A new report has estimated that around a billion Indians don’t have money to spend on any discretionary goods or services though India is home to 1.4 billion people, BBC reported.
According to the report from Blume Ventures, a venture capital firm, the country’s consuming class, effectively the potential market for start-ups or business owners, is only about as big as Mexico, 130-140 million people.
Moreover, as click-of-a-button digital payments make it easy to transact, another 300 million are “emerging” or “aspirant” consumers, however, they are reluctant spenders who have only just begun to open their purse strings.
As per the report, the consuming class in Asia’s third largest economy is not “widening” as much as it is “deepening”.
This basically means that India’s wealthy population is not really growing in numbers, despite the fact that those who are already rich are getting even wealthier.
Particularly accelerating the trend of “premiumisation” where brands drive growth by doubling down on expensive, upgraded products catering to the wealthy, rather than focusing on mass-market offerings, all of this is shaping the country’s consumer market in distinct ways.
This can be observed in zooming sales of ultra-luxury gated housing and premium phones, even as their lower-end variants struggle.
Additionally, affordable homes now constitute just 18% of India’s overall market compared with 40% five years ago.
On the other hand, branded goods are also capturing a bigger share of the market.
The long-held view that India’s post-pandemic recovery has been K-shaped, where the rich have got richer, while the poor have lost purchasing power, has been bolstered by the report’s findings.
