India Set To Become The Consumption Capital Of The World; Outpaces Major Economies

India is poised to become the consumption capital of the world, surpassing major economies, according to a new report by Angel One and Iconic Asset.

With consumption accounting for 56% of the country’s GDP, it stands as the fastest-growing segment of India’s economy.

Driven by the world’s fastest-growing consumer base, India’s consumption is projected to double by 2034, signaling significant economic expansion.

Household Growth And Nuclear Family Trends Drive Consumption Surge

A key factor fueling India’s rising consumption is the country’s changing household dynamics.

The growth of nuclear families is outpacing population growth, emerging as a central driver of increased consumption.

This shift in family structures is contributing to the country’s expanding consumer market.

In addition, India is set to lead global workforce growth, further boosting consumption levels.

Massive Increase In Savings To Fuel Future Consumption

Report highlights that India’s savings over the next 25 years will surpass the total savings of the past 25 years by 10 times.

Also Read: India’s GDP Doubles In A Decade, Economists Credit Digitisation; Reforms, And Financial Inclusion

Between 1997 and 2023, India accumulated USD 12 trillion in savings, but by 2047, this figure is expected to increase dramatically to USD 103 trillion.

This surge in savings will unlock enormous potential for incremental consumption across the country.

Recent Tax Cuts To Boost Consumption And GDP Growth

The Indian government’s recent tax cuts, announced in the union budget, are expected to unlock Rs 1 lakh crore, driving an incremental consumption of Rs 3.3 lakh crore.

This move has the potential to boost the nation’s GDP by 1%.

Consumption Trajectory Mirrors US And China’s Growth Patterns

The report draws parallels with the consumption patterns seen in the US and China during periods of economic and income expansion.

In both countries, discretionary spending increased significantly, and India is poised to follow a similar trajectory.

“Consumption spend in the US increased 10X during a strong rise in per capita income. India can witness similar growth in consumption as per capita income rises,” the report stated.

Discretionary Consumption Categories Poised For Rapid Growth

Consumer electronics, apparel, accessories, and the experience economy are expected to emerge as the fastest-growing categories in discretionary consumption.

With these sectors primed for expansion, India is positioned to see substantial increases in consumer spending.

Despite 92% of retail trade still flowing through traditional Kirana stores, there is a significant opportunity for modern retail to scale and capture a larger market share.

The growth of organized retail is expected to further propel consumption across India.

Gen Z’s Growing Influence On Consumption Patterns

India has more Gen Zers than the entire population of the United States, and by 2035, every second rupee spent is projected to come from a Gen Zer.

This demographic shift will play a crucial role in driving consumption growth, adding momentum to India’s already booming economy.