, Vasco, Bilaspur, Shillong and Kharagpur. Moreover, cities such as Ludhiana, Nagpur, Indore, Patna, Bhubaneshwar, Cochin, Rajkot, Guwahati, Coimbatore and Nashik have also witnessed a surge in investors’ interest.