Consumption is on the increase and poverty on the decrease.

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 India's economy.

Forecast.

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 fold.

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 year 2007:

~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 incomes.

Simultaneous with the rise in economic growth, is a predicted fall 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 year!

July,2000