Ring out the old, tired consumption debates

The discussion around India’s household consumption has been stuck on the same issues for the last 20 years, even though the answers to them are now well-known.

- RAMA BIJAPURKAR

It's time to “man up” and say: “This is not the narrative or number we like, but let’s just accept it”. For example, household income, formal salaried employment. It is also time to embrace the quintessentially Indian idea of “many truths, all true” — for example, mass and class markets both being attractively large and growing; gen-next includes both startup founders and government job seekers; and the ageing and youth are both significant demographics. Only then can we move forward.

Whether household consumption is in good health or not is a popular media debate, especially when favourite listed companies post results that fall short of analysts’ forecasts. Private Final Consumption Expenditure (PFCE) growth has slowed down in periods, but it has been steadily, sustainably growing over time, a trend that we can safely bet on in the future. As this column has often pointed out, here is the world’s largest mass of people who are very keen to consume and whose incomes are slowly and steadily rising. Even at modest gross domestic product (GDP) growth rates, the PFCE expenditure offers enough headroom for companies to grow. Where and how to get this growth is a business strategy question, not a macro consumption health question. We know that all our defining numbers are large on aggregate, small on per capita; absolute numbers of consumption of most things are very large, especially relative to the rest of the world, while penetration levels are still low. We know that a small percentage of a large number is large, and all interpretations are correct.