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India’s Consumer Boom

May 6th, 2007 · No Comments

The Economist writes:

In a report on India’s consumer market published on May 3rd, [McKinsey has] added detail to the probable economic explosion ahead. Assuming annual growth averages 7.3% over two decadesa reasonable betIndia may overtake Germany as the world’s fifth-biggest consumer market by 2025. It predicts the middle class will expand from 50m to 583m, leaving only a fifth of Indians in the bottom household-income bracket, earning less than 90,000 rupees ($2,200) a year.

If McKinsey’s growth prediction looks reasonable, others look optimistic. For example, the report notes that spending on education and infrastructure will have to increase to support its analysis. Yet it is still hard to imagine so many hundreds of millions of Indians being educated to a standard befitting middle-income status. Transforming the thousands of rotten schools might prove impossible, even if sufficient money can be found. Given India’s relatively weak fiscal position, it perhaps cannot be.

Tags: Emerging Markets

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