(Sources: JATO Dynamics, JLL, Godrej and Panasonic sales data)
When 38-year-old due diligence expert Praful Sharma set out to buy a new car for his two-member family last year, a hatchback would probably have met his needs perfectly. However, two years of the Covid pandemic had left an indelible mark on his psyche. Confronted with the loss of loved ones, some younger than himself, Sharma, like many others, found himself assailed by a strange new feeling: YOLO, short for You Only Live Once. That sentiment saw him go against the middle-class grain of saving for a better tomorrow—and choosing instead to spend for a better present. Sharma bought the automatic variant of Honda’s newly launched Elevate, at a price some Rs 6 lakh higher than what he would have paid for a hatchback.
Feeding this YOLO urge is the ‘premiumisation’ trend—something the Indian economy has been witness to for some time now, though it has accelerated in the recent past. There has never been any surprise about the affluent buying luxury goods; what has changed is how India’s middle class is increasingly giving in to its growing aspirations and living in the moment. This has led to the sharpest rise in the segment classified as ‘masstige’, a portmanteau of the words ‘mass’ and ‘prestige’, products that are premium yet attainable, with price points between the mid-market and super-premium. So, whether it’s a house or a car, a refrigerator or a television, a vacation or eating out, the Indian consumer is exhibiting a desire for more than the run-of-the-mill.
Savings in the Covid years, rising stock prices, the bounceback of certain sectors in the organised segment and India crossing the four-trillion-dollar economy mark despite the slowdown in western markets—all these have together lent a certain elan to the India story. Even if not everything touches everyone directly, Indians feel more financially secure than their counterparts in the US, Europe and even China, as Deloitte’s financial well-being index (see Positive Sentiment) shows. The perceived resilience of the Indian economy, in turn, also injected optimism among middle-class youth, many of whom entered the capital markets for the first time during the pandemic. That movement away from old-style thrift is equally visible in consumption patterns: they feel it is perfectly okay to spend their earnings on aspirational products.
That, of course, is preceded by, and predicated on, another trend: a rise in incomes. SBI Research’s report ‘Deciphering Emerging Trends in ITR Filing: The Ascent of the New Middle Class in Circular Migration’ tells us that the average income of Indian taxpayers has grown almost three times from Rs 4.4 lakh in FY13 to Rs 13 lakh in FY22 when read in terms of its weighted mean, led by an increase in the number).
