For a decade, foreign companies wanting to invest in India have viewed the country as a land of 200 million middle-class consumers, while the media pooh-poohed the theory.
But if government GDP data is to be believed, every one of the top 20 per cent families in this country has enough disposable income to afford not only fast moving consumer goods, but also any number of consumer durables. The old cliché of India's 200 million consumers is a reality.
The government's advance estimates of national income put per capita NNP at factor cost at Rs 20,860 at current prices. For a family of four, that works out to a monthly household income of Rs 6,953.
But World Bank data (Human Development Report, 2003) estimate that the top 10 per cent of the total population have 33.5 per cent of total income, while the top 20 per cent have 46.1 per cent of total income.
With a population of 107.3 crore (Rs 1.073 billion) and a per capita NNP at current prices of Rs 20,860, NNP at factor cost would amount to Rs 22,38,278 crore (Rs 22,382.78 billion). 46.1 per cent of that would be Rs 10,31,846 crore (Rs 10,318.46 billion), the amount of income received by the top 20 per cent of the population.
Twenty per cent of the population is 21.46 crore (214.6 million) people. Each person in this top twenty per cent would therefore receive an annual income of Rs 48,082. For a family of four, household income would be Rs 1,92,328 per annum or Rs 16,027 per month.
For the top ten per cent of the population, a similar calculation shows that household income in that bracket for a family of four would be Rs 23,293 per month.
The point is, with a monthly income of Rs 16,000, a household would actually be in a position to pay for most consumer goods, and they could afford to take a loan for a car, a two-wheeler, a mobile phone and plenty of consumer goods.
For the top ten per cent of the population, a monthly household income of Rs 23,000 would enable them to pay the instalments for a house.
In short, the data merely proves what has been observed for years now -- that the top 20 per cent of Indians have tremendous spending power. Note that the data do not take black money into account, which would add considerably to the purchasing power of the top ten per cent.
The flip side, of course, is that, the bottom 10 per cent of the population has 3.5 per cent of the income. That works out to Rs 2,433 for a family of four, barely enough to keep body and soul together.
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