{"id":26194,"date":"2025-03-23T12:38:35","date_gmt":"2025-03-23T07:38:35","guid":{"rendered":"https:\/\/bigbreakingwire.in\/?p=26194"},"modified":"2025-03-23T13:17:07","modified_gmt":"2025-03-23T07:47:07","slug":"indias-consumption-boom-key-trends-growth","status":"publish","type":"post","link":"https:\/\/bigbreakingwire.in\/indias-consumption-boom-key-trends-growth\/","title":{"rendered":"India’s Rising Consumption: A Major Economic Growth Driver"},"content":{"rendered":"
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India\u2019s Growing Consumption Power<\/strong><\/p>\n\n\n\n

India is on track to become a global consumption powerhouse. A recent chartbook by Angel One titled “Ionic Asset” highlights how India’s consumption is set to reshape the global economy. According to McKinsey, by 2050, India will contribute 16% to global consumption, making it a key player in global markets.<\/p>\n\n\n\n

Why India\u2019s Consumption is Growing Fast<\/strong><\/p>\n\n\n\n

1. India\u2019s Economy is Driven by Consumption<\/strong><\/p>\n\n\n\n

56% of India’s GDP comes from consumption, making it the fastest-growing part of the economy.<\/p>\n\n\n\n

India’s consumption is expected to double by 2034, growing at twice the pace of the US.<\/p>\n\n\n\n

The increase in spending is fueled by a rapidly growing middle class, rising incomes, and a young population.<\/p>\n\n\n\n

2. Key Factors Driving Consumption Growth<\/strong><\/p>\n\n\n\n

a. Household Growth & Nuclear Families<\/strong><\/p>\n\n\n\n

More people are moving to nuclear families, leading to higher spending per household.<\/p>\n\n\n\n

This shift increases demand for housing, furniture, electronics, and daily essentials.<\/p>\n\n\n\n

b. Massive Savings Growth<\/strong><\/p>\n\n\n\n

India’s savings over the next 25 years will be 10 times the total savings of the last 25 years.<\/p>\n\n\n\n

More savings mean higher spending potential, leading to greater economic growth.<\/p>\n\n\n\n

c. Tax Cuts Boosting Spending<\/strong><\/p>\n\n\n\n

The government has introduced \u20b91 lakh crore in tax cuts, expected to increase consumption by \u20b93.3 lakh crore.<\/p>\n\n\n\n

This could add 1% to India’s GDP, driving more economic activity.<\/p>\n\n\n\n

Changing Consumption Patterns<\/strong><\/p>\n\n\n\n

1. Shift Towards Discretionary Spending<\/p>\n\n\n\n

As incomes rise, spending on luxury goods, electronics, apparel, jewelry, and experiences is increasing.<\/p>\n\n\n\n

Similar trends were seen in China and the US during their economic booms.<\/p>\n\n\n\n

2. India\u2019s Retail Market Has Huge Growth Potential<\/strong><\/p>\n\n\n\n

92% of retail trade still happens in traditional kirana stores.<\/p>\n\n\n\n

Organized retail (modern supermarkets, malls, and e-commerce) is only 8%, offering massive growth potential.<\/p>\n\n\n\n

In comparison, 80% of the US retail market is modern, showing how much India can grow.<\/p>\n\n\n\n

3. The Influence of Gen Z on Spending<\/p>\n\n\n\n

India has more Gen Z (born after 1997) than the entire US population.<\/p>\n\n\n\n

By 2035, Gen Z will contribute to 50% of total spending in India.<\/p>\n\n\n\n

Key spending categories for Gen Z include:<\/strong><\/p>\n\n\n\n

Fashion & Lifestyle: $45 billion (45% Gen Z share)<\/p>\n\n\n\n

Packaged Goods: $30 billion (44% Gen Z share)<\/p>\n\n\n\n

Travel & Vacation: $75 billion (45% Gen Z share)<\/p>\n\n\n\n

Online Entertainment (OTT, gaming): 47% Gen Z share<\/p>\n\n\n\n

India\u2019s Demographic Advantage<\/strong><\/p>\n\n\n\n

1. India\u2019s Workforce is Expanding<\/p>\n\n\n\n

By 2050, 1 in 5 working people worldwide will be Indian.<\/p>\n\n\n\n

India\u2019s working-age population is growing while countries like China, Japan, and the US are seeing workforce declines.<\/p>\n\n\n\n

