India’s consumption surge: 5x increase in Indians earning over ₹5 lakh drive consumption growth

Data indicates that with the rise in income levels, wealthier individuals in India are driving the nation's consumption surge. According to a BNP Paribas income tax department data analysis, the number of individuals earning over Rs 5 lakh per annum has increased from 3.8 million in FY12 to 18 million in FY21, a five-fold increase.

The report attributes this growth to increased household income and improved credit availability, leading to an increased propensity for consumption and investment among these households. While the data only covers up to FY21, the report suggests that the trend likely continued into FY22 and FY23 due to strong wage inflation.

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The rise in high-income households in India, although a small proportion, has been driven by sectors like IT services, financial services, and others. BNP Paribas predicts that companies catering to these affluent households will benefit from this trend.

Who will benefit?

The report highlights select stocks that may benefit from this trend, including companies like Maruti Suzuki, Eicher Motors, ITC, Nestle, United Spirits, Titan, PVR INOX, IndiGo, Indian Hotels, Oberoi, Apollo Hospitals, ICICI Lombard, Bharti Airtel, HDFC AMC, Nykaa, Havells, Voltas, and SBI Life.

Furthermore, the report suggests that sectors such as automobiles (specifically four-wheelers), financial services, jewelry, hotels, real estate, cigarettes, multiplexes, and hospitals are likely to experience faster revenue growth compared to sectors like FMCG, 2-wheelers, and media broadcasting that cater to the mass market.