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INDIA
Euromonitor International
June 2015
CONSUMER LIFESTYLES IN INDIA Passport I
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CONSUMER LIFESTYLES IN INDIA Passport II
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CONSUMER LIFESTYLES IN INDIA Passport 1
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few years. In fact, in an article in November 2014, The Financial Times dubbed the current
generation Indias Gym Generation. This growth is reflected in the numbers: according to a
report released by the Federation of Indian Chambers of Commerce and Industry (FICCI), the
Indian fitness and slimming industry is expected to increase from INR60 billion in 2012 to at
least INR100 billion in 2015.
The Indian film industry is also believed to have played a part in driving this trend. A
writer/actor comments, Bollywood should be thanked for the way India is starting to view
fitness. I remember growing up in Delhi in the 1990s and rarely seeing gyms. Movie stars
tended to be rather plump. She adds that currently, Bollywood seems to be un-attracted to the
anorexic look so the focus does seem to be shifting more towards a healthy lifestyle than simply
thinness. As a result, a large number of fashion-conscious young consumers have been drawn
to fitness after being inspired by looking at the well-toned bodies of celebrities and sports stars.
Going to gyms also provides an outlet for youngsters to show off branded clothes and high-end
footwear and other accessories.
Fitness activities among Indian consumers are not restricted to gyms. People are also
involved in outdoor running, biking, and hiking groups. Activities like Cross-fit and Zumba have
become popular, along with kick-boxing, spinning, aerobics, Pilates and mixed martial arts
(MMA) classes. Additionally, Indias first fitness station was launched on the Worli Promenade in
Mumbai in 2013.
According to the director of Golds Gym India, The fitness oriented customer is mostly in the
age group of 20-40 years right from their college days to their professional days mainly to look
good. He adds, Earlier it was predominantly dominated by the male population. Today we see
45% of the members being female. Education and access to the Internet has changed the views
of women to take up gymming.
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because they are going somewhere on their wish list this year. Destinations on the wish list
include countries like Australia, France, Switzerland and New Zealand. The survey further states
that the average number of international trips for Indian consumers is set to increase by a
massive 45%, in comparison to the global average of 15%.
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2014. The growth is expected to intensify, with per capita spending forecast to increase to
INR64.1 by 2019.
Instead of using womens grooming products, male consumers are beginning to demand
products specifically designed for them. As a result companies have launched products such as
beer shampoos, whitening creams and face wash designed exclusively for men. Men are even
beginning to outspend women in certain categories such as colognes and deodorants. One 20-
something noticed on a recent weekend trip that the men in the group carried more grooming
products, such as shampoos, hair gels, body wash and deodorants, and that it was the women
who were borrowing these products from their male friends. The managing director of Indian
retail chain Shoppers Stop confirms this trend: 50% of the chains overall consumers are men,
while for categories such as colognes, it is over 60%.
CONSUMER SEGMENTATION
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Indias population growth is finally slowing down. The birth rate decreased from 24.7 in 2005
to 21.2 in 2014, while the fertility rate decreased to 2.5 births per woman in 2013, in comparison
with 2.8 in 2005. The main reasons behind this were government campaigns and programmes
to spread awareness of population control, higher literacy rates (both among men and women)
and a higher number of women in the workforce (15.4% in urban areas in 2011 compared with
11.9% in 2001). According to the 2013 Sample Registration survey of the Census of India,
states with high literacy rates such as Goa and Kerala recorded the lowest fertility rate at 1.6,
while Bihar, which suffers from widespread female illiteracy, had the highest fertility rate at 3.4.
Although the number of women working after marriage has increased in India, it is still quite a
small proportion. Therefore childcare remains primarily the responsibility of the mother. A
shortage of good childcare facilities means that many women have no option but to stay at
home approximately 40% women drop out of the workforce after childbirth. But this is slowly
changing, as more companies begin to provide childcare facilities. Leading corporations like
CSC and Mahindra set up an onsite childcare facility at their campuses in 2014, with many more
expected to follow suit in the near future.
Where both parents work, especially in urban areas, it is common for grandparents to take
care of the children, enabling the parents to maintain a work-life balance. Hiring a domestic
maid to take care of childcare duties is also a popular option.
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Kids
There was a marginal increase of 0.3% in the number of children (aged 3-8) in 2014. The
number of kids increased from 148.2 million in 2013 to 148.7 million in 2014. It is expected to
decline to 148.3 million by 2020, a consequence of declining birth rates. This segment
accounted for 11.8% of the population in 2014, and is estimated to decrease to 10.9% by 2020.
From the age of three to five, children in India attend nurseries or kindergartens. An
expanding economy and an increase in the number of working women have seen a rise in the
number of nurseries and day care centres. As there is no child benefit system in India, parents
have to pay for these services. Most parents want to enrol their kids in these schools and private
schools. Admission is quite competitive due to the limited number of places. Enrolment rates in
pre-primary school were 58%, as of 2011.
Kids in India start primary school at the age of six. Schooling became compulsory and free for
children from the ages of six to 14, after the passing of the Right to Education act in 2009.
Primary school enrolment levels reached 96.5% in 2013, with girls making up 56% of new
students between 2007 and 2013, according to the data released by the 2013 Annual Status of
Education Report (ASER).
There is also demand for private schools, with 29% of students in this age group receiving
private education. Both private and public schools have compulsory uniforms and may admit
children of both genders. Privately educated students have access to computers in school, while
a majority of students in public schools do not.
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Tweenagers
The tweens segment accounted for 7.6% of the Indian population in 2014. The number of
Tweenagers (aged 9-12) in India increased by 0.6%, from 96.1 million in 2012 to 96.7 million in
2014. It is estimated to rise by 2.5% to 99.1 million by 2020.
According to a 2014 article in The Times of India, primary school pupils spend 51 hours more
in classrooms per academic year than students in OECD countries. A typical school day for a
Tweenager would last from 08.00-14.00hrs. Tweens usually take the school bus or walk or cycle
to school. Uniforms are mandatory in both private and public schools.
