India set to become third-largest consumer market

• India is poised to become the third-largest consumer market behind only the US and China; and consumer spending in India is expected to grow from USD 1.5 trillion at present to nearly USD 6 trillion by 2030, a World Economic Forum.

The report produced in collaboration with Bain & Company builds on consumer surveys conducted across 5,100 households in 30 cities and towns in India, and draws from more than 40 interviews with private and public-sector leaders.

Key observations made by the WEF

• According to World Economic Forum (WEF), with an annual GDP growth rate of 7.5 per cent.

• India is currently the world’s sixth-largest economy.

• By 2030, domestic private consumption, which accounts for 60 per cent of the country’s GDP, is expected to develop into a USD 6-trillion growth opportunity.

• The report titled ‘Future of Consumption in Fast-Growth Consumer Market – India’ noted that growth of the middle class will lift nearly 25 million households out of poverty.

• As per the report, growth in income will transform India from a “bottom of the pyramid economy” to a middle class-led one.

• Future consumption growth will mainly come from rich and densely populated cities and the thousands of developed rural towns.

• India’s top 40 cities will form a USD 1.5 trillion opportunity by 2030, many thousands of small urban towns will also drive an equally large spend in aggregate.

• In parallel, there will be an opportunity to unlock nearly USD 1.2 trillion of spend in developed rural areas by improving infrastructure and providing access to organised and online retail,” WEF noted.

Conclusion

• To unlock the potential of these opportunities and to ensure equitable growth.

• The report identified three critical societal challenges that need to be addressed skills development and employment for the future workforce, socio-economic inclusion of rural India and healthy and sustainable future.

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Mains Paper 3: Economy

Prelims level: World Economic Forum

Mains level: Indian economic development

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