India’s private consumption to cross $2.4 trillion amid increased prosperity
According to a report by Redseer Strategy Consultants, India’s private consumption, which dipped to $2.2 trillion in Q3-Q4 in FY23, is on its way up and expected to cross $2.4 trillion in the fourth quarter of FY24, a report showed on Friday, while the global picture was bleak for the last two quarters.
With a GDP of $6.5 trillion and a retail goods market size of $2 trillion, with the private final consumption expenditure (PFCE) at $4 trillion, the Indian macros are best positioned.
Indicators across emerging sectors, such as credit card spending, air travel, and sales of vehicles, show signs of recovery in Q1 FY24 (April-June period),
“The fundamentals are in the right place. Travel, financial services, recreation, and insurance, among others, are ‘prosperity-driven categories‘ and have experienced an acceleration,” said Mrigank Gutgutia, Partner, Redseer.
“India’s long-term consumption trends are gradually reflecting increased prosperity as consumer behavior evolves towards higher categories,” he added.
According to the report, India’s digital ecosystem is already at the gold standard with over 350 million active digital payment users, more than 50 million digital-using merchants, and over 50 percent digital ad share.
Other categories expected to accelerate with long-term growth, include education, personal vehicles, personal care, food, and clothing.
“Premiumisation, brand proliferation, and digitizations being the core consumption themes across sectors. While the journey so far has been turbulent, India’s Internet is poised to be in cruise control momentum until the end of the decade at a 25 percent CAGR,” the findings showed.
Although the total number of Internet transactors is 350 million, the mature Internet transactors who are frequent online buyers have plateaued around 40-45 million.
“While the user base at the top of the funnel is robust, high-value transactors growth has been plateauing. This is because the potential of users across smaller cities is yet to be fully unlocked,” said Gutgutia.
Solving key concerns among non-mature online transactors, such as complex ordering processes, lack of trust, and better offline offerings, is also needed to improve the total user base and high-frequency users, the report mentioned.
[With Inputs from IANS]
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