India: The challenge of milking the rural cash cow

INDIA

Having sustained GDP growth averaging 8.5% from 2003 to 2008, all sectors in the Indian economy thrived.

Since 2010 however, such has been the magnitude of the slowdown (growth rates have virtually halved from the peak), that investors have not only questioned the long-term structural investment proposition for India, but also the valuation premium it has traditionally earned. One area of the economy which has remained highly resilient has been the fast-moving consumer goods (FMCG) sector, which continues to grow at double digit rates through the slowdown. The seeds of this durability were sown as early as 2004. The newly elected Congress Party vowed to make growth “inclusive” and set ab...