Indian Consumer Power

Reuben Abraham points to a commentary by Stephen Roach of Morgan Stanley after his third India visit: “The consumption story the organic sustenance of sustainable growth and development casts India in a very different light. Dont get me wrong the Indian consumer is hardly a powerful force on todays global stage. As the accompanying chart shows, Indias per capita income and consumption levels are about half those of Chinas. But it is growth at the margin that always drives powerful macro and market trends. And the Indian consumption story is, first and foremost, one of accelerating growth off a low base. The potential comes from the structure of the Indian economy: Private consumption currently accounts for 64% of Indian GDP higher than shares in Europe (58%), Japan (55%), and especially China (42%). Indias transition to a 7% growth path in recent years is very much an outgrowth of the emerging consumerism of one of the worlds youngest populations. The increased vigor of private consumption provides a powerful leverage to the Indian growth dynamic that is rarely found in the externally-dependent developing world.”

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Rajesh Jain

An Entrepreneur based in Mumbai, India.