The replacement cycle of TV sets and home appliances has shrunk by 50 per cent due to evolving lifestyle of Indian consumers, in which income levels have risen due to two primary reasons which include – implementation of 6th pay commission report and enactment of Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA), according to a joint report of Ernst & Young (E&Y) and ASSOCHAM.

As per estimates, MGNERGA alone provided employment opportunities to over 47 million households from fiscal 2008-09 onwards and significantly put purchasing power in hands of individuals, part of which is being used to discard old articles at their home, especially TV sets and home appliances.

Quoting the findings of report, ASSOCHAM Secretary General, Mr. D.S. Rawat said that replacement cycle for TV sets and home appliances before 2008-09 was 9 years and 12 years respectively. It is now fallen to approximately 4-5 years and 7-8 years from 2008-09 and will further go down if household incomes improve.

The specific reasons have been assigned in the ASSOCHAM & E&Y report for this development which include a fast rate of obsolescence in technology is bringing down the prices of products and making them affordable to lower income groups as well.

Secondly, some initiatives taken by the government in improving income levels of households comprise execution of 6th pay commission report in which salaries of nearly 5 million central government employees have been revised by an average of 21% with an additional spend of US$ 3.7 billion (INR 157 billion for fiscal 2008-09) points out the report.

With an allocation of US$ 8.15 billion (INR 391 billion) in budget for 2009-10, the MNREGA by the government aims at increasing wage employment in the rural areas. The scheme already provided employment opportunities to more than 44.7 million households in fiscal 2008-09. The bill guarantees 100 days employment in a year. In the financial budget 2009-10, a wage rate of INR 100 per day was committed by the finance minister.

The report, therefore, gives emphasis to manufacturers of televisions and domestic appliances for designing and offering low cost products to a significance market of 121 million households with income levels in the range of US$ 1500-10000.

The report also observes that credit purchases account for nearly 20% of the overall consumer appliances sales and this factor has underscored growth in consumer appliances industry over the past decade.

In addition the rural electrification in India stands at 76.5% as on March 31, 2010 as per the Central Electricity Authority of India. This restricts households which can afford electronics and appliances products in unelectrified villages for using them.

The ASSOCHAM and E&Y report also highlights that under Bharat Nirman Project, towards the end of 11th five year plan period, electrification of 125,000 villages with 23 million households is also expected. In addition 146,185 km of new rural roads network is also expected to connect 66,802 habitations and drinking water to 55,067 uncovered would also be provided. Besides, irrigation to 10 million hectare and telephone connectivity to 66,822 villages are likely to be provided. All these promised initiatives will open up markets for consumer electronics and appliances such as televisions, audios, refrigerators, air coolers and air conditioners, concludes the report.