By Krishna Jha
Industrial growth, the stock market and the rupee have already been sinking. Now more and more reports show a constant fall in Indian households’ rapidly shrinking expenditure capacity. According to the latest data released by the National Accounts Statistics, Indians have significantly reduced their spending on clothing and footwear over the past three years. Clothing and footwear are essential items for any household. A continued decline in expenditure on these items for last three years means that the crisis has started turning endemic in nature.
The data shows that the consumer expenditure on clothing and footwear stood at Rs 4.52 trillion in the financial year 2023-24, marking a seven percent decline from Rs 4.94 trillion in 2021-22. This dip shows a growing trend of cautious spending among Indian consumers. Such a situation arises when there is a definite fall in the purchasing power of the people.
A deeper look into the data reveals that the during this period the footwear consumption remained largely stagnant, with a marginal slip from Rs 1 trillion in FY21 to Rs 99,000 crore in FY24, while the clothing segment faced a steeper decline, falling from Rs 3.93 trillion in FY22 to Rs 3.53 trillion in FY24.
The downward trend in Indian consumers’ ability to spend money on clothing and footwear began in 2020-21 fiscal, the year which was marked by the COVID-19 pandemic. That year the spending on clothing and footwear dropped by 15 percent in comparison to the level of expenditure Indian consumers had shown on these items in the financial year 2019-20.
Recent figures from the Ministry of Statistics signals that the fall in Indians’ capacity to spend on items of daily use is acquiring deeper roots in the economy. They also highlight the desperate need for policy support to boost income growth and restore consumer confidence.
However, such a transformation would require massive efforts to reverse the trend of fall in the employment generation in the country. This in turn would require a complete policy overhaul. This seems an impossible proposition given the way the unemployment, falling expenditure capacity, rising inflation and almost stagnant economy have become the defining feature of the Narendra Modi government.
Only in February this year, a study by venture capital firm “Blume Ventures” found that Nearly 100 crore Indians, 90 percent of the country’s population, lack discretionary spending power to purchase goods or services.
The report stated that the intensification in the decline of the consumption pattern is driven not only by a decline in purchasing power of ninety percent of the population in India but also by a sharp drop in financial savings and a surge in mass indebtedness.
The study, titled “Indus Valley Annual Report 2025” clearly stated that only the top 10 percent of India’s population have shown a significant hike in their consumption expenditure. It, therefore, called this small group of Indians as “the primary driver of consumption and economic growth”.
The report, however, noted that this “consuming class” in Asia’s third-largest economy is not expanding in size but rather becoming wealthier, meaning the rich are getting richer while the overall number of wealthy individuals remains stagnant.
According to the Deccan Herald, India’s top 10 percent controlled 34 percent of national income in 1990, a figure that surged to 57.7 percent by 2025. In contrast, the bottom 50 percent saw their share of national income shrink from 22.2 percent to 15 percent over the same period.
Similarly, an international investment managers’ group “Marcellus”, in a study released on March 5 this year, found that Indians are the most indebted people in the world. “Cross country data shows that Indians today are amongst the most indebted people in the world if we exclude mortgages (or loans taken towards home or property).”
The study said that until 2019 India’s non-housing household debt was broadly in line with other countries. But in 2020, post-Covid India witnessed one of the steepest falls in its GDP and massive increase in indebtedness of the people. The surge in India’s non-housing household debt after 2020 has been unprecedented and has surpassed most of the country in the world.
The study said, “Over the last decade, whilst incomes for the Indian middle class have been stagnant, food prices have nearly doubled. As a result, not only has the ability of the middle class to consume distinctly been reduced, their inability to finance day to day consumption has also led to a rise in their indebtedness.”
The study concluded that Indians today have not only borrowed money, but they have done so increasingly for sustenance and not asset creation.
The Marcellus study also pointed out that white-collar urban jobs are becoming harder to come by as artificial intelligence automates clerical, secretarial and other routine work. “The number of supervisors employed in manufacturing units [as a percentage of all employed] in India has gone down significantly,” it added. (IPA Service)
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