The Next Urban Frontier: Twenty Cities To Watch: Megacities

future capital research
Amritsar Ludhiana
The Next Urban Frontier: Twenty Cities To Watch

Jalandhar Chandigarh Delhi Lucknow Kanpur
Faridabad Jaipur
Ahmedabad Bhopal Surat Mumbai Pune Hyderabad Nagpur Kolkata
Megacities
Mumbai, Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad, Pune
Boomtowns
Bangalore Coimbatore Chennai
Surat, Kanpur, Jaipur, Lucknow, Nagpur, Bhopal, Coimbatore
Niche cities
Faridabad, Amritsar, Ludhiana, Chandigarh, Jalandhar Draftdo not circulate
The top twenty cities make up less than 10% of Indias population, but generate more than 30% of income
Urban Share of total (%) Households Population Income Expenditure Surplus income
Source: NCAER/FCR
Rural Megacities 69.3 70.5 56.0 63.9 32.5 8.1 7.4 24.6 16.4 49.0 Boomtowns 1.9 1.8 4.5 3.4 7.9 Niche cities 0.7 0.7 1.7 1.3 2.9 Other cities 20.1 19.7 13.1 15.0 7.7 Total urban 30.7 29.5 44.0 36.1 67.5
All India 100.0 100.0 100.0 100.0 100.0
Draftdo not circulate
01
Boomtowns register the fastest economic growth

Household Income Growth (2004-8,%yoy)
18 16 14 12 10 8 6 4 2 0
Household Income Growth (2004-8,%yoy)
Source: NCAER/FCR
ra Na t Ah gpu me r da ba d Ja ip Mu ur mb Lu ai ckn Lu ow dh i Ba ana ng All alore 20 cit i Am es rits ar Ch Delh an i dig ar Ch h en Ja nai lan dh ar IN Fa DIA rid ab ad Re Pun st of e I Hy ndia de rab a Ko d Co lkat im a ba tor e Ka np u Bh r op al
Draftdo not circulate 02
Su
Surat is a standout
2007-8 Average Household Income, (Rs/household)
Chandigarh Mumbai Surat Delhi Chennai Ahmedabad Nagpur Bangalore Jaipur Jalandhar Kolkata Lucknow Hyderabad Ludhiana Amritsar Faridabad Coimbatore Pune Bhopal Kanpur
Source: NCAER/FCR
2007-8 Average Household Income (Rs/household), Adjusted for Cost of Living

Surat Chandigarh Mumbai Delhi Ahmedabad Jaipur Jalandhar Chennai Bangalore Nagpur Amritsar Lucknow Ludhiana Hyderabad Kolkata Faridabad Coimbatore Pune Kanpur Bhopal 457,671 422,503 403,059 337,678 328,267 325,254 323,181 319,759 302,371 298,598 290,939 289,020 288,753 275,408 262,247 246,129 231,963 191,520 164,677 157,847
484,775 459,457 431,201 408,237 337,059 317,856 308,625 300,678 300,374 296,651 287,199 280,393 273,353 271,514 267,056 252,558 219,846 210,458 165,210 159,761
03
More than half of households will be middle class by 2016

Low Income Middle Class Aspirants High Income
% of total population
100
80
60
40
20
0 1998-99
Source: NCAER/FCR
2001-2
2004-5
2007-8 (E)
2015-16 (E)
04
The high-income segment will triple by 2016, quadruple in boomtowns

Number of Households (thousands)
16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0
2007-8 2015-16
Low Income
Source: NCAER/FCR
Aspirants
Middle Class
High Income
05
Middle class ownership patterns vary across cities

Middle Class Penetration Rates (% of middle class households) Car Motorcycle Mobile phone Television DVD Player Computer Refrigerator Washing Machine Microwave Oven Air Conditioner
Source: NCAER/FCR
Megacities 57.48 47.08 76.81 90.46 63.13 16.76 90.20 65.98 13.68 9.95
Boomtowns 43.45 60.85 79.05 87.42 63.19 20.12 89.52 55.28 14.12 14.19
Niche cities 46.79 43.66 76.23 85.78 59.16 16.80 91.34 62.03 14.30 9.80
06
Product ownership by income: All twenty cities

