The recent numbers on consumption spending in India brought out by the Central Statistical Organisation show how rapid economic growth is changing consumer product markets in unanticipated ways and redrawing the growth potential of major industries. Fiscal 2006-07 marked the crossing over of per capita consumer spending growth into double digits for the first time, pushing the growth rate of consumer markets to a record 12.7%. It is not a story of uniform growth, though, with some markets outpacing others without any discernible overall pattern visible from afar. Of course, since the motivational factors vary vastly, ranging from product accessibility and costs to changing aspirations and newly surfacing latent desires, these markets are also under diverse marketing influences.
At the base level, it is assumed that the Indian consumer market should display a large ?marginal propensity to consume?. Given widespread deprivation, add-on income for large numbers (as inclusive growth would mean) should go into basic items of consumption. Yet, by the data, the growth of spending on essentials like food is just a little above the overall growth of private consumption spending. Among food products, the highest growth figures have been for sugar, pulses, potatoes and spices. Cereals have lagged behind. Even more surprisingly, spending growth figures for clothes, footwear, rent and water/fuel/power are far below the general trend. So, too, beverages, intoxicants and medical care. The high-growth chart, meanwhile, is topped by communication services, the expenditure on which rose by more than a third in just one year. Credit the telecom sector?s vibrancy; it is the marketing success story of our times. Spending on hotels and restaurants, furnishing and household equipment, and recreation also rose handsomely. This suggests a robust propensity to splurge among the better-off, which, too, does plenty of good for the economy. There has also been a sharp pick-up in purchases of vehicles, mostly cars and two-wheelers. Again, an indication of the bustle at the upper portion of the pyramid. Spending growth on education, thankfully, is above average, though it should be much higher in a country with big knowledge-based ambitions in the 21st century arena of global competition.
