A new report by Goldman Sachs titled “The Rise of Affluent India” indicates that India’s affluent class is set to expand significantly in the next three years, with their numbers projected to reach 100 million, up from the current 60 million. This segment of the population, constituting around 4% of India’s working-age populace, has grown at a remarkable rate, outpacing the overall population by a factor of 12 in the past four years.
The report defines the affluent class as individuals with an annual income of $10,000 or more, which is roughly equivalent to ₹8.3 lakh. This group’s growth has been astonishing, rising from 24 million consumers in 2015 to 60 million in 2023, earning approximately five times India’s average per capita income of US$2,100.
This rapid expansion of the affluent class is expected to have a profound impact on various sectors, including leisure, jewelry, out-of-home dining, healthcare, and premium brands.
The Goldman Sachs report attributes this growth to a significant increase in the value of financial and physical assets in India between 2019 and 2023, particularly in three key asset classes: equities, gold, and property.
In the realm of equities, the report reveals a substantial rise in the number of demat accounts (electronic accounts used for trading shares), which surged from 41 million in 2020 to 114 million in 2023. Household savings flowing into equities have also seen a consistent increase since FY17, suggesting a growing participation in the equity markets, especially during a period of robust market returns.
Gold, a traditional store of wealth in India, has seen a remarkable increase in value. From an average price of Rs 39,900 per 10 grams in January 2020, it soared to Rs 62,200 per 10 grams in December 2023, marking a 65% increase in just three years. This surge has significantly contributed to the rising wealth of India’s affluent class, with the total value of household gold in India reaching US$1.8 trillion.
However, property prices in India have experienced a more modest increase compared to equities and gold. The average property prices in the country rose by 30% between 2019 and 2023, compared to a slower increase of 13% between 2015 and 2019.
The report also highlights positive trends in income tax filings, with an average annual increase of 8% between 2017 and 2022. Filers reporting an income of over Rs 10 lakh grew at an impressive rate of 19%.
Additionally, the report notes significant growth in term deposits above Rs 15 lakh in banks, which expanded by an average of 45% annually between 2019 and 2023. Credit card adoption and spending have also seen substantial increases, with 85 million credit cards in India by the end of fiscal year 2023.
This expansion of India’s affluent class has had a notable impact on the corporate landscape, with companies targeting the wealthy consumer segment experiencing faster growth than those catering to the mass market. Premium product segments within companies have also witnessed accelerated growth.
The Goldman Sachs report paints a rosy picture for India’s affluent class, whose numbers are expected to swell in the coming years, driven by their increasing wealth in equities, gold, and other assets. This growth is poised to reshape the Indian consumer landscape and drive further expansion in various sectors.
