India and China set to sustain consumer class position

Today, more than half of the world’s consumers live in Asia, led by the momentum prevalent in India and China. The two countries make up a third of the world’s population, a third of the global consumer class, and approximately a quarter of global consumer spending (in PPPs). In aggregate, India and China appear very similar. Both have a population of 1.4 billion, this year they will each add around 30 million people to their consumer class, and in the past decade, both economies experienced a high growth of around 5-7 percent annually. From a bird’s eye view, India looks like China, or more precisely, a China-to-be. While China and India will both be dominant markets in the world economy, their consumer classes have three fundamental differences-India’s consumer is young, China’s is old (Consumer Class Population Growth 2022-30) according to World Data Pro, 2023. China’s consumer class is urban, India’s is both urban and rural (2023). At 899 million people, China is the most populous consumer class, whereas India’s is only half that at 473 million. Their growth in 2023 is comparable, with China’s consumer class growing by 36 million as against India’s by 31 million. However, projections are that China will continue to have a larger consumer class for at least the next two decades. China will become the first country to reach one billion people in the consumer class by 2026/27.

Consumer spending in India decreased to 23, 995.15 billion in the first quarter of 2023 from Rs. 24787 billion in the fourth quarter of 2022 according to Ministry of Statistics and Programme Implementation (MOSPI)

India recorded a current account deficit of $1.3 billion in the first three months of 2023, equivalent to 0.2% of the GDP, falling short of market expectations of a $3.3 billion surplus. However, it is the lowest gap in nearly two years, mainly due to a narrower trade deficit on the back of lower commodity prices and an increase in services exports. The goods deficit narrowed to $52.6 billion from $54.5 billion a year earlier and the services surplus widened to $39.1 billion from $28.3 billion. Net earnings from computer services increased and private transfer receipts, mainly remittances were up 20.8% to $ 28.6 billion.

The secondary income surplus rose to $24.8 billion from $21.2 billion. On the other hand, the primary income deficit widened to $12.6 billion from $8.4 billion. In Q4 2022, the current account deficit was revised lower to $16.8 billion from an initial estimate of an $18.2 billion gap.