Consumer spending in India, which is projected to grow from the current US$1.5 trillion to $6 trillion by 2030, will see the country becoming the world’s third- largest consumer market, only behind the United States and China, says a new report by the World Economic Forum (WEF).
The report noted that with an annual GDP growth of 7.5 percent, India was in 2018 the world’s sixth largest economy and is poised to become the fifth this year. By 2030, domestic private consumption, which currently accounts for 60 percent of the country’s GDP, is expected to develop into a $6-trillion growth opportunity, said the WEF.
“If realized, this would make India’s consumer market the third-largest in the world, behind the US and China,” the report said.
Commenting on the report, Zara Ingilizian, Head of Consumer Industries and Member of Executive Committee, World Economic Forum, said “as India continues its path as one of the world’s most dynamic consumption environments, private and public-sector leaders will have to take shared accountability to ensure such consumption is inclusive and responsible.
Notwithstanding the significant growth in consumption, critical societal challenges will need to be addressed, including skills development and employment of the future workforce, socio-economic inclusion of rural India, and creating a healthy and sustainable future for its citizens.
The report titled ‘Future of Consumption in Fast-Growth Consumer Market India’ noted that growth of the middle class will lift nearly 25 million households out of poverty.
This growth in income will transform India from a ‘bottom of the pyramid economy’ to a middle class-led one. Future consumption growth will mainly come from rich and densely populated cities and the thousands of developed rural towns.
“India’s top 40 cities alone will form a $1.5 trillion opportunity by 2030, many thousands of small urban towns will also drive an equally large spend in aggregate.
In parallel, there will be an opportunity to unlock nearly $1.2 trillion of spend in developed rural areas by improving infrastructure and providing access to organized and online retail,” WEF noted.
The report produced in collaboration with Bain & Company builds on consumer surveys conducted across 5,100 households in 30 cities and towns in India, and draws from more than 40 interviews with private and public-sector leaders.