the great indian middle class ncaer-business standard new delhi july 30, 2004 presentation to...
TRANSCRIPT
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The Great Indian Middle Class
NCAER-Business StandardNew DelhiJuly 30, 2004
Presentation to American Chamber of Commerce
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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
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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
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BS Contribution
» BS has done editorial analysis of the numbers» BS has published GIMC and will market the book on behalf of
NCAER
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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
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Consumer spending on most items continues to explode …
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… But there’s the tricky issue of ‘category collide‘(or how consumer spending in one area affects spending in other areas)
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Crowing over crorepatisand other categories of rich people
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Consumer Classification(2001-02)
Class Rs. ('000) per annum
US$ ('000) per annum (approx.
@Rs.48/$)
Deprived < 90 < 2Aspirers 90-200 2 - 4Middle class 200- 1,000 4 - 21Rich > 1,000 > 21
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Annual household
Income ('000)
Households (%)
Two Wheeler
CTV Ref AC Car
Deprived <90 71.9 0.07 0.05 0.04 0.00 0.00Aspirers 90-200 21.9 0.47 0.40 0.34 0.02 0.04Seekers 200-500 4.80 0.70 0.74 0.62 0.13 0.29Strivers 500-1,000 0.91 0.75 0.69 0.64 0.28 0.54Near Rich 1,000-2,000 0.29 0.66 0.89 0.68 0.32 0.66Clear Rich 2,000-5,000 0.11 0.77 1.13 0.81 0.40 0.69Sheer Rich 5,000-10,000 0.02 0.91 1.17 1.00 0.38 0.77Super Rich >10,000 0.01 0.92 1.19 1.08 1.15 2.96
Total 100.0 0.20 0.17 0.14 0.01 0.03
Ownership pattern of major durablesin 2001-02
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Income demographics changing, from an inverted pyramid to a rudimentary diamond(the number of non-deprived is slowing becoming bigger)
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The change is starker in select cities
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And it’s not just the big cities that matter
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0102030405060
Moped Motor Cycle Scooter Refrigerator CTV WM
1985-86 1992-93 1997-98 2001-02
Rural demand is large in many products
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Small towns are where the action is
Four-wheelersCategory Volumes Growth in 2003-04
Top 10 towns 391,306 2311-20 towns 105,216 3221-40 towns 102,708 2941-60 towns 55,686 2261+ 103,173 36(Maruti sells a fifth of its volumes in 61+ towns and 2003-04 growth was 33 percent. That for Hyundai was 56 percent)
RefrigeratorsMarket Size: Rs 3,500 crore5-10 lakh towns: Rs 365 crore
Colour TVsMarket Size: Rs 9,000 crore5-10 lakh towns: Rs 1,000 crore
Car LoansMarket Size: Rs 21,000 croreOutside top 20 cities: Rs 5,250 crore
Source: Business Standard, Business Today
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Choosing which rural areas/small towns is important
(number of crorepati households per million households in state/city, or density)
Area Number of householdsDensity
HaryanaUrban 340 323Below 5 lakh town 241 280Rural 482 199PunjabUrban 726 498Below 5 lakh town 218 256Rural 501 183MaharashtraUrban 7023 890Below 5 lakh town 914 350Rural 295 27GujaratUrban 912 248Below 5 lakh town 270 203Rural 187 32Kolkata 525 180Bangalore 137 113Hyderabad 226 191
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From Capital to Capitalism
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Big boom in small towns
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Rurban consumers
• A third of population in top 67 cities are ‘deprived’
• 23 per cent of Mumbai’s population is ‘deprived’
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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?
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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)
PARAMETERS USED FOR PROJECTION
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Thank You!