Free wheeling

Our Office

2011-07-30T13:54:00.003Z

Best companies to work for 2010 11

2011-01-21T08:04:00.001Z

Check out this SlideShare Presentation: A study conducted for Business Today, by Indicus

Best companies to work for 2010 11

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The luxe life

2011-01-06T10:51:00.002Z

There is no clear definition of either luxury products or luxury consumers. In fact, the various expressions used when describing the luxury market only add to the confusion. Broadly, in the Western world, luxury consumers are defined as the top 2-5% of earners or the 10% of income.
The Bureau of Labor Statistics (BLS) classifies the 111 million households of the United States into equal-sized quintiles based upon household income. The lower cut-off for households in the upper quintile, about $75,000, provides a reliable definition of the luxury market—households with income within the upper quintile of the BLS's model. The average income for those households in the upper quintile is $1,21,367.

The luxe life

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In the Indian context, there are three defining levels of incomes at which consumption of luxury products and services take place. At Indicus, we define these levels as

* Luxury consumers – HHld income > Rs 1 million pa

* High end luxury consumers – HHld income > Rs 2 million pa

* Super luxury consumers – HHld income > Rs 5 million pa

Notice that although in exchange rate terms, Rs 1 million is only $25,000, in terms of value of good and services it can buy, it is closer to $80,000-90,000. Thus when a household crosses the threshold of Rs 1 million, it is in consumption terms already equivalent to the upper quintile of the US households.

Our research indicates that there are about 4 million households (21 million people) in urban India that can be classified as luxury consumers. Of these, 1.4 million households (7.3 million people) are high-end luxury product/services consumers And, 1,65,000 households (9,17,000 people) are super luxury product/services consumers. The numbers of rural luxury product consumers are estimated to be less than 10% of the urban numbers.

While India is still emerging in terms of number of luxury consumers, there are no more than a handful of countries on the planet that have more luxury consumers. In five years, India will scale past many of the G8 nations. It is the fastest growing market in terms of number of consumers, and by 2020, only China, the US and Japan will have more consumers in the high-end luxury and super-luxury categories than India.

India is at an inflexion point and the demand for luxury products is set to grow at near about 20% pa plus (in value terms) for an extended period of time lasting a couple of decades. During the next five years, this growth is expected to be at 25% pa.

The current market size for luxury products/services is estimated to be of the order of $2.5 billion.

The growth patterns suggest that now is perhaps the most opportune time for marketers of a whole cluster of goods and services under the 'luxury' umbrella.

While there are several characteristics of luxury consumers that are common across countries and cultures, there are a distinct set of attributes that define the bulk of the luxury consumers in most emerging economies, including China and India—the 'nouveau riche syndrome'.

It must be remembered that India is an economy where large-scale wealth creation is a relatively new phenomenon and people in large numbers are climbing up the income ladder. A very typical behaviour pattern (which has also been observed in emerging Asia, including China) is the need to announce 'the arrival' and consume conspicuously. This is music to the ears of luxury product marketers. The large numbers graduating to high income levels and the sustained growth rates indicate that the market is not going to dry up any time soon. Further, considering the fact that India has a base of 18% of the world’s population, one can imagine that within a couple of decades it will outstrip most other markets in size by a considerable margin.

Yet, in some ways, there are unique dimensions to this phenomenon not seen anywhere else in the world—the grand weddings, supercharged festivals, and the like. The impact is already being seen across several categories of products and services—housing, travel, education, high-end automobiles, entertainment electronics, home lifestyle improvement products, men's and women's clothing, women's jewellery, women's accessories, watches, gourmet food and wines.

Some characteristics to look out for

* Despite strong family ties, Indians value individualism in consumption choices. They look to luxury goods to help differentiate themselves from the crowd. This implies that quality and brands matter. Indeed, they are more concerned with the logo than many others.

* Luxury = status symbol. If it doesn't convey status, it is not worth spending on.

Following from the above two, brand loyalty tends to be very strong

* Country brands in the luxury segment: US, French and Italian brands for most product categories. With regard to watches, Swiss; French and Italian brands for wines and gourmet food; French brands for perfumes.

* Unlike the Western markets and much like in China, bargains and discounts work even in the luxury segment, though only up to a point.

* ‘They Got Rich Fast, and they Spend Faster’: they acquired their wealth in a short time period, which translates into a different spending pattern than the affluent population of other nations, or the ‘older rich’ within India.

* Every now and then, they want to spend conspicuously on big-ticket items, hence purchasing frequency is high.

VNIT Golden Jubilee

2010-12-28T11:08:00.004Z

A great trip to the campus after 24 years.

Met the following among others - Anil, Amit Chatterjee, Ram Kumar, Shreyashee, Murty, Sudame, Bhave, Thombre, Shaikh, Pandey, Ambhaikar, Kate, Gagan Paul, Bhupesh Bhatia, Shalabh Saxena, Modak (prof), Chopde (prof), Bakhore, Manoj Shah, Baljinder, Neeraj Jaitley, Prashant Shivalkar, Ramesh Kaul, and many others

Fiscal awareness deficit

2010-12-21T11:34:00.001Z

The low level of financial literacy prevalent in the country implies that most Indians, even among those who are financially well off, are not getting anywhere the kind of solutions that they should get. While this may be a dampener overall, here lies the opportunity for a first-generation entrepreneur to build a good sustainable business—a business that serves a strong social purpose, has an obvious latent demand, but requires guts and fortitude to stick it out
There are several financial intermediaries offering all kinds of services. Look around any given street in the major cities of the country and you would see their offices. One would assume, therefore, that the general population is aware of financial products and there is a thriving market. A closer examination reveals that financial illiteracy is widespread. What a paradox! The trouble is that the intermediaries tend to represent the manufacturers’ interests and behave much like high-street hustlers trying to hawk products that enhance their returns and do not pay sufficient heed to consumers’ interests. While this is a worrying fact, we believe that given the size of the market, the income levels and the latent needs, there is a real opportunity for entrepreneurs to work the reverse order—take the consumers’ interest and get them the best deals in the market. It is obviously not going to be easy and is the proverbial road less taken.
Financial inclusion is a talked about topic today and rightly so, given the fact that a large proportion of the population does not have access to basic financial services. However, even among those who are considered financially included, there is a lot of exclusion because of various factors. We are talking about awareness and use of various financial products and services (insurance, investments). This lack of awareness has a serious impact on the economy, because the absence of awareness leads to unhealthy concentration of household investments in instruments such as real estate and land (which are easily understood).

An underdeveloped financial services industry has two components—first the reach itself and second the awareness.

Our research among urban respondents (SEC A and B) across over 400 towns reveals that both on the debt side and on the investment side, there is chronic under penetration.

