The rural India market, a major growth driver of FMCG companies, seems to have hit a trough.

The trend of rural growth surpassing urban may have reversed in  third quarter (July-September) 2019, says a report from market research firm Nielsen. This is happening for the first time in seven years.

In fact, the rural market grew at 5 percent in July-September (Q3) of 2019, which is one-fourth as compared to 20 percent growth in Q3 of 2018.In comparison, urban grew at 8 percent in Q3 of 2019 as against 14 percent growth in Q3 of last year.

On the rationale behind fall in rural growth, Nitya Bhalla, Data Science Leader, Nielsen said: “Rural wage growth adjusted to inflation is meagre 2 percent while the expenditure is increasing year on year. Thus, net disposable income available to consumer is much lower.”

Nielsen considers calendar year (Jan-Dec) for calculating the growth numbers.Rural India contributes 36 percent to the overall FMCG spends and has historically been growing around 3-5 percentage points faster than urban.

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