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After exemption in tax of individual households up to 12 lakhs will further boost consumption sector. Consumption sector is going to play major role for India’s economic growth story and this sector is set to rise in the long term.
As per S&P Global India’s nominal GDP will grow to $7.3 trillion by 2030, almost double from it’s current GDP. Also, by 2030 Indian share of Global GDP would grow from 3.6% to 4.6%.
Before going ahead let’s discuss key drivers for strong growth of consumption sector and Indian economy:
Per Capita Income: Rising GDP per capita income from $442 in 2000 to $2940 in Jan 2025 (source IMF). It is projected to reach $4200 by 2029 due to higher participation of young population in the economy, increased working age population.
Source IMF
Increased investment in infrastructure and government policy reforms in manufacturing and other sectors. Also, government has taken initiatives to boost private consumption, reviving domestic demand and increasing capital expenditure.
Digital Economy Growth: Digital presence in India expanding rapidly, Indian economy has seen several changes in digital space like development of digital infra, promoting innovation and empowering citizens. National digital Communication Policy (NDCP) 2018 has supported this digital infrastructure development and expanding broad base connectivity.
As per mid-2024, there are 650 million users using smart phone and more than 950 million internet users subscribed for internet. India’s digital economy going to reach around trillion-dollar valuations in coming years with better rural development, skill development with improved digital infrastructure and expansion of internet access to remote areas. Further out of 644131 villages in the country has access of 3G/4G mobile connectivity, 95.15% villages are having internet access in India. (villages data as per Registrar General of India)
How digital penetration has significantly expanded in last 10 years, internet subscribers from 251 million to 954 million in 2024 and internet penetration from 14% to 52% in the same period.
Demographic Dividend: Indian economy has potential growth trajectory, reason India demographic dividends, key drivers are urbanization, government huge investment in infrastructure and expanding middle class, Indian middle class is expected to reach by 38% of total population by 2030 and 60% by 2047.
More than half percentage of consumption will be driven by middle class by 2030-31.
Government Initiatives: Government initiatives like startup India, Make in India. India has 2.87% share of global manufacturing, where as China has 31.63%.
Due to government initiatives and China+1 has make India favorable destination for foreign companies. India is going to next manufacturing hub reason behind rising working age population, increasing per capita income that further will boost consumption, expanding middle class and urbanization. Also manufacturing shifting to India due to multiple reasons like monthly minimum wage Rs. 5074 in India compare to China Rs. 24596, which is very high, geo-political issue, trade war, India has high working age population and mass consumption. Foreign companies looking at India as an alternative investment opportunity against China.
Infrastructure Development: Last but not least government spending on infrastructure play a crucial role to boost economic growth of the country like railway, road, power, and ports. Indian government has taken remarkable infrastructure development in past few years.
Final conclusion, India is on growth tack to become 3rd largest economy by 2047. That is up to us that how we can as individual can be a part of this and take opportunity of this new era.
Written By
Surendra Jauhari
www.wealthplys.com