This ensures continued economic growth and rising spending power.<\/p>\n\n\n\n

2. Savings Turning into Spending<\/strong><\/p>\n\n\n\n

As per capita income increases, savings are turning into spending.<\/p>\n\n\n\n

A similar trend was seen in the US and China, where consumption grew 10x during economic expansion.<\/p>\n\n\n\n

Key Growth Sectors<\/strong><\/p>\n\n\n\n

1. Fastest-Growing Consumer Categories (2018-2024 Growth Rate)<\/strong><\/p>\n\n\n\n

Consumer Electronics: 11.7%<\/p>\n\n\n\n

Apparel: 11.4%<\/p>\n\n\n\n

Non-Apparel Accessories: 10%<\/p>\n\n\n\n

Overall Discretionary Spending: ~10.4%<\/p>\n\n\n\n

2. The Rise of New-Age Entertainment<\/strong><\/p>\n\n\n\n

Online gaming, live events, and OTT streaming are experiencing rapid growth.<\/p>\n\n\n\n

The entertainment industry is evolving, with digital platforms gaining popularity.<\/p>\n\n\n\n

India\u2019s Retail Transformation<\/strong><\/p>\n\n\n\n

95% of India\u2019s pin codes lack organized retail outlets.<\/p>\n\n\n\n

Currently, only \u20b98 of every \u20b9100 spent in India goes to organized retail.<\/p>\n\n\n\n

With rising urbanization, organized retail and e-commerce are expected to expand significantly.<\/p>\n\n\n\n

Economic Impact of Rising Consumption<\/strong><\/p>\n\n\n\n

1. India\u2019s Consumption vs. GDP Growth<\/strong><\/p>\n\n\n\n

Consumption contributes 56% to GDP, while exports and capex grow at a slower pace.<\/p>\n\n\n\n

The economy is more dependent on domestic spending than global trade.<\/p>\n\n\n\n

2. Pareto Effect in Spending<\/strong><\/p>\n\n\n\n

Top 10% of Indians contribute 67% of discretionary spending.<\/p>\n\n\n\n

While income inequality exists, increasing wealth in lower-income groups will broaden consumer demand.<\/p>\n\n\n\n

Conclusion: India as the Future Consumption Capital<\/strong><\/p>\n\n\n\n

Key Takeaways<\/strong><\/p>\n\n\n\n

India\u2019s consumption will double by 2034, fueled by income growth, young demographics, and urbanization.<\/p>\n\n\n\n

Gen Z will be the largest spending group by 2035, shaping the future of consumption.<\/p>\n\n\n\n

Retail, entertainment, and discretionary goods will be the fastest-growing sectors.<\/p>\n\n\n\n

Tax cuts, workforce expansion, and high savings rates will continue to drive spending growth.<\/p>\n\n\n\n

India is set to become the world\u2019s largest consumption-driven economy by 2050, with 16% of global consumption share.<\/p>\n\n\n\n

With strong economic fundamentals, India is on its way to becoming the “consumption capital of the world.” Businesses that tap into this growth will benefit from one of the biggest consumer booms in history.<\/p>\n\n\n\n

Sources<\/em><\/strong><\/p>\n\n\n\n

Angel One Chartbook: “Ionic Asset”<\/em><\/strong>

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McKinsey Global Consumption Report<\/em><\/strong>

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Government of India Economic Data Reports<\/em><\/strong><\/p>\n\n\n\n

Mckinsey on Consumption Boom in India<\/a>Download<\/a><\/div>\n\n\n\n
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