Nighthil Inamdar, BBC News, Mumbaigny Images
From ceiling fans to jewelry, brand products capture a larger share of the Indian market
India is home to 1.4 billion people, but about a billion of them have enough money to spend on discretionary goods or services, said a new report.
The country’s consumer class, which is in fact the potential market for start -ups or business owners, is only as large as Mexico – 130-140 million people – according to the Blume Ventures report, a company of venture capital.
There are 300 million “emerging” or “aspiring” consumers, but they are reluctant spenders who are only starting to open their handbag strings, because digital click payments on a button facilitate the transaction.
In addition, the consumer class of the third economy of Asia is not “widening” as much as it is “deepening”, according to the report. This essentially means that the rich population of India does not really develop in number, even if those who are already rich become even richer.
All this shapes the country’s consumption market in a distinct manner, accelerating in particular the trend of “premiere” where brands stimulate growth by doubling expensive and improved products that are aimed at rich, rather than focusing on mass market offers.
This is obvious in the zoom of sales of ultra-luxury closed housing and premium phones, even if their low-end variants are fighting. Affordable houses now represent only 18% of the global market in India, against 40% five years ago. Brand products also capture a larger share of the market. And “the economy of experience” is booming, with expensive tickets for concerts of international artists like Coldplay and Ed Sheeran selling like hot cakes.
The companies that have adapted to these quarters of work prospered, said Sajith Pai, one of the authors of the report, to the BBC. “Those who are too concentrated on the mass or who have a mixture of products which does not have an exposure to the premium end has lost a market share.”
The results of the report strengthen long -standing opinion according to which the post -payic recovery of India has been in the form of K – where the rich have become richer, while the poor have lost purchasing power.
In fact, this was a long -term structural trend that even started even before the pandemic. India has become more and more unequal, the 10% of TOP 10 Indians now holding 57.7% of national income against 34% in 1990. The lower half, on the other hand, saw their share of national income reduce 22.2% to 15%.
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Brands stimulate growth to double expensive and improved products for the rich
However, the last drop in consumption has deepened in the middle not only of destruction of purchasing power, but also of a precipitated drop in financial savings and increasing debt among the masses.
The country’s central bank has also suppressed unsuitable easy loans that supported the demand after the cocovio pandemic.
A large part of the consumption expenses of the “emerging” or “aspiring” class of the Indians was led by such loans and “the deactivation of this tap will certainly have a certain impact on consumption,” said Pai.
In the short term, two things should help stimulate expenses – management of rural demand on the back of a record harvest and a taxation of $ 12 billion in the recently concluded budget. It will not be “dramatic”, but could stimulate India’s GDP – largely caused by consumption – more than half a woman, explains Pai.
But winds in the longer term remain.
The middle class of India – which has been a major engine for consumer demand – is deleted, with wages that remain flat, show the data compiled by Marcellus managers.
“The 50% means of the tax population of India have seen its income stagnating in absolute terms in the last decade.
“This financial hammering has decimated the savings of the middle class – the RBI (Reserve Bank of India) has on several occasions that the net financial savings of Indian households are approaching a hollow of 50 years. This hammering suggests that the products And services associated with average households in the middle class The expenses are likely to meet a difficult period in the coming years, “he adds.
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A collection of rural demand on the back of a record harvest could help stimulate expenses
The Marcellus report also underlines that urban jobs in white collar become more difficult to find while artificial intelligence automates the office, secretarial office and other routine works. “The number of supervisors employed in manufacturing units (percentage of all employees) in India has dropped considerably,” he adds.
The government’s recent economic investigation has also reported these concerns.
He indicates that the displacement of work due to this technological progress is particularly worrying for a main economy focused on services such as India, where a significant part of computer workforce is used in low service sectors added value which are most likely to disturb.
“India is also an economy based on consumption, therefore the drop in consumption which can result from the displacement of its workforce is necessarily to macroeconomic implications. If the projections the worst cases are materialized, this could have the Potential to define the economic growth of the trajectory country outside the course, “said the survey.
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