India is poised for an exciting year ahead. According to Goldman Sachs’s report, “The Rise of Affluent India”, the number of people earning more than $10,000 per annum has hit 60 million, and it is expected to touch the 100 million mark by 2027, with a Compound Annual Growth Rate (CAGR) of 13 per cent. Most of these affluent Indians belong to the working-age population. However, the report also reveals that the growth of income is much slower in other segments of society. For example, there was only a three per cent rise in the number of people earning between $1,501 and $2,500 (India’s per capita
income is pegged at $2,450 for 2023), while there has been a decline of 2.5 per cent in the number of people earning less than $1,500.
With this, one could conclude that India is steadily progressing as far as income is concerned, but not all sections of society are progressing at the same rate. Only 4.4 crore working-age people in India earn more than $10,000, which accounts for only four per cent of the country’s labour force. The report has pegged the average per capita income of an Indian at $2,100 (1,74,000 in INR), indicating that the majority of the population still struggles to make ends meet.
In contrast to income, property rates have increased much more sharply. As per the report, there has been a 31 per cent increase in property rates between 2019 and 2023, almost three times the increase witnessed between 2015 and 2019.
Similarly, the Knight Frank Affordability Index, which determines if a city is affordable or expensive to live in by tracking the fluctuations in the EMI to income ratio in an average household, has termed Mumbai, the most expensive city to live in. In Mumbai, one has to spend nearly 55 per cent of their monthly income on EMI. These statistics indicate that, while there may be a rise in affluent Indians, the cost of living is also increasing.
Moreover, the rise in inflation of essential amenities like housing could lead to the rise of more affordable housing options in the future. The central as well as state governments have been taking steps in this direction by launching schemes like Pradhan Mantri Awas Yojana (PMAY) and Global Housing Technology Challenge-India (GHTC-India) to provide affordable housing to all. The rise in property rates has also led to the rental market’s growth, providing more options for those who cannot afford a house.
While India’s growth story may have its ups and downs, the rise of affluent Indians cannot be ignored. The government, along with various industries, must work towards creating a more inclusive growth model where the benefits of economic growth reach the majority of the population.