Book And Reports 2008

The Next Urban Frontier: Twenty Cities to Watch

Rajesh Shukla , Roopa Purushothaman

Published Report | NCAER and Future Research Capital

Report identifies India’s top twenty cities, which together account for just under 10% of India’s population but generates 31% of disposable income. It is estimated that in 2007-8, these cities will fuel just under $100bn of consumption expenditure. Tier II and Tier III cities today may be much smaller in terms of their income and spending weights, but they are growing rapidly. Many of the cities that have registered the fastest economic growth—along with the highest asset and financial penetration—over the past five years have been outside the megacities (5-million+ population).

Sectors heavily geared towards demographics—consumer durables, financial services, FMCG and apparel—may follow typical patterns where certain Tier II boomtowns will be the next big pockets. At the same time, more specialized consumer markets may find further inroads in smaller niche cities where spending propensities are higher. Consumption patterns in these cities may evolve more quickly, creating deeper addressable markets. These twenty cities will become increasingly important for financial services: savings rates across the cities are nearly double the all-India figure. Megacity savings rates are the highest, with Delhi and Mumbai alone accounting for a fifth of all-India savings.