Rapid growth of Indian economy over the last few years has resulted in increasedconsumption…
India’s growth has accelerated progressively since 1960s. From the ‘HinduRate of Growth’ of 3.5% up to 1980, growth accelerated to 6% following thereforms in 1980s and early 90s
Over the past four years, the GDP growth performance has been even moreimpressive, averaging 8.5% per year; and over the last fiscal it was 9.4%,
GROWTH OF INDIA’S GDP (USD BN)
In 2006, India became the 12
largest economy at current exchange ratesand 3
largest in purchasing power parity terms
It is now widely believed that India’s growth acceleration is more structuralthan cyclical, with an investment boom and high productivity enhancing theeconomy’s productivity. Consequently India is projected to enjoy sustainable
growth rate of 8-9% till 2020.
Economic growth has brought about a spurt in per capita GDP, resulting in arapidly growing middle class. Per Capita GDP increased at a CAGR of 8.6%between FY04 to FY07.
A recent study by McKinsey Global Institute states that India will witnessraid rowth of its middle class –households with disosable incomes from
GDP at Market PricesReal GDP Growth Rate
DRIVERS OF CONSUMPTION GROWTH IN INDIA (USD BN)
Source: Ministry of Statistics and Programme Implementation
USD 5,000 –50,000 a year. That class, which now comprises of about 50Mnpeople (~5% of population) will enlarge to about 583Mn people (~41% ofpopulation) by 2025.
Rising incomes, the creation of a massive middle class and growingpopulation will propel India to become the 5
largest consumer market by2025. Consumption will increase at an aggregate rate of 7.3 percent