Of course, one doesn’t want people to go into debt. However, the lack of borrowing is not because people do not want to borrow for spending, it’s more because they prefer to make informal borrowings, or in some cases they are borrowing to buy certain classes of assets in the parallel economy and are hence not eligible for institutional debt.

As many as 48% of those below the age of 30 years and 38% of those above 30 years have never taken any loan. Personal loan, which tend to be of smaller value and is also the costliest loan, has the highest penetration. These are usually unplanned loans to meet exigencies. The average value of personal loans tends to be of the order of Rs 1.2 lakh.

Insurance is an instrument to protect against unforeseen circumstances. As such, one would expect a population climbing the income ladder rapidly to worry about protecting the lifestyle of their near and dear ones. The truth, on the other hand, is that most people are under-insured and the awareness about term insurance is low.

We found that even among SEC A and B, the penetration of life insurance products is low. As many as 20% of those above 30 years of age have no life insurance cover.

The penetration of term insurance is very low, and only 5% of SEC A and B respondents have this cover. On the other hand, average life insurance cover is just about Rs 9.7 lakh, which clearly indicates that urban India is under-insured, not because it cannot afford to be insured, but because it is not fully aware of the ways in which it can get such protection. Clearly, insurance covers are being taken just for tax rebate purposes and not for life cover.

Insurance as a product is not understood by a vast number of people, and only a small proportion has taken adequate protection.

It is alarming that as many as 58% of households do not have any health insurance cover. Clearly, people are so unaware that there is a time bomb ticking away, ready to explode at unexpected moments in life. It is also worrying that even older respondents seem to have the same level of awareness as the younger respondents.

Frequently, the cover is also not well thought out, and the average cover for hospitalisation is inadequate should an insured person actually fall sick and is hospitalised.

The scenario is not significantly different when one looks at investment instruments. The modern financial system provides for several different instruments for different risk profiles under excellent regulation. However, one finds that once again, the awareness level is pretty low.

We find that whereas there are significant investors in real estate (which is easily understood, but is highly leveraged), fixed deposits and PF (which is usually compulsory), the penetration of instruments such as shares, company debt, etc, is very low. On the other hand, investment in gold has high penetration (in physical form). Incredibly, something like post office deposits has much penetration as investment in shares.

Mutual funds is another instrument not clearly understood by investors. Many investors believe that it is supposed to be used for tax saving purposes only! Very few invest in debt funds, which is far more liquid than fixed deposits. To cut a long story short, despite the availability of many different options, investors, due lack of awareness, do not use them. Instead, they go for less efficient investments, or worse, no investment at all.

Most Indians prefer keeping their savings in assets like bank or post office deposits and cash at home. Their longer-term investments tend to be in physical assets like real estate and gold and very few utilise financial instruments. Ironically, the latter option is probably the most efficient and rewarding.

Take the case of reverse mortgage, which has been introduced for senior citizens recently. The awareness levels are very low, even at the banks that are offering it. What happens here is that the borrower pledges the home to the bank and gets a loan.

The homeowner and now the borrower will not be required to repay the loan during his/her lifetime. On death or leaving the house permanently, the loan, along with the accumulated interest, is repaid through the sale of the property pledged. The heirs can pay off the loan and take the property. Since the property in general appreciates significantly, the heirs are still benefiting from the capital gains.

When one looks at several old couples living alone (children away or abroad), one would think that a scheme like this is a no-brainer. It gives them extra income for the rest of their lives and the property price gains can easily be secured by the heirs. Yet, one finds that there is very little awareness.

On an average, Indian households invest their savings in bank deposits. This can work wonders if it gets directed to market-linked instruments. The stumbling blocks are two—financial inclusion itself and financial literacy, or the lack of it, among those who are financially included.

On the financial literacy front, we know that market participants and the regulators have been trying hard, particularly during the past four-five years, to deliver programmes targeting enhancement in financial literacy. Perhaps, more can be done, but the task is truly daunting, and it is not very clear that mere efforts will get faster adoption. It is here that one suspects there is an opportunity for entrepreneurs who are willing to invest two-three years to really educate the market and build a profitable scalable business.

Perhaps many are already working on it and we will hear of success stories in a few years. What they need to do is to build a financial services intermediaries business, which focuses on educating prospects and delivering solutions to them. It needs to have a significantly higher element of education and service than the high street hustling models that many brokerages and agents follow. Therefore, it will necessarily involve a higher gestation period and staying power. Few will have the fortitude, but for those who do have it in them to stick it out, the rewards are bound to be exceptional.

Fiscal awareness deficit

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Web of jobs

2010-10-26T10:47:00.001Z

Our piece in Financial Express

Web of jobs

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Motorcycle market in india

2010-10-05T04:51:00.001Z

Our article in Financial Express:

Motorcycle market in india

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Car Sales On The Run

2010-07-12T06:59:00.001Z

Check out this SlideShare Presentation: Our view on the passenger car industry

Car Sales On The Run

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Another Hike By RBI Unlikely Soon

2010-07-12T06:57:00.001Z

Check out this SlideShare Presentation:

Another Hike By RBI Unlikely Soon

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Growth Back On Track

2010-06-03T12:33:00.001Z

Check out:

Growth Back On Track

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A Slice Of Life In Peri Urban India

2010-06-03T12:32:00.001Z

Check out this document:

A Slice Of Life In Peri Urban India

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Steve Jobs: How to live before you die | Video on TED.com

2010-02-10T11:19:00.000Z

Steve Jobs: How to live before you die | Video on TED.com

Strength in numbers

2010-01-19T08:11:00.001Z

Strength in numbers

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Why elderly should matter to Marketers

2010-01-19T08:10:00.001Z

Why elderly should matter to Marketers

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Young single and willing to spend

2010-01-19T07:01:00.001Z

The B1 segment includes households where the chief wage earner is young, could be single or married, living in a nuclear or joint family, but has no children. The defining attribute of this segment is that the chief wage earner holds a graduate or postgraduate degree and is in a regular salaried job.
Given the stringent narrowing in focus in life-stage and occupation, these households are a small minority—0.17% of urban Indian households, made up of a little more then 300,000 people. Yet, the household profile gives clear indications of the income and consumption patterns that are quite cohesive within the segment.
With high educational qualifications of the chief wage earner—70% are postgraduates, the average household income in this segment is also high—Rs 6.01 lakh

Young single and willing to spend

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Emerging Economy - Indicus Analytics - A compilation

2010-01-15T16:25:00.001Z

Check out this compilation:

Emerging Economy - Indicus Analytics - A compilation

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Evolving India - Trends for the next decade

2010-01-15T16:23:00.001Z

The Evolving India - 2020
We looked at the emerging trends for the next decade. This assessment study looks at how various economic and demographic parameters are evolving. It predicts conditions in India by 2020 if these trends continue to move in the 2010s the same manner as they have been over the 2000s
Overall GDP growth will be around 9.6% annually, even if the government does not do anything. It would be higher if agriculture and electricity, gas and water supply are able to break through their long term institutional constraints. It would be lower if inflation eats into macro-economic stability and law and order conditions get out of hand.

