The recent short-term trends have pointed out to falling consumption demand in the economy, posing a threat to India’s fastest growing economy status.
India is staring at a massive consumer demand arising from a clutch of favourable factors, with the domestic consumption opportunity alone in 2030 set to grow as big as more than twice the entire present GDP. Increased incomes, a billion diverse internet users and a very young population will drive the consumer demand in the future, increasing it tremendously by 2030, according to a World Economic Forum report.
India’s domestic consumption, which powers 60 percent of GDP today, is expected to grow into a $6 trillion opportunity by 2030, according to the World Economic Forum. Growth in income will convert the Indian economy from a bottom-of-the-pyramid economy to a middle-class led one, with consumer expenditure growing from $1.5 trillion today to nearly $6 trillion by 2030, said the WEF report on ‘Future of Consumption in Fast-Growth Consumer Markets: India’ released recently.
Here the upper-middle income and high income segments will grow from being one in four households today, to one in two households by 2030, the report said. At the same time, India will also uplift around 25 million households out of poverty and reduce the share of households below the poverty line from 15 percent today to 5 percent, the report added.
While metros and emerging boom towns would continue to drive economic growth, rural per capita consumption will rise faster than in urban areas mimicking consumption patterns of urban counterparts, it said. Further, the consumption growth will be supported by the young working age population in the country. Unlike many ageing nations in the West and East, India will remain a nation with a young population with a median age of 31, said the report.
Moreover, with internet access expected to democratise by 2030, more than 1 billion people — both rural and urban — will come online gaining knowledge about the offers and varieties of goods, the report added.
The recent short-term trends have pointed out to falling consumption demand in the economy, posing a threat to India’s fastest growing economy status. However, with the World Economic Forum report, there seems to be no cause of worry, looking at how the domestic consumption is set to grow in the long term.