Over 100 million Indians are expected to be earning more than $10,000 per annum by the year 2027 on account of an encouraging economic growth rate in the country, suggests a report.
India’s real GDP is expected to grow at more than 6% every year between 2023 and 2028, according to Goldman Sachs Research. “In tandem, the wealth of affluent Indians is rapidly growing as well,” it said.
By 2027, according to a report titled “The rise of ‘Affluent India'” by Goldman Sachs Research, this cohort of affluent consumers will increase from around 60 million in 2023 to 100 million people by 2027.
The report cited the data collated by Arnab Mitra, an analyst who leads research coverage of Indian consumer brands. In the report, Mitra talked about his team’s research, calculations and forecasts, and the characteristics of affluent Indians.
Stating about the data he used to triangulate his definition of “affluent” Indians, Mitra said his team looked at the number of people who take a flight at least once a year; the number of people who order from food delivery services at least once a month; the number of people who file income taxes on sums of more than 1 million rupees ($12,046); the number of people who have credit cards and postpaid mobile connections.
“Whichever way we looked, it seemed that the unique number of people who use discretionary products and services is somewhere in the region of 50 or 60 million. Then we looked at the income pyramid, which tells us what the top 60 million people earn. It seems to be around an annual $10,000 per person,” he added.
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And how has that changed over time?
“From 2019 to 2023, the cohort has shown a compounded annual growth rate of about 12-13%. That is corroborated by the sectors I mentioned. So the number of credit cards has grown by about 14-15%, for example. The tax filings we looked at, for more than 1 million rupees — they were growing at about 19%.”
On data suggesting the volume of household financial assets invested in shares has grown conspicuously since 2016 and the possible growth of this cohort in the dynamics of the Indian stock markets, he said it’s quite clear that companies that address this cohort exclusively, or largely, have been growing much faster than companies that address broad-based consumption.
“We compared companies in the same sector that cater to upper-income consumers versus a broader group. So in cars, for instance, we compared SUVs to other kinds of cars. Or we compared premium liquor and spirits brands to more mass-market brands. We also looked at hospital or watch companies that exclusively target affluent consumers. All these stocks—they’ve done significantly better in terms of returns,” he added.