Parents do not have to pay fees or pack lunches for their kids in public schools, as this is
provided by the government. The midday meal scheme in Indian public schools is the largest
such programme in the world, serving food to 120 million children in over 1.2 million schools.
This scheme has increased girls school attendance and improved nutrition among children. In
private schools, students usually carry their own lunch boxes or eat in the school canteen. A
standard lunch would consist of rice, lentils and vegetables.
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According to McAfees Tweens and Technology Report 2013, Indian tweens are
enthusiastically adopting the Internet using multiple devices. On average, online tweens in India
are using between three and four devices that can be internet-enabled laptop, mobile and
desktop predominantly. While 61% of respondents said they use desktops, 40% use tablets and
68% use mobiles to access the Internet, the survey found. Tweens have a clear preference for
not only the devices used for Internet connectivity but also the type of activity on these devices.
So while desktop is preferred mainly for homework, tablets are dominant when it comes to
exchanging pictures and playing games.
It is unusual for children from middle-class families to have part-time jobs. As a result, tweens
often receive spending money from parents, relatives and grandparents. Pocket money, ranging
from INR400 to INR5,000, is sufficient to purchase products like food, sweets, books and
games. Parents generally decide upon any big-ticket purchases. However as the managing
partner of GroupM says, In nuclear families and especially ones where we have both parents
working, parents are spending quality time with the tweens and making them a part of lot of
decisions. The influence of tweens in purchase decisions has been increasing by the day. As a
result, tweens are increasingly able to persuade parents to buy them the products they want,
such as the latest clothing and footwear, music, video games and other forms of entertainment.
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Teens
There was a marginal increase of 0.22% in the number of teens (aged 13-17) in India in 2014,
taking the number to 119.6 million from 119.3 million in 2013. This age group accounted for
9.5% of the overall population in India in 2014. Declining fertility will reduce the proportion to
8.9% by 2020.
According to a 2014 McAfee Intel Security report, about 70% of kids surveyed spent more
than five hours on the Internet in a normal week: 36% used laptops, 27% used smartphones,
while the remainder used desktops. The most popular sites with teens were Facebook,
YouTube and WhatsApp. Other popular sites/apps include Snapchat, Vine, Pinterest, Tumblr
and even Tinder. Getting online and on social media sites is a way of getting social approval.
According to the survey, 64% of kids tried to re-invent their online personas by making
themselves appear older.
According to a ASSOCHAM study published in 2013, the average expenditure among urban
Indian youth increased from less than INR1,500 in 2003 to more than INR6,000 in 2013. Earlier,
teens would look to their parents for all their needs as there was no concept of pocket money.
But with rapidly changing lifestyle coupled with growing costs, we cannot expect teenagers to
manage with figures of the old times, says the national secretary general of ASSOCHAM.
Around 75% of urban Indian teens (16-18 years) spend more than INR6,000 on cosmetics,
apparels and mobiles. Out of this, INR4,500 is said to be spent on cosmetics alone. Looking
good and keeping up appearances is becoming increasingly important to consumers in this age
category: girls start buying cosmetics from the age of 13-14 as compared to 18-19 a few years
ago, while boys aged 16-18 spend more than girls on grooming products such as hair care and
deodorants.
Teenagers also spend a lot of time on school and school-related extra-curricular activities.
According to a 2014 Times of India article, an average eighth grader in India spends 130 hours
more in school in an academic year than students in OECD countries. As the education system
is extremely competitive, with a greater focus on higher education, there is a lot of pressure on
kids to excel in studies and other activities like inter-school competitions (such as sports or
debates) to improve their chances of gaining admission into a good college.
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Young Adults
The number of Young Adults has been steadily growing over the past decade. It rose from
240 million in 2005 to 272 million in 2014 and is projected to increase to 283 million by 2020.
This segments share in the overall population has remained almost constant at around 21.6%,
making it the largest consumer segment in India.
According to statistics released by the University Grants Commission of India, there were 20.3
million students enrolled in higher education in 2013, out of which 86% were under-graduates,
while only 12% and 1% were enrolled in post-graduate and doctoral programmes respectively.
Even though higher education enrolment rates are still low, there has been massive growth over
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the past decade. An expanding middle-class has raised aspirations among parents and children.
Furthermore, the increasing importance of the services sector in the overall economy has
underscored the need to pursue higher education to match global standards. As a result, there
has been an upsurge in the number of private institutions offering professional courses such as
engineering and MBAs. However, this is the segment worst hit by unemployment. According to
a survey released by the National Sample Survey Office (NSSO) in 2014, 5% of rural youth, and
8% and 13% of urban males and females respectively were unemployed, with youngsters
having only secondary and higher secondary educational qualification the worst affected. At
this level of educational qualification, there is maximum competition for jobs, says an NSSO
official.--
This is also the age when the majority of Indians get married and have kids. The average age
for marriage was 26.7 for men and 22.3 for women in 2014. The average age for marriage is
two years lower in rural areas, as a significant proportion of women (60%-70%) marry before the
age of 18. However, with more urban women entering higher education and the workforce,
marriages in urban India are being postponed, though not by much. A representative of the
International Institute for Population Sciences says, A small segment of women who are
educated and in well-paying jobs are now able to postpone childbirth, but they remain a
minority.
According to a January 2015 article in the Hindustan Times, the number of couples under the
age of 30 getting divorced has risen sharply. The number of divorce applications in cities like
Delhi and Mumbai has doubled since 2010. There are many reasons behind this trend, but the
biggest factor, according to counsellors, is the greater willingness to end a marriage that is not
working. One lawyer says, Has the number of divorces gone up? Of course. But has the
breakdown of marriage increased? No. Marriages have been breaking down with much the
same regularity over the years. But couples have been continuing with the marriage to keep up
appearances. The growing rate of divorce is an indication that the stigma associated with it is on
the wane.
In terms of spending habits, Young Indians want it all but they are unsure how much is too
much. This was the finding of a youth survey conducted by the Hindustan Times in 2014.
