MIDDLE CLASS IN INDIA

Presented To: Presented By:

Prof. S.K Chadha Nikhil Gharu
UBS MBA GEN B
Introduction

According to McKinsey Global institute, average

household incomes in India will triple over the
next two decades.
India will become the sixth largest consumer
economy in the world by 2025, up from 12th now.
In 2010, private spending reached Rs. 17 trillion
or 60% of Indias GDP.
But aggregate spending may be spread across
hundreds of millions of households.
They may have very modest incomes by
developed country standards and show high
sensitivity to price and value.
Challenges

There are large regional disparities in growth &

reduction of poverty.
The southern and western states are more
prosperous.
But the northern (with the exception of Delhi,
Haryana, Himachal Pradesh and Punjab) and eastern
states are lagging behind.
India also remains the least urbanized (29%) of the
emerging Asian economies.
Bureaucratic hurdles remain formidable.
Infrastructure problems are plenty urban
infrastructure is already heavily overburdened.
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Growth of the middle class

Along with the shift from rural to urban

consumption, India will witness a rapid growth of
the middle class households with disposable
incomes ranging from Rs. 200,000 to Rs.
1,000,000 per year.
This class forms currently 20% of the population.
By 2025, it may form 41% of the population.
By 2025, the Indian middle class will dominate
the cities.
High Net worth individuals

Those earning more than Rs. 1,000,000 a year

will make up 24 million by 2025 or larger than
the current population of Australia.
These people live in the eight largest cities.
They have a global outlook.
They have tastes similar to those of their
counterparts in the developed countries brand
name goods, vacations abroad, the latest
consumer electronics and high end cars.
Changes in consumption patterns

Increase in discretionary expenditures likely.

Spending on health, education, transport and

communications will increase.

Recreational products and services will account

for a smaller slice of household spending than in
other countries.
Conclusion

MNCs are likely to find themselves squeezed

between the desire of the countrys consumers for a
modern middle class lifestyle and the realities of their
limited budgets.
In 2005, the average middle class family in India
spent just Rs. 300,000 or $6,600.
MNCs must be able to deliver an aspirational middle-
class lifestyle to families on an Indian budget.
Companies should be able to come up with new
business models, products with carefully targeted
features and brands that appeal to the countrys
upwardly mobile people.