Evolving India - Trends for the next decade

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India 2010 to 2020

2010-01-15T16:20:00.001Z

Check out this SlideShare Presentation: Our take on the Indian economy for the next decade

India 2010 to 2020

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A performer for ever

2009-12-11T07:24:00.002Z

"Paa" isn't the greatest film you will ever see. In fact, it is pretty ordinary. However, something stands out - The performance of Amitabh Bachchan.

We know the extraordinary body of work that is already recorded, yet he manages to surprise.

The film has it's moments, and is better than average.

Defining small towns

2009-09-01T05:43:00.001Z

Defining small towns

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Good to recap on the basics

2009-08-27T05:25:00.001Z

Wealth of Nations (1776) excerpt

By Adam Smith

There are three orders in society - those who live by rent, by labour and by profits. Employers constitute the third order. . . The proposal of any new law by or regulation which comes from this order ought always to be listened to with the greatest precaution and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous but with the most suspicious attention. It comes from an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even oppress the public. . .

Masters are always and everywhere in a sort of tacit but constant and uniform combination not to raise the wages of workers. . . . Masters. . .sometimes enter into particular combinations to sink the level of wages. . . These are always conducted with the utmost silence and secrecy. . .

Wherever there is great property there is great inequality. Civil government, so far as it is instituted for the security of property, is in reality, instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all. . .

Perfect liberty can never happen if government heeds or is entrusted to the mean rapacity, the monopolizing spirit of merchants and manufacturers who neither are, nor ought to be the rulers of mankind.

A roundabout way to say "I"

2009-07-30T09:57:00.001Z

The Skeleton in the Cupboard

From the series - Yes Miister

(a persoal favourite)

Sir Humphrey: "Minister, I think there is something you perhaps ought to know."

Jim Hacker: "Yes Humphrey?"

Sir Humphrey: "The identity of the Official whose alleged responsibility for this hypothetical oversight has been the subject of recent discussion, is NOT shrouded in quite such impenetrable obscurity as certain previous disclosures may have led you to assume, but not to put too fine a point on it, the individual in question is, it may surprise you to learn, one whom you present interlocutor is in the habit of defining by means of the perpendicular pronoun."

Jim Hacker: "I beg your pardon?"

Sir Humphrey: "It was...I."

(what a roundabout way to say "I")

Beat the cartel, join the market

2009-06-18T05:39:00.000Z

Fe-Indicus policy series

One of the tragedies of unreformed agriculture is that the producer, the trader and the end buyer are all at a disadvantage during transactions. Farmers are at the mercy of the local trading cartel. Traders are forced to deal with undifferentiated products (undifferentiated by quality) and have no incentive to add value. Buyers are left with a wide variety of undifferentiated products. The whole process adds to costs and wastage that everyone in the chain ends up paying for. One solution is a system of scientific warehousing, tradeable warehouse receipts (WR) and markets dealing with WRs.

In order to understand the role of the WR, let us first look at issues from the perspective of a small producer. What would you want if you were a small farmer with 6-7 acres of land?

Remember, you have taken credit to buy seeds, fertilisers, pay for irrigation, etc, but you can pay this back only after the produce is sold. Your main problem is to sell in a market that is some distance away. Having carried the produce to the market, you are in no position to take it back and so you are forced to sell at whatever price the trading cartel is giving at that point in time. This is even more the case while selling perishables.

What you would like is to have a warehouse within 10-15 km of your farm. You get the produce graded and certified and stored there and get a warehouse receipt, which clearly specifies what you delivered. With the WR, a transferable, tradeable and fully-negotiable instrument, you have the option of holding the WR, selling it or pledging it for loan. By increasing your stock holding capacity, you can wait for a better price or sell instantly—in short you have more choice. No longer are you at the mercy of a local cartel.

Current markets involve physical trading of agricultural goods with no system of grading. Being dependent on visual inspection, this can be easily manipulated by local cartels. Further, without grading and sorting, there is a loss of value as all grades get clubbed into a uniform ‘fair average quality’.

A critical component of such a system is accredited warehousing that stakeholders trust, that provides storage and assaying services. Obviously, this requires regulatory measures.

While considerable capacity augmentation is needed, this must involve change in warehousing standards. Current storage is unscientific, individual owned and mostly unlicensed; the quality of commodities stored and preservation techniques are abysmally poor. For small farmers to benefit, we estimate a requirement of 10,000 to 40,000 warehouses depending on the desired radius of operation (10 km or 5 km). While existing warehouses can be upgraded, and government figures suggest that nearly 4,000 private warehouses exist, in reality very few have scientific storage systems. Majority of warehousing receipts do not enjoy the fiduciary trust of depositors and banks.

There are two key issues here—accredited bankable chains of warehouses need to be created and warehouse receipts need to be fully negotiable instruments. This is necessary to create a marketplace that is fair to all. Trading with WRs in the markets (with the faith that the specifications will be delivered) makes trade highly liquid and allows wider participation. One can imagine buyers from far away participating in trade, without a direct transaction with the producer. WRs can take the demat form, injecting further liquidity into the system.

This would be a paradigm shift in marketing. Organisations like National Spot Exchange and NCDEX Spot exchange are already working towards this change. Note these spot markets are qualitatively different from the existing Agricultural Produce Marketing Committee (APMC) markets since they separate grading and storing from pure price transactions. They need to be supported by regulatory measures and incentives and the APMC markets need to be reformed so that they enable similar WR-based trading.

The Warehousing Development and Regulation Act, passed in 2007, was scheduled for notification in March, but no regulator has been appointed yet. This Act provides the legal backing for WRs. Meanwhile, despite the delay, the National Bulk Holding Corporation has reportedly tied up with more than 30 banks to offer loans to about 45,000 farmers against its warehouse receipts. Clearly, the forces for change cannot be held back any longer.

Amit Sinha is president at Indicus Analytics. Email: amit.sinha@indicus.net

source: The Financial Express

Indian Consumer Spectrum

2009-03-28T06:38:00.001Z

Segmentation of Urban Indian Households Targeting the relevant consumer
Purpose This product has been designed to help marketers understand the essence of 30 Consumer Segments, which together represent the entire urban spectrum of India. It highlights the key features which make each segment distinctive. The purpose of this work is to help marketers devise advertising and communications strategies and fine tune their sales strategies. The two key dimensions are lifestyle stages of chief wage earners of households and their skill levels. The first defines their needs and the second defines their earning abilities.

