Income Classification

A rapidly growing consumer class has emerged since India began its reforms programme in 1991, illustrated by the rapid increase in use of consumer durables. In terms of purchasing power parity, India is the third largest economy in the world. According to a McKinsey Global Institute (MGI) study titled 'Bird of Gold': The Rise of India's Consumer Market (graphs on the following page):

• Total consumption in India is likely to quadruple, making India the fifth largest consumer market by 2025 (from INR 60,000 in 2005 to INR 248,000 in 2025).
• Urban India will account for nearly 68 per cent of consumption growth while rural consumption will grow by 32 per cent by 2025.
• India’s Middle Class population is expected to increase from the present level of ~150 million to ~550 million people by 2025.

The trends are very interesting, and India is poised to become the largest market for a number of mass-consumption items, with these projections. Already, India is the second largest market for mobile phones, measured on month-to-month shipment trends.

Deprived: less than 90,000 Indian rupees, less than $1969; Aspirers: 90,000-200,000 Indian rupees, $1,969-$4376 Seekers: 200,000-500,000 Indian rupees, $4,376-$10,941; Strivers: 500,000-1,000,000 Indian rupees, $10,941-$21,882 Globals: 1,000,000+ Indian rupees, $21,882+

According to estimates made by think tank, National Council of Applied Economic Research (NCAER), growing economy has spun a wheel of fortune for Indians, with high income households outnumbering those in the low category for the first time at the end of 2009-10. Today, India has 46.7 million high income households as compared to 41 million in the low income category . The NCAER survey confirms that 62 per cent of Indian households belong to the middle class, which is the target of most consumer goods firms. Increasing urbanization and modern technology have brought about a remarkable change in the lifestyles and consumption pattern of Indians. Nearly 49 per cent of all cars are owned by the middle class, compared to just 7 per cent by the rich. Similarly, 53 per cent of all air conditioners are owned by middle class homes and nearly 46 per cent of all credit cards are to be found in these households.

Physical Asset Ownerships