Since 1990, when India began to remove the fetters on her
economy, the debate has raged on whether the percolation of
prosperity would indeed occur. Will poverty decline?
It seems an inevitable in modern times, that the engines
of spread and growth of economies, are the middle-classes and their
consumptive instincts. The transformation of the poor into ever-enlarging
middle classes is the course for large countries like India. One way of
measuring change, is to chart these changing numbers.
The National Council of Applied Economic Research [NCAER]
is a venerable old institution, respected for the rigour of it's methods
and the accuracy of it's forecasts. It's reports are the bases for many
crucial decisions made by marketers, economists, analysts and investors.
It's recent 'Ten Year Whitebook - The Indian Consumer
Market 1997 to 2007' is a landmark publication that has much good news for
In brief, for the period covered, the conclusions are:
~the 'very rich' will grow six fold
~the consuming class will triple
~economic destitutes will decline three
Now, let's go a little deeper into the picture and look
at some numbers. Assume the following:
~economy grows by 7.0
~average Indian house-hold has 5.7 members
~electricity is available to most households
Many will find it hard to swallow that the economy will
touch and stay at 7.0% (although it's quite close to that now), or that
electricity can be a presumed a stable service (although power sector
reforms now underway can bring in efficiencies).
Anyway, going with the assumption for the moment, by the
~40% of the house-holds will have washing machines
~all will have more than one wrist watch
~77% will have refrigerators
~94%, pressure cookers
~57%, colour televisions
~61%, two wheelers
Add population fall.
Fuelling all this prosperity-to-come, is not simply
investments, creation of jobs and the consequent rise in disposable
Simultaneous with the rise in economic growth, is a
in population growth. Till the nineties when the economy grew by about 4%,
the population grew at about 2.2%. In the nineties, even as the growth
rate has stayed above 6%, population growth has declined to 1.7%. The
combination has resulted in higher per capita income.
The NCAER report's punch-line might well be this
forecast: By the year 2007, the combined numbers of the upper-classes
(annual income between Rs.45,000 and Rs.215,000) and the 'very rich'
(Rs.215,000+) will outnumber the house-holds with less than Rs.45,000 a