The report says a billion people have no real money to spend.

India is home to 1.4 billion people New report estimate.

According to a report by venture capital firm Blume Ventures, the country’s consumer class is actually a potential market for startups or business owners, just as big as Mexico, 130-140 million people.

Another 300 million are “emerging” or “aspiring” consumers, but they are reluctant consumers, who are just starting to open their wallet strings because clicking the button digital payment makes transactions easy to trade.

The report said that the consumer class in Asia’s third largest economy has not “expanded” as it “deepened”. This basically means that India’s wealthy population has not really grown, even if those who already have the money have become richer.

All of this has shaped the country’s consumer market in different ways, especially accelerating the “premium” trend, where brands are doubling expensive, upgraded products instead of catering to the rich instead of focusing on Mass market products to drive growth.

This is evident in shrinking sales of ultra-luxury enclosed housing and premium phones, even their low-end variants are struggling. Affordable homes now account for only 18% of the overall Indian market, compared to 40% five years ago. Branded merchandise also captures a larger market share. And the “experience economy” is booming, with expensive tickets for concerts from international artists and international artists such as Ed Sheeran sold like hot cakes.

Sajith Pai, one of the authors of the report, told the BBC that the company has rapidly evolved these shifts. “Those who are too focused on the mass side or are not exposed to the premium endpoint lose market share.”

The report’s findings reinforce the long-standing view that India’s post-pandemic recovery is K-shaped – the rich are becoming richer and the poor are losing their purchasing power.

In fact, this is a long-term structural trend that even started before the pandemic. India is increasingly inequality, with the top 10% of Indians now holding 57.7% of national income, compared with 34% in 1990. The share of national income in the second half of the year dropped from 22.2% to 15%.

However, the latest consumption shortage not only destroys purchasing power, but also deepens Save financial savings Debt among the masses surged.

The country’s central banks have also weakened easy unsecured loans, which has supported demand in the wake of the Kuvid pandemic.

Pai said that the consumption expenditure in this “emerging” or “aspiring Indian” category is mostly caused by such borrowing and “closing the faucet will definitely have a certain impact on consumption.”

In the short term, two things are expected to help increase spending – after a record harvest, the collection of rural demand is a $12 billion tax levied on the recently concluded budget. It won’t be “dramatic” but could increase India’s GDP (mainly driven by consumption) by more than half, Pai said.

But important long-term headwinds remain.

According to Marcellus investment manager, India’s middle class is crowding out, the main engine of consumer demand, with wages almost remaining flat.

“In the past decade, 50% of tax payers in India’s medium-term revenue has absolutely stagnated. This means real income has dropped by half. [adjusted for inflation]” Reportpublished in January.

“This financial hammer has reduced middle-class savings – Reserve Bank of India [Reserve Bank of India] It is repeatedly stressed that the net fund savings of Indian households are 50 years. This thump suggests that products and services related to middle-class household spending may face tough times in the coming years. ”

Marcellus’ report also notes that white-collar urban jobs have become increasingly difficult as AI automation papers, secretaries and other routine jobs. “Number of supervisors employed by manufacturing units [as a percentage of all employed] It has dropped significantly in India. ” it added.

The government’s recent Economic Investigation These issues are also marked.

It said that due to these technological advances, labor mobility, especially a major service-driven economy like India, is the most vulnerable to disruption in the low-value value-added services sector.

“India is also a consumption-based economy, so it is bound to have macroeconomic impacts as the displacement of its labor force may lead to a decline in consumption. If the worst case forecasts come true, it may be possible to build the country’s economy. The growth trajectory deviates from the curriculum,” the survey said.

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