We will discuss how consumption is driving the growth of the Indian Economy.

The News

SBI has launched a new fund based on India’s consumption story and this is the fifth mutual fund scheme launched in this category in the past 12 months.

So let’s decode the consumption theme and why everyone’s talking about it.

India’s Consumption Story

It’s 7:00 AM. Your alarm buzzes, and you reach out to switch off your AC via equipment manufactured by Havells. You head to the washroom and reach for your Colgate toothpaste. A quick shower with Cinthol soap wakes you up, and you slip into your attire bought from Westside or Zudio.

Then you hop onto your Royal Enfield, or perhaps you prefer the comfort of a Mahindra SUV. As you ride through the morning traffic, you order your breakfast through Zomato. Hours pass by, and soon, it’s time for that work trip. Indigo Airlines is your go-to, taking you across cities.

From the moment you turn on the lights at home to catch a flight for a meeting, everything around you represents consumption—whether it’s electricity that powers your gadgets or that luxury dinner you treat yourself to at the end of the week.

Basically, consumption is the act of using resources to satisfy current needs and wants.

You see, 60% of India’s GDP comes from consumption, accounting for nearly $2 trillion. It is further estimated to double by 2030 to $4 trillion, witnessing a double-digit growth.

What’s fueling the growth?

India has over 50% of its population (~70 crore people) below the age of 25. With increasing disposable income and a preference for convenience, the lifestyle of young Indians is transforming in unprecedented ways.

It’s quite visible in numbers too:

  • Fast Moving Consumer Goods (FMCG) market was valued at $49 billion in 2016. In 2024, it has increased to about $200 billion.
  • Domestic air travel has nearly tripled from 13 crores passengers in 2016 to 38 crores in 2024.
  • Air conditioner sales in India rose 182% between 2016 and 2024. While that of washing machines by an impressive 230%.

Looking ahead, India’s Per capita Income is forecasted to increase by 70% by the year 2030 from the current level of ₹2.1 lakhs, which would further boost the overall consumption.

To conclude

With rising income levels, a youthful demographic, and an increasing appetite for convenience, more people are looking to elevate their lifestyles.

This will drive the demand for both everyday essentials and luxury experiences, shaping India’s economic landscape for years to come.