India has a population of over 1.4 billion, but only a small group actively spends on non-essential items, according to a report by Blume Ventures. The study found that only 130-140 million Indians, about 10% of the population, have enough extra money to buy things beyond basic needs.

Consumer spending is a big part of India's economy, and many startups depend on this small group of buyers. Another 300 million people, called "aspirant consumers," are slowly spending more, thanks to digital payments like UPI and AutoPay. They mostly spend on things like online streaming, gaming, education, and small loans but remain careful with their money.

However, about one billion Indians do not earn enough to afford extra purchases, making them an unreachable market for most startups. The report says that, for now, startups cannot count on them as potential customers.
The study shows that India’s consumer market is changing. Instead of more people becoming rich, the ones who are already wealthy are getting even richer and spending more. This has led to a trend called "premiumisation," where businesses focus on selling expensive products rather than affordable ones. For example, luxury homes and high-end smartphones are in high demand, while budget-friendly options are struggling. Five years ago, affordable housing made up 40% of the market, but now it has dropped to just 18%.

This matches India's "K-shaped" recovery after the pandemic, where rich people are getting richer, but lower-income groups are struggling more. The gap between rich and poor has grown. The top 10% of Indians now earn 57.7% of the country's total income, compared to 34% in 1990. Meanwhile, the bottom 50% now earn only 15%, down from 22.2% in 1990.

India’s consumer spending is slowing due to falling savings and rising debt. Many "emerging consumers" relied on loans, but RBI’s stricter rules on unsecured lending have made borrowing harder, reducing demand.
Meanwhile, the middle class is shrinking. A report shows their income has barely grown in a decade, and after inflation, it has effectively halved. As a result, middle-class savings have hit a 50-year low, according to RBI.
Automation and AI are replacing many office and factory jobs, adding to economic challenges.

The Economic Survey 2025 warns that while AI improves productivity, it could hurt India’s workforce. Some suggest taxing AI-driven profits, but the IMF warns this could slow growth. The report urges the government, businesses, and universities to work together to make AI helpful for everyone.

India’s wealth gap is growing. The rich are doing well, but the middle class is struggling, and lower-income groups can’t afford extra spending. With new rules, falling savings, and job losses due to AI, urgent action is needed to ensure fair economic growth.

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