According to the survey, 59% of young Indians would like to be rich, but at the same time accept
that they (31%) need to be on the lookout for bargains. Some 47% like high-fashion brands (3%
more than 2013), while dressing well seems less a priority (48% in 2014 vs. 51%).
Consumerism in this age segment has emerged as a big marker of personal identity rather than
just governing purchases. The CEO of Futurebrands India says that young consumers have
moved from a collective past into a personal present: Its no more about being from a good
family, its now about who I am. The survey further states that Indian youth have become
highly experimental particularly with regard to food, media and personal care.
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nuclear families is that they believe that their children would be more independent and
responsible in such an arrangement.
Middle Youth
The proportion of Middle Youth in the total population has been increasing steadily since the
turn of the century. From 19.4% in 2000, the share of Middle Youth increased to 21.1% in 2014
and is expected to increase to 22% by 2020. The growth in this segment has outpaced overall
population growth. From 261 million in 2013, the number of Middle Youth increased to 266
million in 2014 a rise of 2.1% in comparison to overall growth of 1.4%.
Having entered the labour market in their 20s, this is the age group where the transformation
to making big-ticket purchasing decisions such as buying a house or a car takes place.
According to a 2012 article in the Economic Times, the entry age of a four-wheeler buyer has
reduced from 45 to 30, as low unemployment rates in this age segment and rising disposable
incomes have made such purchases much more affordable for consumers. Additionally, well-
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travelled men and women in their 30s, with global exposure and education, are looking for the
good life and are willing to spend on luxury products.
Consumers in this segment are quite comfortable with making online purchases as well.
According to a 2013 comScore report, although about 75% of online shoppers are under the
age of 35, individuals aged between 35 and 44 shop the most.
The number of women having kids in their 30s has declined, with the bulk of pregnancies
occurring in a womans 20s. As a result, Middle Youth is a stage where couples are looking after
their school-going children. One of the biggest problems that parents face is getting their child
into a good school. According to a 2013 survey conducted by ASSOCHAM, parents have to pay
a donation fee of between INR300,000 and INR800,000 to get their child enrolled. One parent
says, I was dead against paying a donation, but as a parent one has many considerations. We
did a lot of research and found very few schools meeting our requirements. Such schools
invariably came with a huge price tag as they know they are in demand. Another adds that
schools insist that parents pay cash: I remember having a hard time withdrawing so much cash.
My husband and I had to do it using multiple accounts, over a couple of days.
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Mid-lifers
The Mid-lifers segment is growing faster than the overall population. The number of Indians in
this age group increased from 174.3 million in 2013 to 178.4 million in 2014, a growth of 2.3%.
This trend is expected to continue to 2020, when it is predicted that this segment will consist of
204.5 million people. As a result the proportion of Mid-lifers in the total population is expected to
increase to 15% by 2020 in comparison with 14% in 2014.
Consumers in this age group are significantly different from younger consumer segments.
According to an article in The Economic Times, they work longer than the average Indian and
have considerably higher purchasing power. However, with the focus on Young India, this
consumer group tends to get ignored. According to the director of Max Life Insurance, World
over, Baby Boomers are darlings and doyens of medical and healthcare services, pension and
annuity plans. They are also heavy consumers of travel, tourism and vacation services.
Unfortunately, the opportunity has not been tapped in to aggressively here. She adds that Mid-
lifers are more concerned about quality and reputation and less about the image or emotional
component of brands.
A majority of consumers in this segment could be categorised as spenders. Mid-lifers have
the responsibility of paying for their childrens higher education and then their wedding. Once
this is taken care of, they tend to splurge on themselves for example on international holidays
and new cars. According to one Bangalore-based consultant, Far from slowing down, the 40s
are living lifestyles normally associated with consumers in the 20s and 30s. Plus, they have the
financial means to splurge on what they probably missed out when they were in a career
building mode. The CEO of Marico adds, The 40+ age group has made a shift from a scarcity
mind-set to an abundant mind-set.
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prefer to go sightseeing, while only 18% voted for relaxation. This age group also rated trekking
over sampling local charms and shopping.
Late-lifers
Even though India currently has a predominantly young population, a 2014 Financial Times
report states that the country is sitting on an elderly demographic time bomb. This is reflected in
the statistics. The number of Late-lifers increased from 102.1 million in 2013 to 106.5 million in
2014, a strong growth of 4.2%. The proportion of Late-lifers stood at 8.4% in 2014 and is
expected to increase to 9.8% by 2020. Interestingly, it is the three older age segments (Middle-
youth, Mid-lifers and Late-lifers) that are going to see an increase in shares, while the proportion
of all the younger age groups (below age 30) will decline over the next few years.
According to one author, India's elderly are splurging after having saved all their lives. Things
turned out well for them and they now have their savings to spend. A retirement home
consultant says, The 65-year-olds of today are very different from what 65-year-olds were 15
years ago. They know what a good life is. A 2015 Forbes article notes of this segment, Theres
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a new generation of age 60 plus Indians on the block. Theyre independent, financially stable,
have travelled the world, and now theyre looking for somewhere to retire comfortably.
At the other end of the spectrum, lack of social security and pension coverage means that
many Late-lifers are forced to continue working to make ends meet. According to a 2014 Times
of India report, over 30 million people over the age of 60 were working full time, while a further
10 million were marginal workers. Many people over the age of 80 work as well. Close to 2.5
million octogenarians worked either full-time or part-time to eke out a living.
Traditionally, Late-lifers in India would either stay in their own homes or live with their children.
The idea of living in a retirement home would evoke horror among Indias elderly as it was
perceived as abandonment. Children would also feel guilty for not being able to take care of
their parents. However, old-age homes are now gaining acceptance among families. These
homes are increasingly being looked at as a practical solution to a difficult problem. One new
resident of a retirement village says, I wanted to live my retirement phase on my own terms and
I have no qualms about it. My wife and I love to read and write, we enjoy nature and love to mix
with like-minded people. If we were staying with the children, our lives would be governed by
their will. This is not on.
