Indian "Affluent Class" To Reach 100 Million In Three Years
According to a Goldman Sachs Group Inc. report, premium goods companies will fare well in India, with the “affluent” class reaching 100 million in the next three years.
The report titled “Rise of “Affluent India” “attributes the phenomenon to robust economic growth, a stable monetary policy, and high credit growth, which in turn has been boosting the purchasing power of high-earning Indians, which account for 60 million people, or 4.1 percent of the population. This
group has been earning over $10,000 per year.
According to the report, the working-age population with per capita income exceeding $10,000 annually, contrasting with India”s average per capita income of approximately $2,100, is “Affluent India”, which is responsible for the widespread adoption of discretionary products and services in India, which include 40 million air travelers annually, approximately 30 million monthly users engaging with online food aggregators, 30 million broadband connections, and roughly 26 million international travelers.
With this, India”s stock market capitalization has surged by more than 80 percent, while the gold price witnessed a substantial 65 percent rise and property prices experienced a notable increase of approximately 30 percent from FY19–23, increasing the combined value of Indian holdings in equities and gold, which now stands at $2.7 trillion rather than 1.8 trillion three years ago.
Stocks with a strong preference for brands and network efforts such as Apollo, Devyani, Eicher, MakeMyTrip, Phoenix, Sapphire, Titan, and Zomato saw a 7 percent upgrade in their FY24 consensus revenue estimates, with broad-based consumption names experiencing a 3 percent downgrade.
This has resulted in a fortified Indian stock market with an 80 percent surge from January 1, 2022, to January 1, 2024, backed by a rise in retail investor participation, an increased number of “demat accounts” from around 41 million in FY20 to approximately 114 million in FY23, the total ownership of BSE 200 by direct retail investors increasing from 8.5 percent in December 19 to 9.8 percent in September 23, and domestic mutual funds” ownership rising from 8.1 percent in December 19 to 9.2 percent in September 23.
However, according to the report, it is alarming that the disparity between the top earners and the middle class is increasing. With a GDP per capita remaining at less than $3,000 a year, only 30 million Indians can afford a vehicle, even though more than 960 million debit cards have been issued and 93 million have post-paid cell phone connections, as per the report.
The report also attributed the International Monetary Fund”s (IMF) prediction that India, currently the world”s fifth-largest economy, is poised to become the third largest by 2027 to the growth determined by the increasing spending power of the middle class.
