Rise of India’s Consumer Class

According to the research paper, Asian consumers will account for half of global consumption growth in the next decade. Densely populated Asian countries, with hyper-connected consumers, will offer a $10 trillion opportunity over the next decade. In addition, globally, one in every two upper-middle-income and above households is expected to be in Asia, and one in every two purchase transactions by consumers in the region is expected to occur, MGI said in its ‘ Beyond Income: Rescheduling’. ‘Consumer Map of Asia’ research paper, made public recently.

How will India’s consumption grow?

MGI expects consumption in India to increase by $1.8 trillion over the next decade, a growth rate of about 6% annually in real terms. India’s total consumption was estimated to be around $1.9 trillion to $2 trillion by 2020. The projections come as India still grapples with the impact of the Covid-19 pandemic that led to strict lockdowns and restricted mobility in Asia’s third-largest economy. “The growth outcome will depend on the size of the recovery from the pandemic and other macroeconomic factors in different geographies,” MGI said.

But what effect will the rise of Asia have on India?

By 2030, about 55% of India’s population—consumers who spend more than $11 a day—could exceed the current 24%. The rise in income levels could prompt India to contribute 27% to Asia’s consumer segment. The share of consumers in the two highest income levels – those who spend $30 to $70 and more a day – in India could double to 20% by 2030.

How will the increase in data usage affect India?

Given the significant penetration of data and connectivity in these markets, digital natives, who were born between 1980 and 2012, are expected to account for 40% to 50% of Asia’s consumption by 2030. In India, these digital natives are expected to account for at least 50% of the consumption in the same period. A growing consumer segment and access to data will drive more Indians to consume digital content and shop online, creating a more “digital eco-system” in the form of super apps and hyper-local delivery models.

What does this mean for homes, women?

The next decade is also set to bring about a change in the concentration of family size. While the average size of households across Asia has been shrinking, it has fallen by 16% from 5.5 to 4.5 people in India from 1999 to 2015. Furthermore, MGI estimates that increased female participation represents a $1.4 trillion GDP opportunity in India. But it requires “structural intervention” as female labor participation decreases, and the gender pay gap widens. This has been further intensified by the Covid-19 pandemic.