High Income
Share of total ownership (%)
Middle Class
Aspirants
Low Income
100 80 60 40 20 0 Washing Machine Microwave Oven Mobile Phone

07
Refrigerator
Source: NCAER/FCR
DVD Player
Motorcycle
Computer
AC
Car
TV
Changes in asset ownership patterns across cities: Car / Mobile distribution by income group
High Income
Share of total ownership (%)
Middle
Aspirants
Low Income
100 80 60 40 20 0 Megacities Niche cities Megacities All 20 cities Boomtowns All 20 cities Niche cities Boomtowns
08
Car
Source: NCAER/FCR
Mobile Phone
Spending propensities span a dramatic range

Household consumption expenditure as a share of income, %
90 80 70 60 50 40 30 20 10 0
Spending Propensities
Source: NCAER/FCR
Co npur im ba to Fa re rid ab a Am d rits ar Ko lka ta Pu ne Na gp ur Ja i Ba pur ng a Hy lore de rab a Lu d ckn ow De l Lu hi dh ian a Ch en na i S Ch urat an dig arh Mu Ah mba me i da ba d
op Bh Ja
lan
dh
Ka
ar
al
Composition of household expenditure

% of total consumption expenditure
100 90 80 70 60 50
2.9% 14.3% 4.6% 5.9%
3.1% 16.0%
2.9% 10.0% 5.5%
5.2% 7.4%
5.3% 8.8%
7.0% 7.6% 10.4% 8.0% 13.1%
Communication Household and personal products Education and recreation Apparel Health care Housing and utilities Transportation Food, beverages and tobacco
20.3%
40 30 20 10 0 Megacities
Source: NCAER/FCR 34.6%
21.3%
20.1%
31.5%
34.4%
Boomtowns
Niche cities
Megacity households spend the least on average on education and recreation

Rs/household/annum
70,000 60,000 50,000 40,000 30,000 20,000 10,000 0
Megacities
Boomtowns Niche cities 2007-8 estimates
Food/ Beverage
Source: NCAER/FCR
Transport
Household/ personal care
Housing
Health
Apparel
Education/ Communication Recreation

11
Surplus income rates in the top cities are nearly double the national average
Surplus Income Rate (% of household income)
60
50
40
30 20
10
All 20 Cities
Source: NCAER/FCR
Megacities
Boomtowns
Niche cities
Urban
Rural
All India
12
19% of households prefer to keep surplus income at home

Keep at home Deposit in co-operative society
% of households
Deposit in bank Purchase insurance policies
Deposit in post office Others
100
80
60
40
20
0 Megacities
Source: NCAER/FCR
Niche cities
Boomtowns
All 20 cities
13
Households overwhelmingly draw on savings to cope with shocks

% of households who faced economic shock
90 80 70 60 50 40 30 20 10 0 Using own savings

Source: NCAER/FCR
Death of chief earner Major sickness of any household member Household/business loss
Loan from friends/relatives
Loan from employer
Selling land/jewellery
Financial institutions/Bank
Others
14
Niche cities have the highest asset penetration, but lowest financial penetration
% of households
50 45 40 35 30 25 20 15 10 5 0 Life Insurance
Source: NCAER/FCR
Boomtowns
Megacities
Niche cities
Loans
Credit Card
15
Nagpur leads in insurance penetration

Life Insurance penetration (% of households)
80 70 60 50 40 30 20 10 0
g Ba pur ng alo re S Ch urat an dig arh Pu ne Ko lka ta Ja ip Ja ur lan Co dhar im ba tor e
Source: NCAER/FCR
lh Mu i m Fa bai rid Ah abad me da ba d Bh op Lu al dh ian a Ka np Lu ur ckn ow Ch en Hy nai de rab a Am d rits ar

16
Na
De
Coimbatore and Jaipur have the highest credit card penetration

Credit card penetration (% of households)
14 12 10 8 6 4 2 0
Co im ba tor e Ja ipu Ch r en na i De lh Na i gp u Mu r All mba 20 i c Ba ities ng alo re Ah Sura me t da ba d Pu Fa ne rid ab a Ko d Ch lkata an dig arh Ka np Am ur rits Lu ar dh i Ja ana lan Hy dhar de rab Lu ad ckn ow Bh op al
Source: NCAER/FCR
17

The Next Urban Frontier: Twenty Cities To Watch: Megacities

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