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India’s Affluent Population on the Rise: Goldman’s Promising Forecast


In a noteworthy shift, rising disposable incomes are poised to propel India’s consumption narrative, emerging as a pivotal driver for the country’s economic growth. Traditionally reliant on business-to-business services and manufacturing, India is transitioning into a consumption-focused economy, marking a significant transformation in its economic landscape, as observed by Abhishek Malhotra, a partner at McKinsey & Company’s Mumbai office.

The Paradigm Shift: From Business-to-Business to Consumer-Centric Growth

Historically, India’s economic growth has been fueled by robust contributions from business-to-business services and manufacturing. However, McKinsey & Company’s Abhishek Malhotra highlights a substantial shift towards a more consumer-centric model. This shift aligns with the findings of a recent Goldman Sachs report predicting that approximately 100 million people in India are set to achieve “affluent” status, defined by an annual income exceeding $10,000, by the year 2027.

The Rising Tide of India’s Consumption: A Game-Changer for Businesses

The Urge to Spend: Discretionary Spending on the Rise

A growing desire to indulge in discretionary spending, including travel, jewelry, and dining out, is becoming increasingly evident as disposable incomes rise. Abhishek Malhotra emphasizes that with basic needs such as food and housing addressed, there is a surplus for discretionary spending. Sectors like travel, jewelry, and services are expected to witness significant growth in the coming decades.

The current landscape indicates that around 60 million people in India, constituting approximately 4% of the working-age population, earn more than $10,000. This represents a substantial increase from 24 million in 2015, underlining the rapid growth of India’s affluent class.

The Consumer Market’s Ascension: A Global Perspective

The consumer market in India is poised to become the world’s third-largest by 2027, a testament to the rising number of middle- to high-income households. Approximately 33% of India’s 1.4 billion people fall within the 20 to 33 years age bracket, driving global firms to establish and expand operations in the country.

For instance, Tata Starbucks, a joint venture between Tata Consumer Products and Starbucks Corporation, has ambitious plans to open 1,000 stores in India by 2028, showcasing the global confidence in India’s growing consumer market.

Financial Growth and Investment Trends: A Macro View

Reflecting the upward trajectory of incomes, India has witnessed a substantial increase in domestic inflows into equities. The country’s market cap has surged by over 80% in the last three years, surpassing Hong Kong in December to become the world’s seventh-largest stock market. Goldman Sachs anticipates not only growth in investments but also a significant uptick in gold and property purchases.

Property prices in India have soared by more than 30% from the financial year 2019 to 2023, fueled by increased housing demand. Additionally, higher incomes have led to a noteworthy surge in credit card spending, more than doubling in the last year compared to 2019. The report reveals the prevalence of around 90 million credit cards in use, with individuals earning more than $10,000 often holding multiple cards, marking a substantial increase from the 50 million credit cards recorded in 2019.

Digital Transformation: Plastic Currency and Digitization of Payments

India’s focus on plastic currency and the digitization of payments is evident in the rising trend of credit card usage. Kranthi Bathini, equity strategist at WealthMills Securities, notes a pronounced shift toward plastic currency and digital payments, with the young population emerging as a key driver of credit card growth. The youth’s confidence in India’s growth story is a significant contributing factor to this trend.

Strategic Investments and Sectoral Opportunities

In light of these economic shifts, strategic investments and sectoral opportunities come to the fore. Stocks of Indian travel companies such as MakeMyTrip and InterGlobe Aviation (IndiGo) have seen notable gains, with Goldman identifying them as top picks in the travel sector. India’s spending on travel is projected to be the fourth-highest globally by 2030, primarily due to the growth in middle-income households.

To meet the escalating travel demand, Indian carriers are placing record aircraft orders, exemplified by Akasa Air’s recent order for 150 Boeing 737 MAX planes. With an estimated 5 billion leisure trips by 2030, predominantly within the country, companies like the Indian Hotels Company, owning 263 properties in India, stand to benefit from the surge in domestic travel.

Jewelry firms, including Titan and Kalyan, have also been highlighted as top picks by Goldman. Both stocks have demonstrated positive growth, up by 2% and 9%, respectively, in the early part of this year.

Conclusion: India’s Consumer Revolution Unfolding

In conclusion, India’s economic landscape is undergoing a profound transformation, with rising incomes reshaping consumption patterns and fueling a consumer revolution. The convergence of strategic investments, demographic trends, and shifting consumer behaviors positions India as a key player in the global economic arena.

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