Health-wise, it is not a very rosy picture. Even though life expectancy has increased, the
number of years that Indians stay healthy has decreased. According to an article in The Times
of India in 2012, 25% of Indias elderly population are depressed, 33% suffer from hypertension
and arthritis, while the prevalence of other diseases such as diabetes is extremely high as well.
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Home Ownership
According to a property blogger and the chairman of JLL India, Indians still consider owning a
home of their own as the ultimate investment and goal in life... for both traditional and practical
reasons, the desire and need to own a home is hard-wired into the Indian psyche. This is
reflected in the statistics: a substantial 91.6% of households in 2014 lived in a house that they
owned. Furthermore, 93% of these homes were mortgage-free.
The division of people living in houses and apartments has remained fairly constant since
2005, with 75% living in houses and 10% living in apartments. Although India has seen rapid
urbanisation in the past decade, 70% of the population still live in rural areas with lower
population density and more open spaces. As a result, a large proportion of consumers in India
still live in independent homes.
According to a 2014 report in the Indian Express, the real estate industry in India was under
pressure due to low absorption levels, high interest rates and prices. In addition to this, the
major cities face a grave supply-demand mismatch. Urban India has a housing shortage, while a
large stock of houses remains vacant because high property prices make buying a home
unaffordable for many. To counter this, cities including Mumbai are planning to introduce the
concept of a variable FSI (Floor Space Index), which would make the city skyline taller and
denser. This is being done to resolve the demand-supply mismatch for affordable housing in
cities.
But with the election of a stable central government, The winds of change are now blowing
more perceptibly, says the JLL chairman. Inflation, including the house price component, has
now been reduced to the lowest level in recallable history. Property buyers are back in force in
most cities as inquiries have rebounded, and developers are finally reading the writing on the
wall more accurately and coming in with the kind of supply that is relevant to demand. Stable
property prices, lower borrowing rates and good deals being offered by developers to clear their
inventory are encouraging signs for time-biding buyers to proceed.
First-time home buyers are shifting towards buying property that is ready to move into rather
than a home under construction. This is a big change from previous generations and has mainly
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come about due to construction and possession delays faced by a large number of buyers.
Another emerging trend among first-time buyers in urban cities is the preference for a flat or an
apartment. Many consumers feel that apartments offer security and community living benefits,
which would not be the case with a stand-alone home.
It was quite common for stand-alone homes in urban India to have a small garden along with
a balcony and a terrace. However, with increasing urbanisation and a lack of space in the big
cities, this trend had begun to die out. An interest in gardening has seen this trend come back in
the form of terrace gardening. Consumers are willing to invest time and money into making their
balconies and terraces greener. One high school teacher and garden enthusiast spends an hour
a day in her terrace garden to keep her childhood hobby alive. Terrace gardening is economical
and eco-friendly, she adds.
Household Profiles
The concept of joint families, especially in North Indian states, and lower awareness of
population control measures in villages mean that currently almost half of the households in
India have more than five members. However, with the growth in the number of nuclear families
in cities, this trend is moving towards three- and four-member households, as more parents
decide to have only one or two children. According to the 2011 Census figures, the median
household size in cities dropped below four for the first time in recorded history, while in rural
areas it was between four and five, but closer to four than it has ever been. According to one
demographer and fertility expert, this trend is not surprising: As the demographic transition
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progresses and fertility declines, household sizes will decline. In addition, we are seeing a rise in
the number of nuclear families compared with multi-generational families
The number of urban households increased from 62.4 million in 2005 to 87.5 million in 2014.
As a result, the proportion of urban households increased from 29.3% to 33.2% and is estimated
to rise to 36.2% by 2020, as more people move to cities. India has one of the lowest
percentages of people living alone globally, at less than 4%. This is something that is looked
down upon in Indian society. According to one author, Living solo has usually been regarded as
something profoundly abnormal, especially in a culture where a parent's job is not done until the
children are settled, ergo married.
Pet care in India is nascent, with the country having one of the lowest rates of pet ownership
globally. But this is changing: increasing affluence and urbanisation have made India one of the
fastest growing markets for pet ownership. Urban consumers are now willing to splurge on their
animals. Pet care is becoming more sophisticated, with owners looking after their pets
healthcare, grooming and leisure needs, in addition to just buying pet food. One pet store owner
says, Pet owners are asking for new varieties of food, grooming products, toys and
accessories. In clothing, they ask for stylish jackets, neck bandanas, creative collars and
designer sweats.
With a share of 85%, dogs are by far the most popular choice as pets in India. According to a
blog post on animalswecare.com, popular breeds in India include Indian Pariah, Labrador
Retriever and Golden Retriever. Apart from dogs, people also keep cats, parrots, fish and
rabbits as pets.
Running Costs
Political pressures and subsidies have meant that energy costs in India have not been passed
on to consumers and therefore have largely remained constant in the past few years. Per
household spending on water and other domestic services increased marginally from INR1,922
in 2013 to INR1,924 in 2014, while household expenditure on electricity, gas and other fuels
increased from INR10,275 to INR10,424 during the same period.
According to a survey published in the Economic Times in 2014, consumer attitudes towards
green energy sources are changing for the better. Almost half of the respondents to the survey
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said that they believed it was very important for India to develop and generate more solar
energy, which appears to be the favoured renewable energy source among Indians. Frustration
with frequent power cuts, government subsidies and the fact that solar power is cheaper than
alternatives like coal in some parts of India have made it a popular option among consumers. In
another survey published on eco-business.com, over 90% of respondents said that they would
prefer to buy energy-efficient electronics and appliances even if it were more expensive. At the
same time, government initiatives and energy conservation drives have led to an increase in the
usage of LED bulbs. The Power Ministry is selling these bulbs for INR10 substantially reduced
from the market rate of INR400 to encourage users in rural India.
Recycling is not only a habit but part of daily life. It is quite common for households to collect
their magazines, newspapers, old furniture and gadgets and give them to the neighbourhood
raddiwala or kabariwala, who re-use them for various purposes.
