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India's middle class population, which will exceed 600 million by 2030, will be a major driving force in global consumption by then, next only to China, says a report by the Asian Development Bank (ADB).
Asian consumers are likely to spend $ 32 trillion by 2030, accounting for 43 per cent of total global consumption, in which India and China will have major shares, ADB said in a special chapter titled Rise of Asia's Middle Class.
"The surge in numbers of middle class people in India has seen additional annual sector spending of $ 256 million and spawned low-cost, locally-produced products and services such as Tata Motor's $ 2,200 Nano car, the Godrej Group's $ 70 batteryoperated refrigerator, and cheap mobile phone rates," the report titled Key Indicators for Asia and the Pacific 2010 says.
The emergence of a substantial middle class in India has created new avenues for employment and entrepreneurship, and a louder voice for improved public infrastructure and services.
India's middle class-defined as those able to spend between $ 2 and $ 20 a day-has expanded to about 420 million, according to an ADB report on Asia's middle class.
However, this growth and employment driver are also most vulnerable to economic shocks.
The people in the vulnerable lower middle class category number about 244 million.
India also has approximately 26 million affluent people, those who can spend more than $ 20 a day.
"Policies that bolster the middle class may have benefits not only for economic growth, but may be more cost-effective at long-term poverty reduction than policies that focus solely on the poor," said Jong-Wha Lee, chief economist, ADB. " More than 75 per cent of the country's middle class remain in the $ 2 to $ 4 daily consumption bracket, the lower end of a range of $ 2 to $ 20, leaving them at risk of falling back into poverty in the event of a major economic shock, such as the global financial crisis," the report adds.
Infrastructure constraints, like unreliable power supplies may also hamper consumption of durable goods.
The report suggests that to help unlock the full potential of the Indian middle class as consumers and drivers of growth, the government must continue to remove structural and policy impediments to the segment's development and improve income distribution.
"Actions should include infrastructure improvements and social safety nets that encourage spending, while providing a buffer during hard times. The government should also put in place policies that stimulate the creation of stable, well-paid jobs, and encourage entrepreneurship and education," the report says.
Indian middle class to shine worldwide: Business : India Today
Asian consumers are likely to spend $ 32 trillion by 2030, accounting for 43 per cent of total global consumption, in which India and China will have major shares, ADB said in a special chapter titled Rise of Asia's Middle Class.
"The surge in numbers of middle class people in India has seen additional annual sector spending of $ 256 million and spawned low-cost, locally-produced products and services such as Tata Motor's $ 2,200 Nano car, the Godrej Group's $ 70 batteryoperated refrigerator, and cheap mobile phone rates," the report titled Key Indicators for Asia and the Pacific 2010 says.
The emergence of a substantial middle class in India has created new avenues for employment and entrepreneurship, and a louder voice for improved public infrastructure and services.
India's middle class-defined as those able to spend between $ 2 and $ 20 a day-has expanded to about 420 million, according to an ADB report on Asia's middle class.
However, this growth and employment driver are also most vulnerable to economic shocks.
The people in the vulnerable lower middle class category number about 244 million.
India also has approximately 26 million affluent people, those who can spend more than $ 20 a day.
"Policies that bolster the middle class may have benefits not only for economic growth, but may be more cost-effective at long-term poverty reduction than policies that focus solely on the poor," said Jong-Wha Lee, chief economist, ADB. " More than 75 per cent of the country's middle class remain in the $ 2 to $ 4 daily consumption bracket, the lower end of a range of $ 2 to $ 20, leaving them at risk of falling back into poverty in the event of a major economic shock, such as the global financial crisis," the report adds.
Infrastructure constraints, like unreliable power supplies may also hamper consumption of durable goods.
The report suggests that to help unlock the full potential of the Indian middle class as consumers and drivers of growth, the government must continue to remove structural and policy impediments to the segment's development and improve income distribution.
"Actions should include infrastructure improvements and social safety nets that encourage spending, while providing a buffer during hard times. The government should also put in place policies that stimulate the creation of stable, well-paid jobs, and encourage entrepreneurship and education," the report says.
Indian middle class to shine worldwide: Business : India Today
