Buying power: Consumption comfort is now here to stay, even more so because people realize that being a consumer gives them things that being a citizen does not. Pradeep Gaur/Mint

The confluence of change in Consumer India that started in 2000 has gathered force, and by the end of the decade has brought about profound change, when read together.

Steady income growths have happened and on an average, an Indian household has improved its by income about 1.7 times. It is also a fact that the top 20% earners in India have between 2002 and 2010 increased their share of the income pie by close to 10% (estimate by the National Council of Applied Economic Research’s Centre for Macro Consumer Research). The income of the top 20% crossed the 50% of total income, both in rural and urban India, last decade. The income of the lowest 20% earners in India also increased about 1.4 times between 2005 and 2010, and more if one were to look at the entire decade—so it is not that the tide of economic growth is not lifting everyone with it. However, if one were to think about the share of the income pie, their share has declined by a little less than 1% in rural India and by 2% in urban India. For businesses, this means that serving the top 20% of urban and rural India, now mercifully a continuum connected by roads, telephones and television serials, is where serious growth in profitable consumption will come from.

Consumption comfort is now here to stay, even more so because people realize that being a consumer gives you things that being a citizen does not, including education, 24x7 power and clean water. The poverty effect is fading. The price discovery mechanism, thanks to all the sales of rural land, in recent times has shown even marginal landholders what the value of their assets are. Seeing more consumption fuels a desire for more consumption, and in the last decade, Consumer India has seen many new things. It has seen prices coming down and has seen new price-performance points, even if many of them were set by Chinese goods! The consumer has learnt how to learn—and is willing to adopt new ways of doing things, as long as they make sense. The liberalization generation has pretty much come of age—and though its impact on shaping new consumption patterns will be felt in full swing over this coming decade, its consumption comfort is at a whole new level compared with their parents. Both pragmatic consumption to improve the quality of living as well as “feel good" consumption will boom—at all income levels.

Perhaps, if one had to pick three things that have changed Consumer India for ever, it is the growth in visible consumption that will breed more consumption—what was the exception to own has become the norm; it is the empowered and discerning consumer, both rich and poor, who is saying, “I will not be seduced by low-grade marketing gimmicks, but I will unhesitatingly open my purse to hard reasoning." And the good news is that with the blurring of urban and rural boundaries, physically and in the consumer mindset, we at last have markets of scale. Many of them, not just one, but then in India a small percentage of a large number is a large number!

Rama Bijapurkar is an independent market strategy consultant, and author of We Are Like That Only, Understanding The Logic of Consumer India.

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