Ashika Monthly Insight August 2016

AUGUST 2016
DESCRETIONARY SPENDING
wealth rose by USD 1.2 trillion. The middle class in India has a 22.6% share (USD 780 billion or Rs 5,070,000 crore) of
the country’s wealth, while sections above the middle class (higher middle-class) share about 64% of the wealth. It has
been noticed that income per middle class adult in India has more than doubled from USD 2,040 (Rs 97,104) in 2000 to
USD 5,100 (Rs 205,020) in 2007. However, the growth of middle class in India was hit by global economic crisis in 2008
and plunged by 26%, after it bounced back to USD 5,300 (Rs 241,150) in 2010. It continued to fall due to adverse
exchange rates and was estimated at USD 4,352 (Rs 282,880) in 2015. In India, middle class wealth is dominated by real
assets, which account for about 86% of estimated household assets. Globally, the share of middle-class wealth has fallen
since 2008, except in China, over the period 2000 to 2015. Further according to the Euromonitor, the Indian average
income per household is set to increase by 89.8% in real terms to reach USD 10,073 (in constant 2014 prices) by 2030.
Such growth in income would transfer the consumer spending of Indian middle class from “bottom of the pyramid”
market towards a greater and more sophisticated level. Increase in per capita income would drive discretionary spending
which share in total household spending is expected to rise from 52% in 2005 to 70% in 2025 (as per Motilal Oswal
report). Rising middle classes would spur the demand for consumer durable goods, automobiles, real assets and consumer
loans.
Source : IMF, World Bank, Tech Sci Research
Source : Global Wealth report
Source : Global Wealth report
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