New Dehli: A recent report highlights that around one billion Indians have no money to spend on non-essential goods or services.
India’s population is 1.4 billion, yet its true consumer market is significantly smaller than expected.
Blume Ventures, a venture capital firm, estimates the consuming class is just 130-140 million, similar to Mexico’s population.
Another 300 million are emerging consumers, but they are hesitant spenders despite the rise of digital payments.
The report indicates that India’s wealth distribution is not expanding but deepening, benefiting only the already rich.
Limited Growth
India’s wealthy population is not increasing in numbers, even though the rich are getting wealthier.
This pattern is shaping India’s consumer market and influencing business growth strategies.
Companies are prioritizing premium products instead of affordable, mass-market offerings.
Sales of luxury goods, premium housing, and high-end smartphones are increasing, while lower-end alternatives struggle.
Affordable housing now makes up only 18% of the market, compared to 40% five years ago.
Shifting Trends
Branded goods are gaining a larger share, showing a preference for higher-quality products.
The “experience economy” is also thriving, with expensive concert tickets selling rapidly.
International artists like Coldplay and Ed Sheeran are attracting large crowds despite high ticket prices.
These trends indicate a growing focus on premiumization over mass-market affordability.
Wealthier consumers are driving economic growth, while the lower-income segment faces stagnation.
Unequal Recovery
The report supports the belief that India’s post-pandemic recovery has been K-shaped.
This means the wealthy have gained more, while lower-income groups have struggled.
Economic inequality in India has been increasing for years, not just since the pandemic.
The top 10% of Indians now control 57.7% of national income, compared to 34% in 1990.
Meanwhile, the bottom 50% have seen their share of national income drop from 22.2% to 15%.
Economic Divide
India’s economic divide is reshaping market dynamics and influencing consumer spending patterns.
Businesses are catering to the affluent rather than focusing on affordable products.
Rising digital transactions make it easier for hesitant spenders to participate in the economy.
However, this does not necessarily mean a larger consuming class is emerging.
The structural trend of rising inequality is expected to continue in the coming years.
