Despite India’s vast population of 1.4 billion, nearly a billion people do not have money to spend on non-essential goods and services, according to a new report.
The study estimates that India’s true “consuming class”—the core market for businesses and start-ups—is only around 130-140 million people, comparable in size to Mexico. An additional 300 million fall into the “emerging” or “aspirant” consumer category but remain cautious spenders, relying on digital transactions for convenience.
The report highlights a key economic shift: India’s wealthy are getting richer, but the number of people entering this bracket is not significantly increasing. As a result, companies are prioritizing premium products over mass-market offerings, with luxury real estate and high-end smartphones thriving while affordable housing and budget-friendly goods struggle.
This trend reflects a long-standing economic divide, which has widened further after the pandemic. The top 10% of Indians now control 57.7% of national income, up from 34% in 1990, while the bottom half has seen its share decline. Financial challenges have deepened, with household savings reaching a 50-year low and rising debt levels squeezing middle-class budgets.
Economic recovery faces further obstacles as artificial intelligence disrupts traditional white-collar jobs, reducing opportunities in clerical and supervisory roles. While short-term relief may come from a strong harvest and recent tax cuts, experts warn that declining consumption and wage stagnation could impact India’s long-term growth trajectory.
