OPINION I MINT

India’s private consumption expanded by 7.1% in real terms in the first quarter of 2026–27. That is encouraging news for an economy whose prospects depend substantially on domestic demand. But a growth rate is not a market strategy. It tells businesses that expenditure is expanding, not which consumers sustain which markets, what they can afford or how much financial leeway remains after meeting their expenses.

The distinction matters because India has several overlapping economic maps. The distribution of income differs from the distribution of consumption, which differs still more from the distribution of saving. Businesses that mistake one for another risk misunderstanding both the scale and the character of their opportunity.

PRICE’s estimates for 2025–26 illustrate this clearly. Dividing the population into ten equal groups ranked by per capita household income, the top 10% account for about 30.2% of income, 24.2% of consumption and 48% of saving. The bottom half account for 23.8% of income and 29.5% of consumption, but only about 6.7% of saving.

These estimates describe the structure of demand, not the contribution of each group to the latest quarter’s growth. Nevertheless, their business implications are substantial. The market for goods and services is considerably less concentrated than the pool of saving. A strategy suited to attracting a financial surplus cannot simply be transferred to selling everyday consumer products.

The population between the bottom half and the top decile deserves particular attention. These four deciles account for roughly 46.2% of consumption, nearly twice the share of the top decile. They are not a uniform ‘middle class.’ Their incomes, expenditure commitments and financial flexibility differ. But collectively, they demonstrate why a consumption strategy focused overwhelmingly on affluent consumers would overlook a substantial consumer market.

The differences become sharper when we examine expenditure per person rather than per household. Monthly per capita consumption rises from ₹5,348 in the bottom decile to ₹34,072 in the top, a multiple of about 6.4. Household comparisons show a smaller gap partly because lower-income households are larger: average household size falls from almost six members in the bottom decile to about 3.4 in the top.

For businesses, the appropriate denominator depends on the product. Food consumption is closely connected to the number of people. A refrigerator is generally shared within a household. Housing requirements depend on both household composition and location. Counting households, consumers and purchasing units as though they were interchangeable can distort market assessments. Nor does expenditure rise uniformly across categories. Monthly cereal spending increases from ₹390 per person in the bottom decile to ₹869 in the top, a little over twice as much. Education expenditure rises from ₹108 to ₹2,227, more than 20 times. Healthcare spending increases from ₹196 to ₹2,986, while expenditure on consumer durables rises from ₹112 to ₹1,571.

These are expenditure differences, not estimates of how spending responds when an individual’s income rises. They reflect prices, quality, household composition, access and preferences as well as purchasing power. Even with that qualification, they show why applying a common consumption-growth assumption across categories makes little commercial sense.

For staple products, affordability, availability and distribution efficiency remain central. In  categories with steeper expenditure differences, businesses need to understand whether customers are purchasing greater quantities, better quality, convenience or access to services. The opportunity may lie in a premium offering, but it may equally lie in making an adequate product affordable to a wider population.

There is a key policy distinction here. Higher non-food spending should not be described as discretionary consumption. Healthcare, education, transport and housing contain substantial essential expenditure. Low spending on these services can reflect public provision, but it can also reflect unmet need. High spending may indicate choice and quality, or the cost of securing services that households cannot readily obtain elsewhere.

Financial flexibility further separates consumers who may otherwise appear to share similar aspirations. In the bottom decile, average spending exceeds average income by about 10%. In the second decile, consumption absorbs about 99% of income. In the top decile, the corresponding proportion is approximately 60%.

These are group averages, not descriptions of every household. But they underline a basic distinction between willingness to buy and the ability to sustain expenditure. Borrowing or drawing down savings can help households bridge shortfalls. Neither should be confused with a durable increase in purchasing power.

The practical response is not to abandon national growth indicators. It is to supplement them with category-specific maps of expenditure, household composition and financial capacity. Businesses should distinguish the customers who provide scale from those who provide higher spending per purchase, and both from those with substantial investible surplus.

For policymakers, the same evidence directs attention towards reliable earnings and affordable essential services. Improving these foundations can strengthen households’ capacity to participate in markets without requiring them to stretch already constrained budgets.

India’s consumption opportunity is real. But it is neither evenly distributed nor confined to its richest citizens. The national average provides a headline. Understanding how different households earn, spend and retain resources provides the strategy.