DIY is not a major part of Indian culture. Access to cheap labour allows the majority of Indians
are able to keep their homes in good shape. Many urban households hire domestic help to
clean their homes on a daily basis. Additionally, it is quite common to outsource heavy repair
and maintenance work to low-cost contractors. Increasing urbanisation and disposable income
have made consumers willing to spend on their homes. The managing director of Asian Paints
says, Theres been a massive transformation in the Indian consumer. Earlier, people used to
paint when the walls were peeling. Now its about decor.
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common in India. However with the growth in online banking, the value of these transactions
has been falling since 2012.
Alternate payment methods such as PayPal are popular among freelancers in India, but their
widespread use is hampered by strict government and banking regulations. One freelancer
commented, You cant send PayPal payment from one Indian PayPal user to another one, you
cant use PayPal money for buying stuff, and there are lot more restrictions like adding your Pan
Card and others.
The Reserve Bank of India launched an integrated bill payment system in 2014, which would
enable all consumers to pay their bills at the same window. Under the Bharat Bill Payment
System (BBPS), people can pay all their bills online or at a single location. This system is
expected to make bill payments easier for the large un-banked population, who would usually
have to pay cash in various locations.
Savings
Consumers in India have one of the highest saving rates in the world. From INR31 trillion in
2013, consumer savings reached INR32.6 trillion in 2014 and the sum is predicted to increase to
INR44.5 trillion by 2019. Consumers saved 31.2% of their disposable income in 2014, in
comparison to 28.4% in 2005.
Consumers typically save money for big-ticket investments. According to one corporate
advisor and commentator on economic and political affairs, The savings habit of Indians in a
risk-free investment model is a product of the family system. We need to promote, sustain and
protect this relationship-based model, which is unique to India. Owning a house is considered
one of the biggest priorities for Indians, so it is a priority for savings. Another motivation is that
parents take care of their children until they are financially stable. Parents save money not only
to educate their kids, but also to spend later on big occasions like a wedding. Additionally, a lack
of effective government social security schemes and poor public health services mean that
consumers also have to save for their retirement and healthcare costs.
While the savings ratio has been more or less constant since 2013, a 2014 article in Livemint
states that there has been a shift from saving in financial assets to physical assets such as gold
and real estate. For the 600-700 million consumers with no bank account, gold is an important
saving instrument. Even urban consumers have moved towards gold, as many believe that the
formal financial system, with its low real returns, is stacked against them. Additionally, a host of
problems (including mis-selling) with insurance products have seen consumers move to physical
assets.
According to an article in Youth Incorporate Magazine, young Indians are more focused on
spending than saving. This is partly because pay packages and disposable incomes have
increased substantially over the past decade. The number of households with an annual income
greater than US$5,000 has nearly doubled since 2005. As a result, people can spend more
without having to compromise on their savings.
In the government budget announced in February 2015, the Finance Ministry announced
various tax incentives and a new pension scheme, with the objective of creating a pensioned
society. In order to boost retirement savings, the investible limits and tax deduction limits for
pension products were increased substantially.
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Traditionally, People in India are very debt averse, says the chief executive officer of HDFC.
On average, loans have an initial duration of 13 years, but are usually repaid within five-six
years. A project manager at an IT firm took out a 20-year home loan to buy a two-bedroom
apartment in Mumbai, but plans to repay it within three years. He says, I dont want to have
debt for long, I want to be in control. Interest rates matter too. If I continue my loan for a longer
tenure, my interest payments will be higher than the principal loan amount.
Positive sentiment among consumers regarding the economy and the fact that more young
people are moving to and working in urban areas have boosted consumer demand for real
estate, which in turn has increased demand for home loans in India. However, according to
Mumbai-based brokerage firm Emkay Global Financial Services Ltd, home loan debt levels in
India, though rising rapidly, are still only at about a tenth of the levels seen in the US and
Europe.
As the lending market in India gets more organised, it has become easier for consumers to
borrow from banks instead of having to rely on personal savings or local money lenders. Apart
from mortgages, which account for almost half of the retail loans by the banking sector, demand
for car loans and loans for consumer durables have also increased.
A consequence of the spread of credit facilities is an increase in the number of households in
debt. According to figures released by the National Sample Survey Organisation in December
2014, 22% of households in cities and 31% in villages were in debt. The average debt per family
increased by seven-fold in cities and more than four-fold in rural areas between 2002 and 2012.
Some 82% of the debt in urban areas is incurred to finance housing, education, weddings
amongst others an indicator that the urban housing boom has partly been driven by debt.
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Eating Habits
Eating habits in India differ across the various classes. According to a 2014 report in The
Hindu, the top 5% of urban India spent an average of INR26,400 per capita annually on
groceries. A further INR9,600 was spent on eating out, while INR2,472 went on snacks like
chips, chocolates and other processed foods. By contrast, the bottom 5% spent an average of
INR4800 every year on groceries, out of which over 25% went on cereals alone.
Consumption of cereals and bread overall has declined from INR3,479 per capita in 2004 to
INR2,965 in 2014. According to one economist and director of a research firm, this was in line
with expected trends: As countries get richer and as individuals have more money and are in
less strenuous activities, consumption of carbohydrates goes down, and the intake of fruits and
vegetables as well as foods with other micronutrients including milk products and meat rises.
India has traditionally been a largely vegetarian country, with very low meat consumption.
However, this trend is changing. Consumption of meat and fish has risen and is expected to
increase further through to 2020. A hike in income, more foreign holidays and an increasing
willingness to experiment with different global cuisines (such as Japanese, Peruvian and
Mexican) is expected to drive this trend.
As lifestyles get busier, consumers continue to slowly move away from home-cooked food. As
a result, eating out has evolved from being an occasion-driven activity to being an almost
everyday activity. The popularity of fast foods among Indian consumers continued to rise in
2015, with a number of international food chains either expanding or entering the Indian market.
The Indianisation of menus has proved to be a hit among Indian consumers. For example,
McDonalds introduced a Masala Grill burger in 2013, while Starbucks introduced localised
Indian food such as murgh kathi wrap (chicken wrapped in Indian flatbread), and tandoori
paneer roll (a cheese wrap grilled in an Indian style) in 2014.
