79 years of India rising as households dream bigger

79 years after India gained independence on August 15, 1947, the country has witnessed a remarkable transformation in the aspirations of its households. As Amartya Sen and Jean Drèze have noted, poverty was widespread, with around 60% of Indians living below the poverty line in 1947, and the average family's focus was on securing basic necessities such as food, shelter, and clothing.

Over time, as the economy grew and urbanization accelerated, households gained access to a greater range of goods and services that were once considered luxuries. Today, the Indian consumer is characterized by a growing capacity to choose among a wider array of options. Rising incomes, urbanization, wider credit access, and digital platforms have expanded the choices available to households, shifting consumption from necessity to preference.

According to Poonam Upadhyay, Director at Crisil Ratings, the shift in aspirations is evident in the household budget. While the share of food expenditure may still be high, it is gradually decreasing, allowing households to allocate more resources towards other essential and non-essential expenses such as transport, healthcare, entertainment, housing, consumer electronics, and personal care.

The automobile industry is another area reflecting these changing aspirations. Traditionally, Indians had a progressive approach to purchasing cars, starting with small hatchbacks and upgrading over time. However, a report by Redseer Strategy Consultants indicates that consumers are increasingly using the used-car market to move up the automotive ladder.

This shift towards premiumization, rather than broad-based affluence, is evident with nearly 65% of used-car buyers being first-time owners, and a significant portion opting for used SUVs and premium variants instead of new entry-level cars.

As the Indian consumer continues to evolve, their aspirations have shifted from merely commuting to owning a car to accessing a better lifestyle and status through it. This new wave of consumerism is characterized by selective premiumization, where consumers trade up in categories that shape their identity and experience, while remaining value-conscious in their day-to-day purchases.