Indicus Consumer Spectrum

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The entire consumer segment is available on order, for all the 33 segments. Segment details consist of: 1. Chief Wage Earner’s Profile •Age - Proportions in various age categories (19-24 years, 25-34 years, 35-44 years, 45-54 years, 55-64 years, > 64 years) •Marital Status - Proportions - Never Married, Currently Married, Wodowed, Divorced •Education - Proportions in 10 classifications ranging from illiterate to post graduates & above •Proportions working in 6 industry types - manufacturing, wholesale & retail trade, etc. •Type of Enterprise they work for - Proportions in Proprietorship, Partnership, Govt/ PSU, Public/ Private Ltd, Not for Profit, etc. •Occupation Type - Proportions self employed, employees, others. ……continued 2. Household profiles •Gender distribution for 4 age categories - <18> 45 years •Proportions of various household sizes - 1, 2, 3, 4, 5, and > 5 member households •Composition - Minors (proportions having none, 1-2, and more than 2), Senior citizens (proportions having none, 1-2, and more than 2) •Adult members of the households - Proportions in 10 classifications ranging from illiterate to post graduates & above •Members employed - Proportions of one, two and more than two members of the household employed ……continued 3. Chief Wage Earner’s Spouse •Education - Proportions in 10 classifications ranging from illiterate to post graduates & above •Occupation - Proportions in 5 classifications home makers, students, employed, seeking employment, others 4. Other Characteristics •Social group representation in the segment - SC, ST, OBC, General •Income distribution •Spending Pattern across 5 major categories, and further expansion with each of the 5 major categories (3 to 5 in each) •Residences - Rented residences v/s owned residences, Apartments v/s independent houses •Asset ownership - 4 wheelers, 2 wheelers, TV, Refrigerator, Air Conditioner Please send your inquiries to: Indicus Analytics Pvt. Ltd. 2nd Floor, Nehru House, 4 Bahadur Shah Zafar Marg New Delhi- 110002. Phone: 91-11-42512400/01 E-mail: products@indicus.net www.indicus.net Other Indicus Products Market Skyline of India 2008-09 City Skyline of India 2008-09 City Skyline of India – neighbourhood series – 2008-09 Housing Skyline of India – 2008-09

Great Indian Families 2009

2009-03-26T08:34:00.002Z

A JuxtConsult – Indicus Analytics Joint Study. Understanding the Indian ‘Families’ as Consumption Units

Great Indian Families 2009 Great Indian Families 2009 Indicus Analytics A JuxtConsult – Indicus Analytics Joint Study

Partial Transcript

Great Indian Families 2009 Understanding the Indian ‘Families’ as Consumption Units A JuxtConsult – Indicus Analytics Joint Study
Correcting a basic market research anomaly!  Consumers live their lives as ‘families’ and not households. And family consumptions get driven by the all the people living in them and not just by the ‘chief wage earner’ of the house  How a family consumes gets defined as much by the ‘family composition’ and the ‘lifecycle stage’ the family is in, as by its socio- economic status and the ‘ability to spend’  It is therefore important to ‘distinguish’ and understand families by their ‘member composition’ to target them appropriately
Topline Findings
The Macro Picture  There are approx. 226 million families in India* (72 mn urban, 154 mn rural)  The average family size varies from 1 to 6.9 depending on the family composition  25 mn Indian families (11% of all families) have more than 1 earning member  28 mn Indians (2.5%) prefer to read in English, marginally more than Malayalam. 50% of Indians preferring to read in English live in rural areas  Average monthly family income in India is Rs.5,930 (‘per capita’ is Rs.1,350)  70% of all Indian families earn average to below-average incomes * accounting for approx. 1,112 million individuals (343 million urban and 769 million rural)
The Socio-Economic Landscape At 30%, highest proportion of families belong to SEC ‘R4’  19.5 million families (27% of urban, or 9% of all Indian families) belong to SEC ‘A’ and ‘B’  Chief wage earners of 87% of SEC ‘A’ and 36% of SEC ‘B’ families are graduates  No SEC ‘C’ and ‘R1’ chief wage earners are graduates. But 15% SEC ‘C’ families and 22%  SEC ‘R1’ families have a graduate member within the household Clearly then, defining the socio-economic status (SEC) of a household using education  level of the ‘chief wage earner’ is losing its meaning and can often mislead Time to look beyond the ‘urban-rural’ divide, and the ‘chief wage earner’ driven SEC definitions to understand families as consumption units!
The Real Socio-Economic Ladder by Incomes Monthly ‘Per Capita’ Family Income Ratios SEC ‘R4’ 1  (Rs.830) 1.1  SEC ‘R3’ times of R4 SEC ‘E’  1.2 ” SEC ‘D’ 1.4 ”  SEC ‘R2’ 1.6 ”  SEC ‘C’ 1.8 ”  SEC ‘R1’ 2.3 ”  SEC ‘B’ 3.0 ”  SEC ‘A’ 5.3 ” 
The New Indian Consumer Pyramid 131 million families (634 million individuals) Tier 3 The Underprivileged 44 million families (217 million individuals) Tier 2 The Aspiring Class SEC A SEC D SEC C SEC B SEC E Tier 1 SEC R2 SEC R1 SEC R3 The Consuming Class SEC R4 51 million families (260 million individuals) * Total – 226 million families (1,112 million individuals)
Looking at Families by ‘Lifecycle’ Stage  51% Indians are married. But only 1 in 5 Indian family (21%) is a 3-generation joint family, or ‘Dynasties’  An equal proportion of Indian families (21%) are ‘Baby Sitters’ - with the eldest child below 12 years in age  The majority 45% of Indian families are ‘Maturing Mentors’, or families with the youngest child above 12 years in age  Young married couples without any children, the ‘Nest Builders’, account for only 7% of all Indian families  The single independents, or ‘Free Birds’, account for only 1.3% of all Indian families
Glimpse of their Socio-Economic Status….  Dynasties have the highest average monthly family incomes (Rs. 6,530). But they have the lowest average ‘per capita’ monthly incomes (Rs.975)  Free birds show the second highest average monthly family incomes (Rs.6,385), and the highest average ‘per capita’ monthly incomes (Rs.6,385)*  Rented accommodation is highest among Free Birds (at 35%). Dynasties show the highest incidence of ‘inherited’ property (at 74%)  Automobile ownership (both cars and 2-wheelers) is highest among Dynasties  Preference for reading in English is relatively highest among ‘Free Birds’ (6%) and lowest among ‘Dynasties’ (0.5%) * Note – Sample of ‘Free Bird’ segment relatively low for high statistical accuracy of its segment level findings

