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| Income Classification |
The discrepancy between income levels in the country, where fabulous wealth and dire poverty co-exist, can be shocking to citizens of developed countries. India has the largest population of poor people (nearly 400 million people, according to the World Bank) among all countries. On the other hand, a large consuming class of 300 million people outnumbers several of the world’s large markets in terms of market potential.
India’s official income classifications, based on census data, are probably inadequate to map the target market segment for up-market goods. For instance, the National Council for Applied Economic Research (NCAER) classifies the richest category of households in India as having average household income greater than the figure of Rs.140,000 (Euro 2400) per year, which is indeed very low compared to western standards. Official income classifications can also be misleading, given that less than 8% of India’s population is assessed for tax. Farm incomes are tax-exempt; even though a large percentage of India’s rich households are in rural India. As a result, India has a large unofficial economy, estimated to be at least as large as the reported GDP.
Based on economic data compiled by the NCAER, it is estimated that there are approximately 600,000 households (3 million people) in India with an annual income of Rs.1 million (Euro 17100) and 150,000 households (0.75 million people) with an annual income of over Rs.5 million (Euro 85500), or a standard of living comparable to a wealthy middle class European. This represents an even much larger disposable income in purchasing parity terms. This upper-crust section of the population is a ready market for all up-market lifestyle goods reflecting the latest trends found in developed economies. This is the segment most intensely pursued by international brands entering India.
For instance, at least 50,000 households are buying expensive cars every year. Assuming that cars are replaced every five years, it is reasonable to estimate that there are at least 250,000 extremely wealthy households in India with significant disposable income, comparable to developed economies, which corroborates NCAER assessments of the super-rich households.
Table Classification of High Income Groups and Relative Affluence |
| Consumer Classification |
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| Total Number of Indian households |
192 million |
| Rich households as classified by average income levels |
30 million |
| Very rich households as classified by average income levels |
2 million |
| Rich households owning refrigerators |
5.6 million |
| Rich households owning washing machines |
4 million |
| Households buying at least one expensive car every five years |
0.25 million |
| Households earning more than Rs 1 million (Euro18,200) per year |
0.6 million |
| Households earning more than Rs 5 million(Euro91,000) per year |
0.15 million |
| Source: compiled from National Council of Applied Economic Research (NCAER) |
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| Source: Statistical Outline of India, 2000-01. |
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ICREON