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for traditional Indian food items continues to remain strong, under new brands. Retailers are
increasingly stocking branded versions of popular Indian street food items such as Gol Gappa,
Bhel and Aam Panna. As the CEO of value retail at Reliance Retail says, Tradition and
rootedness is also a vector of modernity and upgrade for the consumer, as she becomes more
confident in making her choices. So we now see packaged aam panna and golgappa pani being
stocked with bhel as well as pasta. We believe modern retail has to be a celebration platform
that gives consumer the choice she wants to exercise. Just because you like niche products like
Meswak toothpaste or palak soup, you don't have to be underserved with narrow availability
compulsions of traditional trade.
Additionally, as health awareness among Indian consumers grows, there is a greater demand
for sanitary versions of Indian street food. As the CEO of Food Bazaar, Future Group, says, As
consumers become affluent, hygiene, health and convenience start taking centre-stage, which
explains this rise. However, currently, by and large, it's a trade-off consumers make for better
quality of product that's convenient and hygienic in exchange for the form of the product which is
the experience which one gets at a panipuri-wala/dabbawala (street vendor).
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Drinking Habits
Overall spending on alcohol has increased substantially since the turn of the century. From
INR391 in 2000, per capita expenditure on alcohol increased to INR615 in 2014, and is further
expected to increase to INR691 by 2020. The main reasons behind this were a large young
population with increasing disposable incomes and increasing social acceptance of alcohol.
It is common to drink both at home as well as in bars. Drinking establishments do have official
opening and closing hours, but the timing varies across the different states. Distribution of
alcohol is highly regulated in most parts of India and is controlled by the state government. For
drinking at home, consumers usually buy alcohol from wine shops, which are licensed outlets
owned by the government. In states such as Karnataka and Andhra Pradesh, the rules have
been relaxed somewhat and liquor is now sold in supermarkets and hypermarkets as well.
According to a 2014 article in The Hindu, there are differences in the drinking patterns of
urban and rural consumers. An average rural consumer drinks 11.4 litres of alcohol a year, while
an urban consumer drinks less than half of that an average of 5 litres a year. A majority of
urban Indians prefer beer and spirits, while consumption of wine continues to be a niche
category mainly due to its high price and a lack of knowledge among the majority of people.
Cheap, locally brewed alcoholic drinks such as toddy and country liquor are most popular
among consumers in rural India. As people get richer, country liquor consumption decreases,
while consumption of beer and refined liquor increases.
Per capita expenditure on the consumption of mineral water, juices and soft drinks has more
than doubled over the past decade, from INR369 in 2005 to INR736 in 2014 and is forecast to
go past INR1,000 by 2020. However, carbonated and sports/energy drinks have lost some
popularity among consumers due to growing health concerns. Rising health awareness and
poor access to clean water have also led to an increase in the popularity of bottled water.
Consumers not only buy bottled water while travelling or eating out at a restaurant, but also for
consumption at home.
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complained of the early deadline. We used to get free from the office at around 22.30hrs and by
the time we managed to reach our favourite pub on MG road it had already started winding up.
Another trend of 2013 and 2014 is that drinking out is no longer restricted to just the weekend
or social occasions; it has become quite common for people to drink in pubs during the week as
well. Additionally, as more women enter the workforce and begin to make independent choices
and drink outside their home, a women-only pubbing segment is emerging. A business
development professional in Delhi says that she visits a pub twice a week in women-only
groups. She adds, There is always attention but things are safer now. It's a far cry from an
evening, almost a decade ago, when I was scooted out by a government vendor after buying a
bottle of wine, intimidated.
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wear... Florals are also making their way in 2015 like never before. From large and loud to
minute, it's all about going floral this year, according to one designer.
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Rising concerns over aging have persuaded men to start using skin care products. The
founder of Iraya, an auyrvedics personal care and beauty brand, says, Men above 45 are
realising that they need to work until quite late in life and maintaining a professional appearance
will be an advantage. Todays men no longer want just clean skin they want it to be fair, bright
and spotless!
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to hospitals. As a result of this, a large percentage of the rural population depends on alternative
medicines (such as Ayurvedaherbal medicine) and government programmes in rural health
clinics. Consumers in India do not usually buy OTC medicines to keep at home, as awareness
of such products is quite low. People continue to prefer home remedies for small ailments and
consult doctors for more serious issues.
A majority of consumers are not satisfied with the public health system, mainly due to its poor
infrastructure and lack of doctors and nurses. Private hospitals on the other hand are generally
well-equipped and of high quality, and are popular among those who can afford them. Private
hospitals also attract medical tourists from around the world, due to the high level of service
provided.
With an increase in government spending on healthcare (4% of GDP in 2012 versus 4.3% of
GDP in 2014), the proportion of public health expenditure increased from 33.1% in 2012 to 36%
in 2014. This means that the health system is still largely dependent on private healthcare, with
India having one of the highest out-of-pocket health expenditure rates (about 70%) in the world.
The new government that was elected in 2014 is discussing a plan to offer universal healthcare
along the lines of the Affordable Care Act in the US, under the new National Health Policy Act
(2015).
Obesity rates have been increasing steadily over the past decade, but it is not yet a major
health issue in India. The obesity rate for adults (aged over 15) has gone from 1.6% in 2005 to
2.8% in 2014. The past few years have seen a growth in health consciousness and consumer
interest in health and wellness products, which can clearly be seen in the greater popularity of
exercising, gyms and weight control. A 2014 report in the Financial Times labelled the current
generation as the Gym Generation. According to an estimate from the Federation of Indian
Chambers of Commerce and Industry (FICCI), the Indian fitness and slimming industry is
expected to grow from INR60 billion in 2012 to nearly INR100 billion in 2015.
The prevalence of smoking among adults is quite low in India, and has been declining since
2000. From 12.8% in 2000, it fell to 11.6% in 2014, on the back of strong anti-smoking
government campaigns, including a ban on smoking in public in 2008. According to a 2014
article in The Times of India, the number of female smokers has doubled in the past three
decades from 5.3 million to 12.2 million, while the smoking rate among men has reduced. The
same article states that smoking among the 20-25 age group has considerably reduced due to
growing awareness of health issues.
