New Delhi: A recent report reveals that around 14 crore people, or 3 crore households, are the main consumers driving India’s economy. This is similar to the entire population of Mexico. In contrast, about 100 crore people at the bottom of the income spectrum struggle to spend on non-essential goods and services.
The report from Blume Ventures divides Indian consumers into three groups: the rich, the middle class, and the poor. The wealthy, making up less than 10% of the population, have a per capita income of $15,000, which is over 13 lakh rupees a year. The middle class, with around 30 crore people, has an annual income of $3,000, equating to about 2.62 lakh rupees.
This middle class is comparable in number to Indonesia. However, the poorest group consists of roughly 100 crore citizens, similar to the population of sub-Saharan Africa. These individuals earn just $1,000 annually, a little over Rs 87,400, amounting to around Rs 7,300 a month. They typically do not have extra money for entertainment or recreation.
Interestingly, the 14 crore consumers form a vital market for startups in India. Many new businesses start by targeting this group before reaching out to the middle class.
The aspiring middle class is characterized by their strong consumer habits but often hesitate to spend. They are significant consumers of online streaming, media, gaming, education technology, and lending services. The rise of India’s UPI payment system and features like AutoPay have made it easier for them to make small purchases.
While the rich represent less than 10% of the population, they contribute nearly two-thirds of discretionary spending. The middle class, which is about 23% of the population, contributes only one-third of such spending. On the flip side, the 100 crore people at the bottom rely on their savings for essential expenses.
The top 10% in urban areas stand out in their spending habits. For example, they spend three times more on food than the average. Their spending on fuel is four times the average, and for personal care products, it’s 4.5 times more. As one looks at non-essential items, the disparity becomes even greater:
- Five times more on clothing
- Six times more on packaged food
- Seven times more on consumer services
- Eight times more on transportation
- Nine times more on education
When it comes to major purchases, the gap widens further:
- 10 times more on jewelry
- 11 times more on dining out
- 11 times more on healthcare expenses
- 13 times more on durable goods like appliances and electronics
This disparity highlights the growing wealth gap in India, where despite being the fastest-growing major economy, the poor are not reaping the benefits. The authors of the report conclude, “India’s consumption looks promising overall, but not when broken down on a per capita basis.” They point out that while the wealth of the top 10% continues to grow, their numbers are not increasing significantly.
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INDIAN ECONOMY, 140 MILLION DRIVE INDIAN ECONOMY, 1 BN LACK DISCRETIONARY SPENDING, RICH ACCOUNT LESS THAN 10 PER CENT, RICH MINORITY OF 14 CRORE DRIVING INDIAN ECONOMY; 100 CRORE LACK MONEY FOR DISCRETIONARY SPENDING
