INDIA’S VILLAGES ARE no longer just the backdrop to the growth story of the world’s fifth largest economy―they are taking centre stage. As rural incomes rise, access to modern infra improves, and industries shift focus to smaller towns, the potential of rural India is impossible to ignore. What is happening is more than incremental growth―it is the dawn of a transformation and a lifetime opportunity for wealth creation.
Farm force
Picture this: a farmer in a remote village, now earning more thanks to better crop prices, buys a smartphone. This is not just about personal use―it is access to markets, financial tools and knowledge. Multiply this story by millions, and you get a thriving rural economy. India’s rural regions have already reached a milestone, with per capita income crossing $2,000, a figure that traditionally signals an up tick in discretionary spending. Rural households are no longer spending just on necessities. Their shopping list contains appliances, vehicles and even aspirational products. This reflects in rural indicators that have turned significantly positive since August 2024.
The growth is not just about spending. Structural changes are laying a foundation for long-term development. Electrification has reached every village in India since 2018, and nearly 75 per cent of rural households now have access to tap water under the Jal Jeevan Mission. Improved road connectivity, with 99 per cent of rural habitations now linked by all-weather roads, further integrate villages with cities.
Multiple drivers
Manufacturing is another powerful driver of rural transformation. Over the past decade, government initiatives like Make in India and production-linked incentive schemes have created jobs in smaller towns. Seven global firms, between 2018 and 2024, have set up manufacturing bases in rural regions, attracted by lower costs and access to a large workforce. New projects in manufacturing grew nearly 4 times from Rs3.8 trillion in FY20 to Rs13.2 trillion in FY23, a testament to the sector’s momentum.
It is not just the big players making a difference. Micro, small, and medium enterprises are playing a critical role, too. Over 50 per cent of India’s MSMEs are based in rural areas, providing employment and contributing to the local economy.
Agriculture remains an anchor of rural life, but is evolving rapidly. Farmers are adopting modern techniques, improving productivity, and even tapping global markets. For instance, India’s rice exports have been gaining traction, driven by higher prices and quality output. Meanwhile, non-agricultural jobs in manufacturing, services, and trade now make up over 40 per cent of rural employment, offering more diverse income sources.
The government’s push for rural welfare is also undeniable. In the last decade, over Rs80 lakh crore has been spent on rural-focused initiatives. With over 10 states/UTs going to elections in the next three years and anticipated higher budget allocations on rural economy, signs of a strong rural recovery are visible. Real rural wages are growing again, after struggling during the pandemic. Vehicle sales have rebounded, reflecting rising incomes and confidence. Consumption trends are shifting, too, towards discretionary purchases.
Rural wealth creation
For Indian investors, this is not just a distant story. Rural opportunities offer a broad universe of investable stock ideas in large-, mid- and small-caps across diversified sectors.
The ripple effects of rural development reach every part of the economy. FMCG companies, telecom providers, and even financial services firms, to name a few, are seeing growth driven by rural markets. Cement, auto, power, consumption, capital goods, chemical goods and agri-processing industries provide potential for long-term growth.
In short, rural India represents a dynamic opportunity for investors. Its growth revival, after a decade of muted expansion, appears backed by strong structural changes, government support, and rising demand. Equity funds that focus on rural themes offer an easy and accessible way to participate in this transformation.
In line with this, investors may consider ICICI Prudential Mutual Fund’s new offering, the ICICI Prudential Rural Opportunities Fund which is an open-ended equity scheme following rural and allied theme, open from January 9, 2025 to January 23, 2025. The scheme shall predominantly invest in sectors/companies contributing to and benefiting from rural India’s growth and development.
The author is a Certified Financial Planner and Founder, Unnathi Wealth, Bengaluru