Consumer Market Trends

2009-03-13T06:49:00.001Z

Consumer Market Trends

Publish at Scribd or explore others: Marketing Business & Legal savings income statistics

During the post liberalization decade, from 1993-94 to 2003-04 the average annualized growth rate of India’s Gross Domestic Product was a little above 6% and has arguably since crossed the 7% mark on a long term basis. This has brought about a considerable increase in India’s personal disposable income. As a result, both saving and consumption expenditure in the household sector has had considerable growth. During 2003-04, India’s total personal disposable income was Rs. 23,585 billion and 24.6% of this income was directed into savings by the household sector. By 2008-09, our estimates show that India’s total annual personal disposable income has grown to Rs 36,059 billion (about 52% being urban) and the annual savings have grown to Rs 9,239 billion, at present.
High growth has contributed to greater incomes for Indian households, which in turn has enabled Indian households to both save and spend more. We have in the past few years observed that household sector savings have in fact grown by far more than any of the other macro-indicators. This is of course a desirable outcome. Greater incomes do imply greater expenditures in the short term, but greater savings (if translated into good quality investments) ensure long term growth of the economy, employment opportunities, and household incomes.

Transforming West Bengal - Changing the Agenda for an Agenda for Change

2009-02-26T09:42:00.001Z

An Excellent White Paper from Indicus Analytics

Transforming West Bengal - An Indicus Whitepaper

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The study highlights 30 specific reform steps, that are more than enough. In the United States, people have said that they can. They can bring about change. It is no different for West Bengal’s citizens. West Bengal’s citizens deserve a better government and with that new government in place, can bring about change. In 5 years, West Bengal can become a completely different State. One that will not be stuck in India’s middle, but will be right at the top. One that people don’t migrate away from, but one that people want to migrate into. West Bengal can become a State that one will be proud to live in, provided the political environment changes.

Promise 1: Governance

Governance has collapsed in West Bengal. The first step is to convince West Bengal’s citizens that there is a government. There is law and order. There is an administration that is not run by the party. There is an efficient dispute resolution system.

Sub-Promise 1 – The new Police Act will be passed within a year.

Sub-Promise 2 – There will be fast track disposal of the 14,017 under-trials languishing in West Bengal’s prisons.

Sub-Promise 3 – Fast track courts, people’s courts, family/women’s courts, lok-adalats, shift systems in courts, mobile courts, nyaya panchayats and gram nyayalayas will be energized to clear the backlog in courts

within 5 years.

Sub-Promise 4 – An Administrative Reforms Commission will be set up, with a short time-frame for submitting a report.

Sub-Promise 5 – There will be an immediate Action Taken Report (ATR) on recommendations of earlier State Finance Commissions (SFCs). Unless there are strong reasons to the contrary, recommendations of SFCs will be mandatory.

Sub-Promise 6 – District planning will be introduced and all funds, functions and functionaries (not just functions) devolved to panchayats and urban local bodies. The central sector and centrally sponsored

schemes will accordingly be revamped and Gram Sabha audits of NREGA will become mandatory.

Sub-Promise 7 – The national multi-purpose identity card will be introduced on crash basis and also used for delivery of subsidized and non-subsidized public services.

Promise 2: Land

Land is a key input and development requires more efficient and better-productivity use of land, including that in agriculture.

Sub-Promise 8 – Krishi Vigyan Kendras, Agricultural Technology Management Agencies and farmers’ organizations will be integrated through a district/block/village level agricultural development strategy.

Sub-Promise 9 – The APMC Act will be amended to allow direct marketing, contract farming and markets in private and cooperative sectors.

Sub-Promise 10 – Registration and mutation services will be integrated and cadastral maps and revenue records also integrated. Land records will then be computerized, based on the records of the last 50 years. Citizen services based on land records (caste, income, domicile) will also be integrated into this system.

Sub-Promise 11 – PESA (Panchayat Extension to Scheduled Areas Act) will be made applicable to every village where a majority of the population consists of STs.

Sub-Promise 12 – Home-stead garden plots (10-15 cents) will be given to all rural landless families.

Sub-Promise 13 – With caveats to prevent abuse, agricultural tenancy will be legalized.

Sub-Promise 14 – The policy on land acquisition, rehabilitation and resettlement will become transparent and there will be no acquisition without a social impact assessment. After survey/settlement and recording of land titles and mutations, there will be an on-line registry of farmers, their land status and a land bank. The land-lease market will also feed into this.

Sub-Promise 15 – The Rajiv Gandhi Grameen Vidyutikaran Yojana will be expanded to cover energization of pump-sets.

Sub-Promise 16 – Water Users’ Associations will be formed in every village.

Sub-Promise 17 – When sanctioning a new irrigation project, it will be mandatory that micro-irrigation should be implemented in at least 10% of the command area.

Promise 3: Labour

Other than land, labour is a key input and West Bengal’s strength lies in its human resources. However, the tapping of this potential requires improved physical and social infrastructure outcomes.

Sub-Promise 18 – The targets and time-lines of the Bharat Nirman programme will be rigidly adhered to. A white paper will be prepared on why West Bengal is lagging in attaining these targets and on progress towards the MDGs and the SDGs (SAARC Development Goals).

Sub-Promise 19 – Private sector participation will be invited for construction and maintenance of State highways and major district roads. A standard contract will be evolved, even if this involves the State PWD. A

West Bengal State Road Development Fund will be created, using market committee funds and vehicle fees, combined with possible borrowings from NABARD. PMGSY implementation will be improved.

Sub-Promise 20 – The performance of the State’s road transport undertakings will be improved. Commercial fares and motor vehicle-related taxes will be rationalized. Staff and services will be outsourced and the

private sector will be allowed regulated entry in the provision of passenger transport services.

Sub-Promise 21 – New berths will be created in Kolkata and Haldia through the PPP mode. The Port Trusts will be corporatised.

Sub-Promise 22 – WBSEB will be restructured and corporatised, unbundling transmission, generation and distribution. SERC recommendations will become mandatory. The State government will provided the 75% funds required for APDRP (Accelerated Power Development and Reforms Programme).

Sub-Promise 23 – The JNURM (Jawaharlal Nehru National Urban Renewal Mission) will be used to allow private sector participation in urban water supply and sanitation and dismantle the public sector monopoly,

with an appropriate regulatory structure in place. Property taxes, stamp duties and user charges will be re-examined. Drainage fees, parking fees, hoarding fees, vacant land taxes and development impact fees will be imposed to augment municipal revenue. Municipal bodies that are in a position to do so will be allowed to issue tax-free bonds.

Sub-Promise 24 – E-governance will be mandatorily introduced in all cities that have a population of more than 1 lakh. A Metropolitan Development Plan will be prepared for each city, based on plans prepared by

municipalities. The provisions of the 74th Constitution Amendment Act will be implemented.

