Force to be reckoned with – India's middle class in 2025

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India_middleclassBusiness Today (subscription required) analyzes the most recent McKinsey report:

An average Indian today can potentially spend double of what he could in 1985; in the next 20 years, he will be able to spend four times what he does now […]. Result: India is expected to emerge as the world’s fifth-largest consumer market by 2025, overtaking countries like Germany and Italy which are currently far ahead.

By 2025, India's middle class is expected to swell almost 12-fold from its current size of 50 million […] people to over 583 million.

Rural areas are slated to receive a slice of the cake too:

The growth rate in annual rural income per household will accelerate from 2.8 per cent over the last two decades to 3.6 per cent over the next two; and rural consumption will reach the level of today’s average urban household by 2018.

This rosy scenario will depend on heavy outlays on infrastructure and education. The Economist notes:

The report notes that spending on education and infrastructure will have to increase to support its analysis. Yet it is still hard to imagine so many hundreds of millions of Indians being educated to a standard befitting middle-income status. Transforming the thousands of rotten schools might prove impossible, even if sufficient money can be found. Given India's relatively weak fiscal position, it perhaps cannot be.

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