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The Next Urban Frontier: Twenty Cities To Watch
Jalandhar Chandigarh Delhi Lucknow Kanpur
Ahmedabad Bhopal Surat Mumbai Pune Hyderabad Nagpur Kolkata
Mumbai, Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad, Pune
Bangalore Coimbatore Chennai
Surat, Kanpur, Jaipur, Lucknow, Nagpur, Bhopal, Coimbatore
Faridabad, Amritsar, Ludhiana, Chandigarh, Jalandhar Draft—do not circulate
0 Boomtowns 1.7 1.1 19.4 7.8 4.0 63. but generate more than 30% of income Urban Share of total (%) Households Population Income Expenditure Surplus income Source: NCAER/FCR Rural Megacities 69.9 1.7 29.0 36.6 16.4 24.0 100.5 44.7 1.7 Total urban 30.future capital research The top twenty cities make up less than 10% of India’s population.5 3.9 Other cities 20.4 49.9 32.0 100.1 67.1 15.3 2.5 8.5 56.0 7.7 0.3 70.0 100.7 13.0 Draft—do not circulate 01 .0 100.5 All India 100.9 Niche cities 0.1 7.
%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 Draft—do not circulate 02 Su .%yoy) 18 16 14 12 10 8 6 4 2 0 Household Income Growth (2004-8.future capital research Boomtowns register the fastest economic growth Household Income Growth (2004-8.
059 317.753 275.408 262.353 271.503 403.181 319.846 210.558 219.671 422.939 289.254 323.020 288.856 308.199 280.future capital research Surat is a standout 2007-8 Average Household Income.759 302.457 431.210 159.678 328.651 287.247 246.625 300.056 252.237 337.514 267.761 Draft—do not circulate 03 .598 290.371 298.847 484. 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 457.201 408.059 337.129 231.267 325.393 273. (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).963 191.678 300.374 296.677 157.458 165.775 459.520 164.
future capital research 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 Draft—do not circulate 2007-8 (E) 2015-16 (E) 04 .
000 2.000 0 2007-8 2015-16 Low Income Source: NCAER/FCR Aspirants Middle Class High Income Draft—do not circulate 05 .000 12.000 4.000 14.000 6.000 8. quadruple in boomtowns Number of Households (thousands) 16.000 10.future capital research The high-income segment will triple by 2016.
68 9.78 59.66 76.19 Niche cities 46.future capital research 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 57.42 63.46 63.30 9.20 65.79 43.85 79.28 14.95 Boomtowns 43.12 89.05 87.03 14.45 60.13 16.34 62.23 85.81 90.48 47.12 14.52 55.08 76.98 13.80 91.16 16.19 20.80 WHY DO BOOM CITIES SCORE OVER MEGACITIES ON OWNERSHIP OF SOME PRODUCTS LIKE MOTOR CYCLES BUT NOT CARS? HOW DO YOU EXPLAIN THE OWNERSHIP OF AIR CONDITIONERS circulate Draft—do not IN BOOM TOWNS? 06 .76 90.
future capital research 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 Refrigerator DVD Player Motorcycle Computer AC Car TV Which is the product most preferred by the Low income group? What are your inferences on this? What does the lower penetration of DVD players in this strata tell you? Source: NCAER/FCR Which are the most preferred products of the Middle class? Given the absolute number of middle class house holds. what are the 07 Draft—do not circulate implications? If you are in mobile communications industry (cell phone makers/ telephony providers). how do you look at the Middle class & Aspirants .
future capital research 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 Draft—do not circulate .
future capital research 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 WHY IS AHMEDABAD SO DIFFERENT FROM JALANDHAR? 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 Draft—do not circulate 09 op Bh Ja lan dh Ka ar al .
1% Communication Household and personal products Education and recreation Apparel Health care Housing and utilities Transportation Food.6% 10.3% 8.0% 2.6% 21.4% 5.9% 10.1% 16.3% 4.3% 40 30 20 10 0 Megacities Source: NCAER/FCR 34.0% 5.5% 5.9% 3.4% 8.0% 13.5% 34.2% 7.future capital research Composition of household expenditure % of total consumption expenditure 100 90 80 70 60 50 2.3% 20. beverages and tobacco 20.4% Boomtowns Niche cities Draft—do not circulate 10 .9% 14.8% 7.0% 7.6% 5.1% 31.
000 60. FOR MARKETING HOUSE LOANS? Megacities Boomtowns Niche cities 2007-8 estimates Food/ Beverage Source: NCAER/FCR Transport Household/ personal care Housing Health Apparel Education/ Communication Recreation 11 Draft—do not circulate .000 30. WHICH CITIES YOU WILL CONCENTRATE ON.000 50.000 40.000 10.000 20.000 0 IF YOU ARE HOUSING FINANCE ORGANISATION.future capital research Megacity households spend the least on average on education and recreation Rs/household/annum 70.
EVEN THOUGH SURPLUS INCOME RATE IS LOWER? 60 50 40 30 20 10 0 All 20 Cities Source: NCAER/FCR Megacities Boomtowns Niche cities Urban Rural All India 12 Draft—do not circulate .future capital research Surplus income rates in the top cities are nearly double the national average Surplus Income Rate (% of household income) CAN YOU NOW APPRECIATE WHY CITIES ARE THE "BIG MARKETS"? YOU PROBABLY TOUGHT THAT IT WAS ONLY DUE TO POPULATION & POPULATION DENSITY! OPEN YOUR EYES TO DATA!! WHY DO YOU THINK THAT COMPANIES ARE RUSHING INTO RURAL MARKETS.
future capital research 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 Draft—do not circulate 13 .
future capital research 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 DO YOU SEE A CULTURAL PHENOMENA HERE? CAN YOU GUESS WHAT IS THE PICTURE IN SOME OF THE WESTERN COUNTRIES. NOTABLY THE USA? Loan from friends/relatives Loan from employer Selling land/jewellery Financial institutions/Bank Others Draft—do not circulate 14 .
EUROPE .PIGS ETC) Loans Draft—do not circulate Credit Card 15 .future capital research 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 DO YOU SEE A CULTURAL INFLUENCE HERE? CAN YOU LINK THIS TO THE FACT THAT INDIA IS UNLIKELY TO GO THROUGH THE KIND OF TROUBLES THE DEVELOPED WORLD IS NOW GOING THROUGH (USA.
future capital research 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 Draft—do not circulate De .
future capital research 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 Draft—do not circulate 17 .
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