India’s domestic consumption in the last 10 years multiplied 3.5 times in the last decade from Rs. 31 Tn to Rs. 110 Tn. By 2028, this consumption level is expected to go up to Rs. 335 Tn, according to a report jointly issued by the Boston Consulting Group and Retailers Association of India.
The households that earned anywhere between Rs. 5-20 lakh in annual income accounted for about 43 percent of the Rs. 110 Tn consumption in 2018, according to the Going for Gold: By Creating Customers Who Create Customers’ Report. These aspiring and affluent households contribute to about 28 percent of the total households.
Millennials in the workforce are playing a crucial role in driving up domestic consumption in India. With rising salaries and a higher inclination towards spending on travel, luxury goods, and gadgets, this generation is more likely to engage in online shopping. The combined disposable income of Asian millennials is as high as $6 Tn, according to a joint report by Deloitte and RAI. It is interesting to note the scale of consumption in India in light of the fact that about 34 percent of the total population in India is millennials.
Affluent households, i.e. those with an annual income between Rs. 10-20 Lakh, have more than doubled since 2008 from 10 million to 24 million in 2018. The “aspirers” belong to the next bracket whose annual household income lies between Rs. 5-10 lakh. The number of aspiring households has seen a sharp rise from 31 million in 2008 to 57 million in 2018.
The share of the next billion households who rose in number from 104 to 129 million dipped from 44 percent in 2008 to 34 percent in 2018. However, this group which earns between Rs. 1.5-5 lakh per annum, still accounts for the largest share of consumption in India.
The rising salaries, urbanization, shifting priorities, and higher disposable income are some of the major factors that have contributed to the rise in domestic consumption. These influencers will continue to drive up the consumption demand given the current scenario in the space of rapidly transforming workplace at the intersection of talent and work.