India's Consumer Boom

As rapid economic growth shapes India into a consumerdriven society, it is also reshaping markets and businesses

- D. SHIVAKUMAR

TODAY, INDIA IS a consumption economy and a consumer society, and this will accelerate during this decade as the country’s economy grows and more segments of the population acquire greater purchasing power.

Hence, in this context, it is crucial to understand the history of consumerism in India.

Consumerism is rooted in Keynesian thought, based on the logic that consumer spending is a key driver of the economy. Today, more than 60% of India’s GDP is driven by consumption—similar to the US.

Consumerism represents the democratisation of consumer wants and desires, leading to social status. The first surge in consumerism occurred in the US after World War II. Between 1945 and 1949, Americans purchased 20 million refrigerators, 21.4 million cars, and 5.5 million stoves. The emergence of the US as a consumer society led economists and policymakers to appreciate the value of purchasing power as a driver of the capitalist economy.

What drove consumerism in the US? It was the development of retail, mail-order shopping, large department stores, and a rise in incomes due to more women entering the workforce. In 1945, 35% of American women were in the workforce. The growth of media channels and advertising in the 1950s and 1960s further highlighted the power of consumerism-driven advertising. P&G’s sponsorship of TV shows even led to the creation of ‘soap operas’.