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The Great Indian Middle Class

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 :

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The Great Indian Middle Class

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

  2. 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

  3. 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

  4. BS Contribution BS has done editorial analysis of the numbers BS has published GIMC and will market the book on behalf of NCAER

  5. 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

  6. Consumer spending on most items continues to explode …

  7. … But there’s the tricky issue of ‘category collide‘(or how consumer spending in one area affects spending in other areas)

  8. Crowing over crorepatis and other categories of rich people

  9. Ownership pattern of major durables in 2001-02

  10. Income demographics changing, from an inverted pyramid to a rudimentary diamond(the number of non-deprived is slowing becoming bigger)

  11. The change is starker in select cities

  12. And it’s not just the big cities that matter

  13. Rural demand is large in many products

  14. Small towns are where the action is Four-wheelers Category Volumes Growth in 2003-04 Top 10 towns 391,306 23 11-20 towns 105,216 32 21-40 towns 102,708 29 41-60 towns 55,686 22 61+ 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) Refrigerators Market Size: Rs 3,500 crore 5-10 lakh towns: Rs 365 crore Colour TVs Market Size: Rs 9,000 crore 5-10 lakh towns: Rs 1,000 crore Car Loans Market Size: Rs 21,000 crore Outside top 20 cities: Rs 5,250 crore Source: Business Standard, Business Today

  15. Choosing which rural areas/small towns is important (number of crorepati households per million households in state/city, or density) Area Number of households Density Haryana Urban 340 323 Below 5 lakh town 241 280 Rural 482 199 Punjab Urban 726 498 Below 5 lakh town 218 256 Rural 501 183 Maharashtra Urban 7023 890 Below 5 lakh town 914 350 Rural 295 27 Gujarat Urban 912 248 Below 5 lakh town 270 203 Rural 187 32 Kolkata 525 180 Bangalore 137 113 Hyderabad 226 191

  16. From Capital to Capitalism

  17. Big boom in small towns

  18. Rurban consumers • A third of population in top 67 cities are ‘deprived’ • 23 per cent of Mumbai’s population is ‘deprived’

  19. 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?

  20. 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)

  21. Thank You!

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