Sub-Promise 25 – Surplus urban land will be identified and efficiently used to rehabilitate the slum population.

Sub-Promise 26 – The targets and guidelines of the SSA will be rigidly adhered to. Under the mid-day meal scheme, health cards will be issued to all children. A State-level eligibility test will be introduced for teachers

so that decentralized recruitment can take place. The entry of private schools (aided and unaided) will be liberalized. Private sector entry will also be liberalized in higher education.

Sub-Promise 27 – Vocational education will be revamped by handing over industrial training institutes to the private sector on PPP basis. The employment exchanges will also be handed over to private sector

management.

Sub-Promise 28 – Village Health and Sanitation Committees, Accredited Social Health Activists, Primary Health Centres and specialists in Community Health Centres will be ensured in every village/ district, integrating panchayats and civil society into the process. Health services (like immunization) will be spliced with the midday meal scheme. Public-private partnerships will be encouraged and community-based health insurance will be introduced. The State Medical Council will switch to a system where registration is periodical and has to be renewed, unlike the present permanent system. Private sector entry will be encouraged in curative healthcare and a voucher system introduced for BPL households.

Promise 4: Capital

With governance, land and labour reforms in place, there is not much that has to be done for capital and industry. West Bengal’s advantages will ensure that capital moves in, without special fiscal incentives, and that capital flight is reversed. Informal unorganized enterprises will become formal and organized. Subsistence self-employment will become productive wage employment. And the rural worker will move to higher income-earning urban pursuits. Having said this, some reforms are indeed necessary.

Sub-Promise 29 – The transaction costs associated with the registration system will be reduced, to create an incentive system for registration. This will also be part of the mandate of the Administrative Reforms

Commission.

Sub-Promise 30 – Micro-finance will be encouraged, for instance, through energization of self-help groups.

The Pockets of Affluence in India

2009-02-24T11:09:00.001Z

The Affluent in India
The affluent are those that have a large amount of wealth and spending power.
This is also most likely to be reflected in their high income profile.
As is evident, the bulk of the affluent in India reside in urban areas, it is also likely that they are most concentrated in the large metros.
The Pockets of Affluence in India

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However, that does not imply that affluent do not exist in
other parts. Large rural landowners, agriculture commodity traders, contractors, public servants, or those living in large farms or farm-houses in the vicinity of (but not within) large urban centers are all spread across the country.
They tend to travel nationally and internationally and can access products aimed at them through many different sources.
The affluent tend to be very different from those less fortunate economically.
Affluent households tend to have lifestyles characterized by lesser physical work, greater expenditures on entertainment, lower time spent on day-to-day necessities of household chores and occupation.
They also have a different disease profile.
Overall, the affluent can spend more, and they are better-off,
but there are many aspects of their lives that they seek to improve.
They have the ability to pay for such goods and services. They
also tend to be more concentrated thus making it easier for marketers
to identify locations where they are concentrated. All these
characteristics ensure that there are always many more goods and
services for the affluent than the poor. Consequently, serving the
affluent market is a highly competitive endeavour.

Sequoia Capital on startups and the economic downturn

2009-02-18T10:17:00.000Z

a lot of research
an engaging presentation
a good snapshot of what has happened
Take aways-recovery will be long, Get Real
negatives - steers clear of forecasts. does not go beyond basics

Sequoia Capital on startups and the economic downturn

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Consumer Markets February 2009

2009-02-18T08:24:00.003Z

Biyani slows expansion plans

Pantaloon Retail, which houses the Future Group's main formats such as Big Bazaar, Pantaloons, Food Bazaar and Central, had plans ......

Retail loan rates may dip to 3-yr low on cooling inflation

This is expected to spur demand in housing and other rate-sensitive sectors such as automobiles.......

India's auto sector skidded into deeper trouble in January, with domestic vehicle sales falling 7.4 per cent from a year ago ........

LG plans to double handsets mkt share

LG lords over 27 per cent of the Rs 32,000-crore per annum Indian consumer electronics .......

Kingston records impressive growth in 08, charts plans for 09

Kingston Technology Company, Inc., the independent world leader in memory products, announced impressive 2008 business growth in India.......

Bajaj to launch KTM bike by mid-2009

for Bajaj Auto, excitement with the niche high-end bikes will begin in mid-May..........

Hyundai launches new Verna in 4 variants

The new Verna range includes two petrol variants.........

IDFC Mutual Fund launches India GDP Growth Fund

The scheme aims to capture the growth in .......

Beam Global launches premium single malt whisky Ardmore

Ardmore will be available at general liquor shops in ........

Household structures in India

Nuclear, joint or extended families? Which segment dominates and what are the trends?

.........................

Consumer Markets February 2009

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INDIA BUDGET 2009-10

2009-02-13T10:27:00.001Z

Indian Budget 2009-10 due on 16th Feb

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Presentation Transcript

Budget 2009-10 to be announced February 16th 2009 With polls scheduled for April, there is confusion over whether this is a vote-on-account/interim budget/budget.

Important: All budgets go through a vote on account procedure till final approval gets the Budget passed a couple of months from announcement. (See Budget in India by Deepa Nayak) Since the poll dates have not been announced yet, this is a regular budget and not an interim budget.

BUT The current government has a moral responsibility, since there is a possibility of not staying in power, it should refrain from letting it be ‘ business as usual’. This budget should therefore not put in high spending budgetary provisions, And should leave major changes to the next government.

Expectations from government are high Because of the financial shock and the recession in the West, growth in India has slowed down from 9% last year to estimated 7.1% this year. Since boost to economy comes from monetary and fiscal policy, budget is being watched. Demands are many, some that are the same year to year, despite economic performance e.g cut in excise duties, etc.

FICCI for example has asked for: Extension of interest rate subsidy of 2% to exporters till March 2010. Reduction in income and corporate tax rates, removal of surcharge Extend tax holiday to housing sector and exempt it from service tax.

However, the budget should stick to across the board stimulus – e.g reduction in VAT for all items, no sector–specific strategies. Right now every sector has been hit, except education, health and to some extent FMCG. Allowing the markets to get the right signals is important, rather than fudge them with selective measures.

