Middle class population to touch 267 mn in 5 yrs
The Indian middle class, target consumers for many companies, is expected to swell up to 267 million people in the next five years.
New Delhi: The Indian middle class, target consumers for many companies, is expected to swell up to 267 million people in the next five years, up 67 percent from the current levels, thus providing a great market opportunity for firms, according to NCAER.
A report by National Council for Applied Economic Research`s (NCAER) Centre for Macro Consumer Research said by 2015-16, India will be a country of 53.3 million middle class
households, translating into 267 million people falling in the category.
As per the study, which uses `household income` as the criterion, a family with an annual income between Rs 3.4 lakh to Rs 17 lakh (at 2009-10 price levels) falls in the middle class category.
(As per 2000-01 prices, middle class classification was based on annual income of Rs 2-10 lakh.)
Currently India has 31.4 million middle class households (160 million individuals).
"Factors such as the country`s GDP growth, which is projected to be around nine per cent, going ahead and high growth rate of urbanisation will result in the increase of middle class in the country," NCAER`s Centre for Macro Consumer Research (CMCR) Director Rajesh Shukla told a news agency.
Further ahead, by 2025-26 the number of middle class households in India is likely to more than double from the 2015-16 levels to 113.8 million households or 547 million individuals.
"There is a huge market being created for the white goods and automobile makers," Shukla said.
Besides, the growth in the number of middle class households will translate into huge demand for the products such as cars, televisions, computers, air-conditioners, microwave ovens and credit cards, he added.
Interestingly, as per NCAER findings, the middle class that represents only 13.1 percent of India`s population currently owns 49 per cent of total number of cars in India, 21 percent of TVs, 53.2 percent of computers, 52.9 percent of ACs, 37.8 percent of microwaves and 45.7 percent of credit cards.
The report said a typical Indian middle class household spends about 50 percent of the total income on daily expenses with the remaining goes into savings.
"Which means a middle class family has strong purchasing power to spend on durables and other items," Shukla said.
As per the findings, the percentage of the middle class in the country`s total population, will increase to 20.3 percent by 2015-16 and 37.2 percent by 2025-26.
By 2015-16, the country`s total population is expected to touch 1.30 billion (a total of 262.6 million households) and 1.45 billion (305.8 million households) by 2025-26, up from 1.22 billion people (240.2 households at present), it said.
NCAER also said with increase in village incomes and growing urbanisation, the percentage of rural population in the total middle class of the country will reach 48.8 percent by 2025-26 from 37.4 percent at present.
Another class that will see an increase in households is the rich class, who earn Rs 17 lakh per year,according to NCAER.
The rich class category will touch 33 million people (6.6 million households) by 2015-16, up from the current 16 million people or 3.2 million households.
By 2025-26, the rich class will swell up to 128 million people with 26.1 million households, the NCAER finding said.
The rising incomes on the back of robust economic growth will mean that the number of deprived households with annual income of below 1.5 lakh will come down to 113.3 households
(559 individuals) by 2015-16 from 134.7 million household (684 million individuals) at present.
In case of `aspirers` those defined by NCAER as households with annual income of between Rs 1.5 lakh and Rs 3.4 lakh, the number of such households will also go up to 89.4 million by 2015-16 from the current of 70.7 million households.