India on Track to Become World's Consumption Capital: Report With more GenZs than the entire population of the United States, their spending power will be a defining factor in shaping India's economic trajectory
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With consumption currently accounting for 56 per cent of the country's GDP, India is witnessing an unparalleled surge, driven by changing demographics, rising income levels, and evolving consumer preferences. India is poised to emerge as the world's consumption capital, surpassing major economies in its pace of growth, according to a new report by Angel One and Iconic Asset.
The report projects that India's total consumption will double by 2034, fueled by a fundamental shift in household structures. The rapid rise in nuclear families, which is outpacing population growth, is leading to a surge in discretionary spending. Additionally, India is on track to lead global workforce expansion, further strengthening its economic momentum.
Between 1997 and 2023, total savings in the country amounted to $12 trillion. This figure is set to skyrocket to $103 trillion by 2047, unlocking immense opportunities for economic expansion. The surge in savings is expected to provide the necessary financial cushion to drive sustained consumption growth over the next two decades.
Government policies are also playing a pivotal role in shaping India's consumption story. Recent tax cuts announced in the Union Budget are expected to inject additional liquidity into the economy. The report estimates that tax reductions will free up INR 1 lakh crore, leading to an additional INR 3.3 lakh crore in spending, which could propel GDP growth by one per cent.
The report also underscores a global trend that India is likely to follow, where discretionary spending outpaces essential spending as economies mature. Categories such as electronics, apparel, jewellery, and experiential consumption are projected to witness a significant upswing.
Despite the proliferation of modern retail formats, traditional Kirana stores continue to dominate India's retail landscape, accounting for 92 per cent of trade. This presents a lucrative opportunity for organized retail to expand its footprint and capture a larger market share.
A key driver of India's consumption boom is its youthful population. With more GenZs than the entire population of the United States, their spending power will be a defining factor in shaping India's economic trajectory. By 2035, every second rupee spent in India will come from a GenZ, solidifying the country's position as the epicenter of global consumption growth.