Sector performance Most affected Garments, Gems & Jewellery Textiles IT and ITES Capital Goods Engineering Basic manufacturing Organized real estate Higher end Auto, Electronics, Durables

BUT Worrying Fiscal Situation Various estimates but all point to sharp rise in deficit numbers. This year already the fiscal deficit has gone up from a budget estimate of 2.5% of GDP to 6%, thanks to falling tax collections, farm loan waiver, pay hikes to govt servants. Gross fiscal deficit, including oil and fertilizer subsidy bonds will be 9.5% of GDP compared to 6.1% last year, says Fitch. Govt borrowings high Govt has changed its borrowing programme Four times this fiscal, now an additional Rs. 46,000 crores to be borrowed by March end

Calling for greater fiscal stimulus is not advisable. Laveesh Bhandari in an interview to Outlook : Many macro-economists are calling for greater and greater government expenditures. And that is making me very uncomfortable. There is an ongoing growth story at the very minimum at the 5% level and likely to be at the 6%-7% level. Things are not, in the aggregate, as bad as the corporate sector is making it out to be. Of course, many sectors in the organized sector have been very badly hit. But it is not the government’s job to save the organized sector at the cost of the economy’s long term growth. And long term stability and growth will be impacted if public sector investments are ramped up, and the government liberally spends the money it does not have. You cannot costlessly keep on increasing the deficit – and you don’t need to be a PhD in macroeconomics to know that. Something somewhere will give if the deficit figure reaches (say) 15%. It already is at the 10% level. So if the government goes on an unconstrained spending spree, something will go wrong somewhere - inflation, exchange rate, crowding out of private investment.

Best Advice Possible to give the government: Remember: Short term growth is important, but long term economic and financial stability is much more important.

Some trivia to end with: How unusual is this year? The budget speech should have been with PC Chidambaram, who was transferred abruptly and unhappily to Home in December. Though the PM has the Finance Portfolio, he is at his home resting after a bypass, so the speech will be by External Affairs Minister, Pranab Mukherjee. This is also the first time a PM is missing the budget session of the Parliament.

Continuing Opportunities in the Indian Financial Sector

2009-02-11T11:54:00.001Z

Undoubtedly, India’s economic reforms have changed the way we work, live, consume and invest. And in sync with this, aspirations and expectations have also changed dramatically for many of us. With changing aspirations and greater choice in employment, consumption, and investment options we have become a far more mature economy. No doubt large gaps remain, the large numbers of the unbanked, the lack of adequate micro-finance options for the poor and the underprivileged, the inability of many to enter into the organized sector and stable employment are all unfulfilled gaps. But unlike in the past, today both private and public sector initiatives are being taken to find the right mix of technology, access, and costs, that can fulfill the demands of the masses.
What was available in only Mumbai and Delhi a few years back is today commonplace in small towns and villages in India. ATMs are one example. Credit card is another. Already mobile payment options have been introduced and are further being experimented with. Cash cards are also expanding rapidly. Good quality internet access has already spread beyond the major metros and with the introduction of broadband will be available in every nook and corner of the country.
Admittedly, such advances in financial technologies have tended to benefit the better-off more than those at the bottom of the pyramid. The key problem is that most financial technologies in use today were developed in the West (and consequently are costly) and have been introduced into India almost as-is. It is difficult to profitably service the masses with those. But trials of new innovations are under-way. A team at IIT Chennai has developed a very low cost ATM that public sector banks are currently experimenting with. Many financial institutions are trying out different ways of running low cost micro-finance options. IT companies are trying out various low cost electronic payment alternatives not to mention computing options. Undoubtedly, many of these experiments will fail. But a few will succeed. And it is those innovations
that will change the lives of the masses, just as their predecessors have changed ours.

Continuing Opportunities in the Indian Financial Sector

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Consumer Demography and Markets in Top cities of India

2009-02-10T09:55:00.002Z

It is well known that India is a young country with the major proportion of its population that is below 25 years of age. Not only that, the large base of its age pyramid shows that for many years, Indian population will continue to have a large number of young.

But beyond this there is not much of an understanding.

For instance, among the higher income groups the age distribution is more like that of developed countries, somewhat uniform among the lower age segments with a tapering off at the higher end. This is important from a marketing perspective.

Age is only one small characteristic of overall consumer demography. The bulk of Indian households in both rural and urban areas are in fact nuclear and not at all in sync with the imaginary household shown in various TV soaps. Large joint families are an insignificant percentage of the total. Extended families (where parents stay with a married child) are the next in importance and, if trends are to be believed, will become even more important in the near future.

India has historically been a highly rural country with the bulk of its population residing in far flung areas. But its urban areas have been growing at a far more rapid pace in the last few years and are only expected to grow at a faster rate. India is no longer a rural country, though the majority of its population continues to reside there.

Consumer Demography and Markets in Top cities of India

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Indicus Consumer Handbook for India

2009-01-30T07:51:00.002Z

This is the introductory chapter of the forthcoming book by Laveesh Bhandari.

This chapter provides an overview into the state of the Indian economy, its growth, expenditures by households, income distribution as well as issues of ineuqlity. This is followed by an overview of some of the broad areas covered in this volume.

The idea is to provide to the student and practitioner alike, a basic overview of the key demographic and macro-economic variables that affect consumer decisions in the short and long term. The discussion that follows then seeks to tie-in the key aspects that determine and reflect consumer behaviour in India.

High growth has contributed to greater incomes for Indian households which in turn has enabled Indian households to both save and spend more. We have in the past few years observed that household sector savings have in fact grown by far more than any of the other other macro-indicators. This is of course a desirable outcome. Greater incomes do imply greater expenditures in the short term, but greater savings (if translated into good quality investments) ensure long term growth of the economy, employment opportunities, and household incomes.

Even though India’s total household income and saving can be known from National Accounts Statistics, it does not provide the same information across economic groups. Therefore, the pattern of distribution of total income and saving across households with different economic status is not known. Thus, “What share of India’s total personal disposable income comes from the richest 10% of the households?” or “Do the poorest 10% of the households save anything at all?” – these questions remain unanswered from government data. Moreover, per household income or savings, for households with different economic status is also not known. This typically requires using data from household surveys. The problem with using survey data to estimate aggregates on a all India basis is that surveys – no matter how well they have been conducted – tend to under-report incomes and expenditures. As a consequence, we require various types of quantiatiative excercises to correct for this under-reporting.

Indicus Consumer Handbook for India

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Policy News and Views - Jan 29

2009-01-30T07:28:00.001Z

Our view is that coal will be the primary fuel for generation of electricity in India. This however, does not mean that in meeting India’s electricity needs we will have to neglect the impact on environment. A viable and sustainable solution lies in encouraging generation from “clean” coal. Whilst policies to promote electricity generation from non-conventional energy are being put in place a significant shift towards low-carbon energy sources, may not take place in the near future.

Our view is that the private sector has a comparative advantage in renewable electricity generation, it is best that the government encourages the private developers for some time to come. Given that the Government of India sees a huge potential for investments in renewables, the power sector reforms have created space for private entry in this mode as the public utilities are cash strapped and have traditionally no comparative advantage in this field, with only 0.85 percent of the public sector installed capacity is in renewables as compared to 40 percent in the case of private. So the idea of a PSU for renewable energy is misplaced.

