With 1,000 new cars a day crowding onto the streets of India, and one million passenger vehicles sold in the 12 months to March 2006, there is very real evidence of escalating consumer demand, driven by increasing affluence, available credit and a growing propensity to spend. Yet at the other end of the scale India is still home to some of the world’s poorest people.
...What’s more, growth in this sector is also being fuelled by the climbers, who represent 37% of India’s households, not to mention the aspirers who are joining the market economy for the first time.
...It is the young working populations that drive personal consumption. These are the individuals that are driving the purchases of televisions, cars and mobile phones. It is this group that has made a generational leap built on buying now – possibly using a new brand of credit card that just did not exist in India a decade ago – so they can pay tomorrow. Meanwhile, money is going further as competition for consumer spend is rising, leading to static and often falling prices for typical purchases. This is manifested by the purchasing power of the rupee, where its PPP (purchasing power parity) value is about 80% more than the prevailing exchange rate.
Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.