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SHOPPING HABITS
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Consumers in India are beginning to buy more fresh produce. Growing exposure to
international food trends and cuisines, especially among younger consumers, is driving interest
in such new products. Rising incomes have meant that these products have become more
affordable to a greater number of consumers. Additionally, rising health awareness and greater
education about food safety have spurred demand for premium and imported fresh food
products.
As traditional grocery retailers either deliver to or are located close to consumers homes,
there is no fixed pattern for shopping times in traditional grocery retailers: people can buy or
order groceries any time of the week. For online grocery shopping, Fridays and Saturdays see
an increase in the number of orders, while the first weekend of the month sees the highest
number of orders.
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However, consumer attitudes in rural India are changing. According to an article published on
Livemint.com in 2015, the greater penetration of media and telecom services is changing the
way rural consumers shop. People in rural India are looking for branded, aspirational high-value
products, just like their urban counterparts. They are less willing to buy inferior products in order
to save money. According to the COO of Kenstar, Videocon Industries, The next generation of
rural consumers coming up has a higher exposure level than the previous generation. He adds
that younger rural consumers demand convenience and are more open to experimentation,
while the previous generation was more conservative and traditional.
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Leisure Time
The proportion of households with internet-enabled computers increased from a measly 1.6%
in 2005 to 12.9% in 2014 and is estimated to further increase to over 20% by 2020. Growth in
mobile penetration has been one of Indias success stories over the past 15 years. From being
virtually non-existent in 2000, mobile phone penetration shot up to 74% in 2014, leading to
greater connectivity and inclusivity for everyone, especially poor and rural consumers. Internet
and smartphones have completely changed the way people spend their free time at home.
Online streaming, shopping, emailing and social networking now share space with conventional
leisure activities, such as watching television. As a result, colour TV and cable TV ownership
have remained fairly stagnant since 2012.
According to an article from 2014 published in The Times of India, Indian men spent an
average of 283 minutes per day on leisure, while women spent 221 minutes. This difference is
mainly due to the fact that men in India spend only 19 minutes on housework, while women
spend an average of 298 minutes on routine housework.
Indian consumers are following the TV watching pattern of Western countries. Urban viewers
would rather not be restricted by the times of programmes and their current location. Instead,
they prefer to view shows online, an option supported by larger mobile screens (on mobiles and
tablets) and the availability of more programmes online.
According to a 2014 study published on the We Are Social blog, an average internet user in
India spends close to five hours every day on the Internet, while another blog on Yourstory.com
states that Indian smartphone users spend more than three hours every day on their phones.
Additionally, social networking sites such as Facebook and Twitter recorded growth of 37% in
2013. Facebook hit 100 million users in 2014, making India its second largest market worldwide
after the US. Other popular networking sites include LinkedIn (26 million users, the second
largest market) and Twitter (33 million users, the third largest market).
Other popular online activities include video streaming, app usage and chat services. Social
media and chat apps such as WhatsApp are the biggest reasons behind the consumer
preference for smartphones. According to the blog on Yourstory.com, app usage has increased
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by 63% since 2012, while mobile broadband users spend 61% more time on video apps than
non-users.
The two big passions of Indian consumers are cricket and movies. Going out to watch films is
one of the countrys most popular forms of leisure activity. Close to 2.7 billion tickets were sold
in 2013, according to a 2014 article in Forbes, with more and more urban consumers switching
to multiplexes. Other popular activities include eating out and shopping. Rising affluence and an
increase in the number of dual-income households have led to more consumers going out for
entertainment purposes.
An emerging trend among young consumers is the rise of the music festival culture in India.
Young people are travelling to off-beat destinations such as Ziro and Coorg to attend an ever
increasing number of festivals. For a lot of people this is like an adventure with good music
thrown in, says an organiser of the Ziro festival.
Among participation sports, cricket is by far the most popular game. According to a 2012
survey by YouGov, 62% of respondents said that they play cricket regularly. Greater exposure
to live sport on TV and an increase in the number of international sporting events held in India
have led to greater participation in other sports such as badminton, table tennis, tennis and
swimming. Additionally, growing health awareness among Indians has led to strong growth in
activities such as cycling, running, walking and going to the gym.
Vacations
Typically, family holidays in India meant a weekend getaway to a cool, pleasant hill station
which was a few hours drive from cities such as Delhi, Mumbai and Pune. Although these
holidays are still extremely popular hill stations like Mussoorie and Lonavala are still jam-
packed almost every weekend and overbooked during long weekends a trend of foreign travel
has emerged among families that can afford it.
Increases in disposable income and in the number of direct flights to foreign destinations have
led to a massive increase in international travel. Cheap low-cost flights have made it easier for
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Indians to visit places such as Singapore, Bali, Thailand, the Maldives and Dubai in the same
time that it would take to drive to a hill station. In fact, it can be cheaper for consumers to travel
and holiday in Thailand than in Kerala or Goa. According to a survey conducted by Skyscanner,
volume searches for international destinations grew a staggering 101% in the first quarter of
2014, in comparison to a 60% growth for domestic destinations.
According to tour operators, short-haul packages for the long weekend market were extremely
popular in 2014. There is an emerging trend among young, upwardly mobile consumers to take
two or three short vacations a year, usually to a foreign destination. According to the co-founder
of MakeMyTrip.com, The trend is here to stay since people are willing to spend anything from
INR1-1.5 lakh per person on this kind of short holiday, in addition to one long holiday a year.
According to an article in the Economic Times from 2013, the frequency of foreign travel
among Indians has increased to once in 12-18 months, in comparison to once in 18-24 months
in 2008. The article states that while travelling abroad, 43% visit and stay with friends and
family. For domestic trips, families prefer to stay in hotels as they find it safer, cleaner and better
equipped than other accommodation.
