India to be fifth largest market by 2025
By agencies   |   Friday, 04 May 2007, 19:30 IST
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BANGALORE: The McKinsey Global Institute (MGI) study predicts that India will be the world's fifth largest consumer market from the current 12th rank by 2025, surpassing Germany, if India continues and accelerates the economic growth. By then, the middle class will have grown almost 12 times, from 50 million today to 583 million. Over 23 million Indians will become the country's wealthiest citizens. The overall economic growth will lead to a decline in the deprived segment from 54 per cent of the population in 2005 to 22 percent by 2025 benefiting India's poorest people. The report shows that 291 million people will move out of poverty during a period while 322 million people will be added to the country's population. In effect, India will have 465 million fewer poor people by 2025 if the poverty rate remains at 2005 levels. Titled "The 'Bird of Gold': The rise of India's consumer market", the study, conducted over a year, says, "The study forecasts that aggregate consumption in India will grow fourfold in real terms, from Rs 17 trillion at present to Rs 70 trillion by 2025." The study is predicated on India's real GDP growth ranging between 6 per cent and 9 per cent a year over the next two decades. "Our base case assumes real compound annual growth of 7.3 per cent in the 2005?2025 period, a marked acceleration from the 6 per cent growth of the previous two decades," says the report. If India continues this growth path over the next two decades, Indian income levels will almost triple. The study also predicts that expenditure on foods; beverage and tobacco (FB&T) drop as a proportion to overall expenditure by 2025. Although FB&T will still be the biggest category, its share will have dropped from 42 per cent to 25 per cent. Communications that is only the two percent of the expenditure will be one of the fastest expanding categories with growth of over 13 per cent a year.

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