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[marne.vivek]

Indian Consumer Spending

The NCAER-CMCR divided the country into five income quintiles based on the National Survey of Household Income and Expenditure.

The top quintile (20% or ~45 mn households) accounts for
~52% of aggregate income and
39% of consumption.
They account for an ~45% of aggregate non-food consumption.
(This is the upper class that has driven a bulk of the incremental consumption in India. This set of consumers epitomizes the surging confidence of India having arrived. Considering that this quintile contributes ~93% of aggregate savings, food inflation will have no impact on it.

Middle two quintiles (40% or 90 million households). These households account for
~34% of aggregate income,
~39% of aggregate consumption,
Spend ~54% of their income on food,
~5-7 % each on housing, education, clothing, durables, health, transport and other nonfood items.
Their spend on food spiralled up to 65-67 % of their income which was earlier at 54%.

Bottom two quintiles (~40% or 90 mn households) account for
~14% of income,
22% of consumption.
- spend bulk of their income on food (63%) and buy the bare necessities in terms of non-food items.
Given their massive spend on food these households are being squeezed with inflation. They are being forced to make even greater sacrifices than they are normally used to. However, there is no impact on their savings since these households did not save money anyway.