Transcript The Great Indian Middle Class NCAER-Business Standard New Delhi July 30, 2004 Presentation to American Chamber of Commerce.

The Great
Indian Middle Class
NCAER-Business Standard
New Delhi
July 30, 2004
Presentation to American Chamber of Commerce
About National Council of Applied
Economic Research (NCAER)
» National Council of Applied Economic Research - independent body
» Activities of NCAER include :
- developing policy reports
- macroeconomic monitoring & forecasting
- human development
- agriculture & rural development
- industry & infrastructure
- survey & general economics
Market Information Survey of
Households (MISH)
Only survey to be done annually since 1985-86, so time-line available
» MISH holds a unique position because of its massive sample size – 3 lakh
urban and rural households
» MISH provides income distribution separate for rural and urban areas
» MISH classifies consumers by – chief earner, highest education level
attained by any household member, number of earners
» Growth of income based on MISH surveys is similar to that of the official
NAS data
» NSS surveys, and all those based on them, capture less and less of GDP
with each passing year
BS Contribution
» BS has done editorial analysis of the numbers
» BS has published GIMC and will market the book on behalf of NCAER
What’s new about this year’s MISH?
»
»
»
»
This report has been put together by NCAER and BS, as will several other
reports that will be generated out of the MISH survey
Data for past years, like 1995-96 and 1998-99, have been inflated to bring
them to 2001-02 prices, to make all time-lines strictly comparable and
relevant
Number of cities covered in The Great Indian Middle Class has been
increased from 24 the last time around to 67 this time. This means cities
with a population of over 5 lakh have been covered as opposed to one
million in earlier surveys
Income categories have been extended upwards to Rs 1 crore a year per
household for the first time
Projections have been made till 2009-10 on an all-India level
Consumer spending on most items
continues to explode …
… But there’s the tricky issue of ‘category
collide‘
(or how consumer spending in one area affects spending in other areas)
Crowing over crorepatis
and other categories of rich people
Consumer Classification
(2001-02)
Class
Deprived
Aspirers
Middle class
Rich
Rs. ('000)
US$ ('000) per
per annum annum (approx.
@Rs.48/$)
< 90
90-200
200- 1,000
> 1,000
<2
2-4
4 - 21
> 21
Ownership pattern of major durables
in 2001-02
Deprived
Aspirers
Seekers
Strivers
Near Rich
Clear Rich
Sheer Rich
Super Rich
Annual
Households
Two
household
(%)
Wheeler
Income ('000)
CTV
Ref
AC
Car
<90
90-200
200-500
500-1,000
1,000-2,000
2,000-5,000
5,000-10,000
>10,000
Total
0.05
0.40
0.74
0.69
0.89
1.13
1.17
1.19
0.17
0.04
0.34
0.62
0.64
0.68
0.81
1.00
1.08
0.14
0.00
0.02
0.13
0.28
0.32
0.40
0.38
1.15
0.01
0.00
0.04
0.29
0.54
0.66
0.69
0.77
2.96
0.03
71.9
21.9
4.80
0.91
0.29
0.11
0.02
0.01
100.0
0.07
0.47
0.70
0.75
0.66
0.77
0.91
0.92
0.20
Income demographics changing,
from an inverted pyramid to a rudimentary
diamond
(the number of non-deprived is slowing becoming bigger)
The change is starker in select cities
And it’s not just the big cities that matter
Rural demand is large in many products
60
50
40
30
20
10
0
Moped
Motor Cycle
1985-86
Scooter
1992-93
Refrigerator
1997-98
CTV
WM
2001-02
Small towns are where the action is
Four-wheelers
Category
Volumes
Growth in 2003-04
Top 10 towns
391,306
11-20 towns
105,216
21-40 towns
102,708
41-60 towns
55,686
61+
103,173
(Maruti sells a fifth of its volumes in 61+ towns and 2003-04 growth was 33 percent.
That for Hyundai was 56 percent)
Refrigerators
Market Size:
5-10 lakh towns:
Rs 3,500 crore
Rs 365 crore
Colour TVs
Market Size:
5-10 lakh towns:
Rs 9,000 crore
Rs 1,000 crore
Car Loans
Market Size:
Outside top 20 cities:
Rs 21,000 crore
Rs 5,250 crore
23
32
29
22
36
Source: Business Standard, Business Today
Choosing which rural areas/small
towns is important
(number of crorepati households per million households in state/city, or density)
Area
Haryana
Urban
Below 5 lakh town
Rural
Punjab
Urban
Below 5 lakh town
Rural
Maharashtra
Urban
Below 5 lakh town
Rural
Gujarat
Urban
Below 5 lakh town
Rural
Kolkata
Bangalore
Hyderabad
Number of households
Density
340
241
482
323
280
199
726
218
501
498
256
183
7023
914
295
890
350
27
912
270
187
525
137
248
203
32
180
113
226
191
From Capital to Capitalism
Big boom in small towns
Rurban consumers
• A third of population in top
67 cities are ‘deprived’
• 23 per cent of Mumbai’s
population is ‘deprived’
What if GDP growth slips?
•
MISH numbers based on 8 per
cent growth till 2009-10.
•
What if growth is 7 per cent?
•
Will number of rich decline
dramatically?
PARAMETERS USED FOR
PROJECTION
Income Projection
 Population growth (Census 1991, 2001, RGI)
 Sectoral income growth (NCAER)

Income distribution (MISH 1985-2001)
Demand Projection for specific product
 Ownership (MISH)
 Penetration (MISH)
 Structural change in the market
 Production/Purchase (MISH and Secondary data)
 Scrap rate (MISH)
Thank You!