In our previous stories, we’ve been talking to you about the potential impact of the current actions by the government on the Indian economy. We also spoke to you about why we feel the goal of $5 trillion seems more possible than before and to back it up we spoke about the auto sector and the infrastructure sector.
In this story, let us talk to you about how we as individuals or as households contribute towards the growth of the Indian economy. This will also tell that irrespective of some short term slowdowns, the Indian economy cannot suffer in the longer run.
India’s growing consumption story
Let’s start with a history of India’s Private Consumption Expenditure
The chart is extremely self-explanatory, isn’t it! It has grown around 8x in a 20-21 year period, irrespective of short-term hiccups such as Lehman crisis and many others. And whosoever thinks or comments that it could see a long-term slowdown, would surely need to introspect once again.
The latest World Economic Forum (WEF) report states that India is poised to become the third-largest consumer market by 2030 with consumer spending expected to grow from $1.5 trillion to approximately $6 trillion by 2030. Domestic private consumption accounts for 60 per cent of the country’s GDP, so this another positive factor for the Indian economy.
The rise of ‘India’s affluent middle class
The growth of a young population with rising incomes is creating a large emerging middle class in India. This class of people have both the purchasing power and the desire for a better lifestyle.
India’s increasing demographic dividend
India is a young country with nearly 65% of its population falling below the age of 35. This is an opportunity to drive economic growth on the back of the rising working-age population.
The nation is expected to add almost 10-12 mn people to its workforce every year over the next two decades, with the working-age population crossing the 1 billion mark by 2030. While other growing economies will have a much older population, India’s young population could cater to the demand for skilled workers globally.
Unlike China, India is an extremely consumption based economy. We are a young society with a lot of growth potential and even more aspirations.