100 million 'affluent' Indians by 2024, but divide in spending power an issue: Goldman Sachs

By Advait Palepu

Indian companies selling premium goods will outperform broad-based competitors as the country’s affluent class is expected to nearly double to 100 million people within three years, according to Goldman Sachs Group Inc.

Strong economic growth, stable monetary policy and high credit growth has increased the purchasing power of top earning Indians over the past decade. This has resulted in the number of affluent Indians earning above $10,000 (Rs 8,28,723) per annum from 24 million consumers in 2015 to 60 million, or 4.1 per cent of the population currently, according to a Goldman report published on Friday.

The world’s fifth-largest economy is tipped to become the third-biggest by 2027, according to the International Monetary Fund, with the country seeing rising spending power among its middle-class, benefiting firms with premium brands in leisure, jewelry, out-of-home food and healthcare, according to Goldman.

“There has been a significant increase in the value of financial and physical assets in India in the past three years which is driving an increasing wealth,” according to the report. Though gold and property remain seen as important stores of wealth, there has been a drastic shift in households investing in equities through direct stocks or mutual funds over the last five years, Goldman said.

However, the divide in spending power between the top earners and those in the middle remains an issue in a country where GDP per-capita is less than $3,000 a year. While more than 960 million debit cards have been issued in India and 93 million have post-paid cell phone connections, Goldman says that only 30 million Indians can afford a vehicle.