Retail is indeed a market structure that enables a new supply chain that allows for faster, more certain and timely procurement. It shortens the supply chain allowing higher margins to farmers and better returns in the absence of a large number of intermediaries. Retail also has a high employment multiplier, especially for those who are relatively lesser educated and less skilled. Hence the importance of retail, especially in rural areas for India. This paper looks at the growth in rural retail and how it is related to access to markets, supplies and therefore to basic infrastructure. Using data from the NSS and the Census, we calculate gap indices for states in the areas of education, health and market access. Retail trade is dependent on availability of infrastructure and states that have poor facilities would tend to benefit lesser from retail growth. The literature available on this issue points out to a significant correlation between infrastructural facilities and the growth of the retail industry in any locality. Absence of infrastructure makes rural markets fragmented characterised by high costs of transactions and high information asymmetry. Infrastructure ensures speedier flow of information, and reduces transaction costs in doing businesses. Social infrastructure facilities like health and education infrastructure ensure a better quality of life for the people – both in rural and urban areas. Since a vast majority of the population resides in rural areas, and development challenges are more pronounced in the villages as compared to the cities, provisioning of infrastructure facilities in rural areas enables
market-led growth.