Synopsis
According to a recent report, India is on course to become the global consumption capital, exceeding major economies. With a remarkable growth rate, India's consumption constitutes 56% of its GDP, with projections indicating a doubling by 2034. The rise of nuclear families and a young population significantly contribute to this trend.Key Takeaways
- India's consumption is 56% of GDP
- Projected to double by 2034
- Rise in nuclear families driving spending
- Young population to boost consumption
- Tax cuts expected to enhance spending
New Delhi, March 23 (NationPress) India is set to establish itself as the world's consumption hub, surpassing leading economies, as per a recent report.
Consumption in India constitutes 56 percent of the nation’s GDP and is expanding at an unparalleled pace globally.
A study conducted by Angel One and Iconic Asset indicates that within the next decade, India’s consumption is expected to double by 2034.
The escalation in consumption is primarily fueled by the growing number of nuclear families. The increase in households outstrips the population growth, resulting in a notable rise in expenditure.
Furthermore, India is anticipated to spearhead the expansion of the global workforce, thereby enhancing economic activity.
The report also emphasizes India’s remarkable savings potential. From 1997 to 2023, total savings in the nation reached $12 trillion.
In the next 25 years, this amount is projected to soar to $103 trillion by 2047. This surge in savings is expected to unlock vast opportunities for elevated spending and economic progress.
Recent tax reductions announced in the Union Budget are expected to further stimulate consumption. The report estimates these tax cuts will release Rs 1 lakh crore, leading to an additional Rs 3.3 lakh crore in spending, potentially boosting India’s GDP by 1 percent.
India is likely to follow a global trend where discretionary spending, including electronics, apparel, accessories (like jewellery), and experiences, will grow at a faster rate than essential spending.
The report notes that during times of economic growth, both the US and China experienced discretionary consumption outpacing basic spending, and India is expected to mirror this trend.
“Consumption expenditure in the US surged 10X during a period of significant growth in per capita income. India can achieve similar consumption growth as its per capita income increases,” the report stated.
Despite the rise of contemporary retail, 92 percent of India’s retail trade still occurs through small local Kirana stores.
This presents a substantial opportunity for organized retail to expand and capture a greater market share, according to the report.
The report further highlights the influence of India’s youthful population on consumption. India boasts more Gen Z individuals than the entire population of the United States.
By 2035, every second rupee spent in India is anticipated to come from a Gen Zer, further propelling the country’s consumption surge.
