Private Consumption To Comprise 50-55% Share In India's $5 Trillion GDP: Expert Analysis
Private consumption is expected to account for 50-55 per cent from the India's economy as it reaches USD 5 trillion in the near future. But despite a robust overall growth rate of 7.5 per cent, the consumption story has faced headwinds in recent quarters, with a notable disparity in the recovery across different income segments, according to expert analysis.
Speaking during an event on Thursday, Mrigank Gutgutia, Partner, Redseer Strategy Consultants said, "India is experiencing a partially k-shaped recovery, with the top 10 per cent of households, representing higher income brackets, driving consumption in various sectors. However, there is room for improvement in the consumption story for the remaining part of India, particularly in rural areas, where signs of soft demand are evident."
According to Gutgutia, projections indicate India's digital economy could reach USD 1 trillion by 2030-2032. While this is a promising prospect, challenges such as funding constraints and a "funding winter" were acknowledged by the expert. Gutgutia stressed the importance of addressing these challenges for sustained growth in the digital space.
Discussing the ecommerce sector, Gutgutia unveiled intriguing statistics. The sector, which witnessed exponential growth in previous years, experienced a paradigm shift this calendar year (CY23), with growth slowing down to approximately 10-11 per cent, a marked deviation from historical averages of 20-40 per cent during the Covid era.
Data: Redseer Strategy Consultants
"This year has been a reset for many ecommerce platforms, focusing on unit economics and profitability. While a lower growth rate isn't necessarily negative, it indicates the need for platforms to optimise their value propositions for customers," Gutgutia explained.
The analysis delved into category-specific nuances, highlighting sectors that outperformed others in the current landscape. Quick commerce emerged as a standout success (75 per cent), capturing attention as one of the fastest-growing segments. Additionally, the beauty and personal care sector demonstrated a robust growth rate of 20-25 per cent, showcasing the success of innovative value propositions.
Data: Redseer Strategy ConsultantsGutgutia also outlined the need for a concentrated effort in tier 2 and tier 3 cities, where ecommerce penetration is currently around 2-3 per cent, offering significant untapped potential.
He said, "The foundation for digital commerce has been laid out effectively with widespread smartphone access, digital payment adoption, and efficient logistics. However, deep solutioning is required in areas like assortment and discovery to unlock the potential of these emerging markets."
