India's middle-class story

INDIA

Manish Sonthalia, portfolio manager of the Gemini MOSt India fund, examines what changes to the region could mean for investing in this marketplace

India’s consumption and savings patterns have undergone three periods of major change. Incomes rose in the 1980s and 1990s and consumption rose too, but at a significantly slower rate than GDP. Consumption therefore declined from 76% of GDP in 1985 to 57% today. Imported goods from developed world companies became increasingly available but were still only affordable for India’s wealthiest households. With spending failing to keep pace with income growth, household savings rates grew dramatically, rising from 11% of household disposable income in 1985 to around 28% today. It is generally...