Many consumers are looking for more unique travel experiences, with experimental, exotic
destinations and customised holidays becoming increasingly popular, especially among younger
travellers. Experiential journeys such as volunteerism, river cruising and eco-tourism will see
unique interest, says the VP of Thomas Cook. Single women and older people travelling
overseas is a small category right now, but is expected to grow fairly rapidly in the next few
years.
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networking sites). However, cards are used to celebrate occasions such as Mothers Day,
Fathers Day and so on.
GETTING AROUND
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Private Transport
Cycling is the most common mode of private transport in India. However, bicycle ownership
has stagnated over the past decade, as consumers become affluent and shift towards other
modes of transport.
The percentage of households owning bicycles increased from 51.1% in 2005 to 51.7% in
2014. Car and motorcycle ownership more than doubled during the same time period, from
2.7% to 5.8% for cars, and from 13.8% to 29.4% for motorcycles. There were 28.1 million
passenger cars in use in 2014: 2 million more than in 2013 and a whopping 16.5 million up on
2005. The massive increase in the number of cars has led to major problems such as traffic
congestion, lack of parking spaces, accidents and air and noise pollution. As a result, parking
fees have doubled in most major cities in the past two to three years, while there is currently
also a proposal to impose a congestion charge on vehicles in cities in an effort to reduce car
usage and encourage people to take public transport.
SUVs were coveted in 2012 and 2013 but that has changed as consumers have gone back to
small cars and hatchbacks. According to a report published on NDTV.com, such cars dominated
the top 10 bestselling car list of 2014, as drivers sought to avoid parking and congestion
problems. Additionally, these cars are more affordable and fuel-efficient. Despite the global
reduction in oil prices, fuel costs in India remain high, driving demand for less gas-guzzling
smaller cars, instead of SUVs. Additionally, two-wheelers (scooters, motorbikes) are also
popular, due to their fuel efficiency, affordability and ease of use on congested roads.
In rural areas, a majority of consumers have to rely on private transport due to a lack of public
transport. People in rural India predominantly either walk or cycle to school and work. Other
forms of transport include rickshaws, cattle-drawn carts and makeshift vehicles. According to a
2012 report in The Times of India, the government is planning to roll out 85,000 buses by 2017
to improve public transport in rural areas.
Public Transport
Consumer expenditure on public transport has been increasing since 2005. Per capita
spending rose from INR7,229 in 2005 to INR9,298 in 2014 and is further expected to jump to
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INR12,450 by 2020. This is largely due to the vast improvement in the quality, connectivity and
extent of public transport in India. As a result of the improved transport infrastructure, per capita
spending has increased across all categories (bus, rail, air) in the past decade.
Buses are the most popular mode of public transport, accounting for more than 90% of
passenger journeys. They are a cheap and convenient mode of getting around. Many cities
have introduced newer, better quality buses in the last few years, many of which are air-
conditioned, making them even more attractive to commuters.
Indian trains carried over 9.3 billion passengers in 2014, up from 8.7 billion in 2013. The rail
network in India is the fourth longest and the most heavily used system in the world. Rail
transport is primarily used for long-distance travel, while commuting to work using trains is
restricted to the seven metropolitan cities with their own dedicated suburban rail network.
However, this is expected to change in the coming years, as more cities build rapid transit
systems.
Attitudes towards public transport have improved, as more and more consumers begin to
embrace it, mainly due to the improvement in the quality of service. A survey conducted by the
Delhi Metro authorities in 2013 revealed that a majority of users were satisfied with the service,
while a global customer satisfaction survey conducted in 2014 by Nova and CoMET rated the
Delhi Metro as the second best metro system in the world. Delhi metro ridership levels reached
a record high of over 2.5 million commuters per day in 2014, while Mumbai trains recorded a
ridership of over 6 million per day. Another survey conducted in Kerala that was published in
The Times of India in 2014 states that a vast majority of consumers were ready to use public
transport, provided bus services were extended and upgraded. However, a cause for concern
remains: the issue of womens safety. According to surveys conducted in various cities in 2014,
over 60%-70% of women feel unsafe using public transport.
Commuting
Commuting times vary from city to city. According to a 2014 report in The Economist, the
average commuting time in Delhi was 72 minutes. Another report on Payscale.in estimates the
average one-way commuting time for major Indian cities to be as follows: Mumbai, 47.26
minutes; Delhi, 42.96 minutes; Bangalore, 37.91 minutes; and Pune, 30.87 minutes.
According to a report released by the government in December 2013, in 77% of rural
households, the breadwinner either did not have to travel to work or had to travel less than 5 km
to reach his or her place of work, while the corresponding figure for urban India was 63.5%.
Commuters can buy seasonal public transport passes (monthly/quarterly/annually) in addition
to the standard ticket, which can cost between INR0.42 and INR0.90 per km for a normal bus.
Seasonal passes are extremely popular among regular commuters due to their cost
effectiveness and time savings. Students and senior citizens get a special discount: in Delhi, a
monthly pass for students and senior citizens costs INR100 and INR250 respectively, in
comparison with INR800 for a general pass.
As of 2014, there were no major incentives for using alternative means of getting to work or
school. But plans are afoot to institute dedicated cycling tracks and walkways to encourage
people to abandon private and public transport. For example, authorities in Gurgaon proposed a
plan in 2014 to develop an 8 km dedicated cycling track, while the city of Mumbai has started
construction work on more than 50 walkways.
Another commuting trend on the horizon is the expansion of the rapid transit system
throughout the country. After seeing the massive success of the Delhi Metro system, it was
decided in 2009 to launch metro rail projects in all Indian cities with over 2 million people.
Currently, many rapid transit systems (bus, metro, monorail, light rail) are under construction or
being planned in cities throughout India.
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Students in urban areas usually take the school bus, while those in rural areas either walk or
cycle. At the same time, around 30% of workers drive to work in urban areas. One of the biggest
drawbacks of driving to work is getting stuck in traffic jams. According to a 2012 article in The
Times of India, the country lost INR600 billion through traffic congestion (including fuel
wastage), the slow speed of freight vehicles and waiting time at toll booths and check points.
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