Understanding the impact of macroeconomic indicators on different consumption driven industries in India

Abstract

The primary objective of this project is to analyse the impact different macro variable indicator on the growth rate of consumption industries in India. Industry experts suggest that whenever a country's GDP per capita reaches 2000 USD, consumption grows at a much faster rate. This point is popularly referred as inflexion point by economists. According to Jefferies, the $2,000 level is a critical threshold. A significant boom in the discretionary spending has been observed once it crosses $2,000 in other countries,” the report said citing China, Russia, and Brazil. 1 These countries have witnessed the tremendous growth in their consumption post this inflexion point. India has tipped this inflexion point in 2018. It will be interesting to observe how India’s consumption will grow in the near future. Similarly, other indicators like urbanization, inflation, CPI etc affects the consumption behaviour in different industries. India is a consumption driven economy. An increase in income shifts the spending patterns of the consumer from essential goods to discretionary goods. The surge in the discretionary spending will impact industries such as food and beverages, clothing and footwear, household goods, education, transport, communications. Healthcare, real estate, hotel, leisure, alcohol and tobacco. Our study will mainly circumscribe the above mentioned industries. The benefit of this study can help PE/VC firms for identifying or calculating the horizon for their investments in various sectors in India.