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Economic Studies, Country Reports Article, India's middle class
Article at a glance:

Tracking the growth of India’s middle class

  • Over the next 20 years, India will likely grow to become the world’s fifth-largest consumer economy.
  • A study by the McKinsey Global Institute suggests that if India can achieve 7.3 percent annual growth—a reasonable assumption if economic reforms continue—consumer spending will quadruple, from about 17 trillion Indian rupees ($372 billion) in 2005 to 70 trillion rupees in 2025. The dramatic growth in India’s middle class, from 50 million to 583 million people, will power this surge.
  • Spending patterns will shift dramatically as expenditures grow rapidly on discretionary items ranging from personal products to consumer electronics. Incumbents will have to fight to retain their market dominance, while attackers could find lucrative ways to exploit the evolving tastes of India’s massive new middle class.

Additional Features
This article includes “At home with India’s middle class,” a narrated set of photos provided by three Indian families. Also included are links to an audio file of the article, an interactive exhibit on the country's consumer market, and the full McKinsey Global Institute report on which the article is based.

 

This article contains the following exhibits:
  • Exhibit 1: India’s private consumption as a share of GDP is closer to that of Japan and the United States that it is to China’s
  • Exhibit 2: India will see further reduction in poverty and a growing middle class.
  • Exhibit 3: A continuing rise in incomes nationally will spur a tenfold increase in the size of India’s middle class.
  • Exhibit 4: Income growth in India’s urban areas will lead to waves of dominant segments.
  • Exhibit 5: The focus of India’s household budgets will shift from basic necessities to discretionary items.
  • Sidebar Exhibit: Map

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