According to a survey by Blume Ventures, a far lower percentage of India's 1.4 billion (143 crore) individuals actively spend money on non-essential items and services. According to a survey by a venture capital firm, only around 130–140 million indians, or 13–14 crore, make into the "consuming class," which is defined as those who have enough spare money to purchase items beyond necessities.
 
 "Heavily dependent on consumer spending" is how the study describes the country's GDP.  The "consuming class" "effectively constitutes the market for most startups" and consists of about 140 million individuals.

An additional 300 million individuals (30 crores) are categorized as "aspirant" or "emerging" customers.  Because digital payments are so convenient, they have begun to spend more, but they are still cautious consumers.  "Heavy consumers and reluctant payers" is what the study said they were.
 
 For them (aspirant consumers), OTT/media, gaming, edtech, and financing are relevant markets.  According to the research, UPI and AutoPay have made it possible for this demographic to make small ticket purchases and transactions.
 
 However, according to the survey, almost 1 billion indians (100 corer) do not earn enough money to be able to purchase any discretionary items.  "They are beyond the pale, as of now, for startups," it states.

The paper emphasizes that India's consumer market is becoming deeper rather than broadening.  This indicates that although there isn't a substantial increase in the number of affluent individuals, those who are currently wealthy are becoming even wealthier.
 
This change is having an impact on business developments, especially the emergence of "premiumization," a tactic wherein businesses target wealthy customers with more costly, higher-end items rather than mass-market ones.  Even when more affordable solutions are struggling, this tendency is visible in the growing sales of luxury residences and high-end cell phones.  For example, barely 18 percent of the market is currently affordable housing, compared to 40 percent five years ago.

The results lend credence to the notion that India's post-pandemic economic recovery has been "K-shaped," with the wealthy continuing to thrive while the poor face dwindling buying power.
 
 Data shows that the wealthiest 10 percent of indians now own 57.7 percent of the country's income, up from 34% in 1990, while the bottom half's share has decreased from 22.2% to 15%.
 
 Declining financial savings and mounting debt among most indians exacerbate the present slump in spending.  Unsecured lending regulations, which had earlier stimulated consumer spending during the COVID-19 epidemic, have also been tightened by the reserve bank of india (RBI).

This shift is anticipated to have an impact on overall consumption levels because many members of the "emerging" consumer category rely on borrowing to make purchases.
 
 Long-term difficulties still exist, though.  Historically a major force behind consumer demand, the middle class is getting smaller.
 
 The middle 50% of India's tax-paying population has had little to no salary growth over the last ten years, according to an analysis by Marcellus Investment Managers.  This essentially indicates that their salaries have been cut in half when inflation is taken into account.
 
Over the past ten years, the income of the middle 50% of indian taxpayers has stagnated in absolute terms.
 
This suggests a real (i.e., inflation-adjusted) income halving.  The RBI has frequently noted that the net financial savings of indian families are getting close to a 50-year low, demonstrating how severely this financial pounding has affected middle-class savings.  According to the analysis, this hammering indicates that goods and services linked to middle-class family spending are probably going to have a difficult time in the years to come.
 
Additionally, the Marcellus research cautions that technology is making white-collar professions increasingly rare.  Clerical and secretarial work is being replaced by AI-driven systems, and even manufacturing supervision positions are becoming less common.
 
 
 

 
 
For more interesting updates wa click and follow Indiaherald WhatsApp channel

Find out more:

SIBY JEYYA

27/02/2025 08:10 AM