See the newsletter below

Policy News and Views - February 2009

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Glimpses from The Indian Financial Scape

2009-01-14T17:44:00.001Z

Indian Financial Scape contains, for all 593 districts, information on (across Income classes, Socio economic classes, Rural, Urban) -
Financial services penetration – insurance, credit, deposits, etc. , Demography, Market Size, Asset penetration including financial assets, Credit and Savings, Indices on Financial Service Activity, Affluence, Growth, Savings Propensity, Credit Propensity, Consumer Loan Activity, Durables Loan, District Risk.
For all 593 districts, the product contains information on (Across Income classes, Socio economic classes, Rural, Urban):
Demography - Migration, Population, Employment, Education, Age distribution, Married couples, etc.
Market Size – GDP Banking and insurance, Incomes, Savings, Expenditure, Remittances, Rents, etc.
Asset penetration – Durables, Investment and savings instruments, insurance other financial assets, etc.
Credit and Savings – Penetration, Amounts,
Growth - across economic sectors, across establishments (PO, Banks, Coop Banks, NBFC, SHG), etc.
Others – Growth across economic sectors, incidences of crime and economic offences, etc.
Others – Growth across economic sectors, incidences of crime and economic offences, etc.

Glimpses from The Indian Financial Scape - Indicus Analytics

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Indicus Calendar

2009-01-13T04:09:00.004Z

Our calendar for 2009 is in cyberspace. You can view and download it from http://www.slideshare.net/indicusanalytics/indicus-calendar-2009-presentation/
You can request for the desk calendar at our office @ products@indicus.net too. Indicus Analytics is an economic research firm with research and value added data product services. visit Indicus Products for more information on Indicus products

Indicus Calendar

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Glimpses from The Market Skyline of India

2009-01-11T10:06:00.003Z

Market Skyline of India Indicus looks at consumer profiles at district level separately for urban and rural consumers of India - income, savings, expenditures, assets owned, expenditure patterns. A few glimpses

Glimpses from The Market Skyline Of India - Indicus Analytics - 2

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The Richest Neighbourhoods Of India

2009-01-11T10:02:00.001Z

Oshiwara in Andheri (West) is the richest neighbourhood in India, in terms of number of Millionaire families, with over 15,000 households having annual incomes of over Rs 1 million. In fact, of the top 20 neighbourhoods in India, as many as 18 are from Mumbai.

The Richest Neighbourhoods Of India

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Formulation of India's Union Budget

2009-01-05T09:15:00.001Z

What are the mechanics behind india's union budget
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Formulation of India's Union Budget

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Low cost housing demand in urban India

2009-01-05T09:08:00.001Z

An excellent article by Peeyush on Low cost housing demand in urban India

Low Cost Housing in Urban India

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City Skyline Neighbourhood Series - Indicus Analytics

2008-12-30T12:34:00.001Z

City Skyline of India – Neighbourhood Series 2008-09 – Top cities - neighbourhood profiles.
It divides the top cities into 100+ neighbourhoods each. Once identified, it provides consumer profiles for each of these
 Demography
 Number of Households in 6 Annual Income Categories
 Population in each of the above 6 Annual Income Categories
 Consumer markets
 Annual aggregate disposable incomes of Households
 Annual aggregate expenditures of Households
 Annual aggregate savings of Households
 Annual Household Expenditure on 5 major categories

City Skyline Neighbourhood Series - Indicus Analytics

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Consumer 2.0 November, 2008

2008-12-19T13:34:00.001Z

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Consumer 2.0 November, 2008

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Indicus Methodology

2008-12-18T06:39:00.001Z

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Indicus Methodology

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Economic and Market Data Products from Indicus Analytics

2008-12-18T03:42:00.001Z

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Economic and Market Data Products from Indicus Analytics

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Income and Savings in Urban India

2008-11-11T10:20:00.002Z

The top 112 cities account for about 200 million Indians which is more than 60% of urban India. These cities constitute a market of consumers whose combined annual incomes are Rs 13.26 billion. Their combined savings are Rs 3.5 billion which is about 26.5% of income. However there is considerable heterogeneity in the income and savings pattern across these cities.

If we look at four classes of cities (by size), we get the following picture:

	Total Income (Rs billions)	Total Savings (Rs billions)	Savings/ Income Ratio
Alpha (Top 10)	5,912	1,296	21.9%
Beta (11th to 30th)	2,887	931	32.2%
Gamma (31st to 50th)	1,774	519	29.3%
Delta (The balance 62)	2,688	771	28.7%
Top 112 cities	13,261	3,516	26.5%

The large cities have a significantly lower savings rate. The top 10 cities have a savings rate of under 22%, whereas the gamma and delta cities (82 in number) have savings rate around 29%. Clearly the EMI culture hasn’t percolated down to too many cities in India. An interesting piece of statistics is that the 2^nd rung of cities are the biggest savers – the beta cities save as much as 32% of their income and reinforce the old adage that savings and investment are the route to growth.

If we look at the same set of data through the regional prism, we get the following picture:

	Total Income (Rs billions)	Total Savings (Rs billions)	Savings/ Income Ratio
East	2,011	522	25.9%
West	5,167	1,191	23.0%
North	2,849	797	28.0%
South	3,233	1,007	31.1%

The Southerners are by far the largest savers with a savings rate of over 31%. The West (it includes Rajasthan and MP) has the lowest savings rate of just 23%. Within West, Gujarat is a high saver with 27% savings rate whereas Maharashtra saves only 18%. Madhya Pradesh is a very high saver with savings rate of 38%.

Contrary to popular wisdom, the North is not exactly spendthrift, they are second only to the South in savings rate.

What do the figures look like for some of the major cities?

	Total Income (Rs billions)	Total Savings (Rs billions)	Savings/ Income Ratio
Mumbai	1,608	216	13.4%
Delhi	1,264	289	22.8%
Bangalore	602	192	31.9%
Urban Areas in Thane	569	132	23.2%
Pune	446	111	24.9%
Ahmadabad	429	109	25.3%
Chennai	393	88	22.2%
Kolkata	350	68	19.3%
Surat	318	82	25.8%
Hyderabad	295	87	29.3%

Mumbai has the lowest savings rate. Delhi, Kolkata and Mumbai’s neighbours are also low savers. Bangalore and Hyderabad are high savers, much higher than average.

The heterogeneity of India is well reflected in the savings patterns. There are no clear regional patterns. However, it is evident that the economically vibrant cities are lower in savings rate as compared to their regional brethrens which reinforces the theory that consumerism is one of the key pivots of the recent surge in economic growth and erosion in consumer confidence will impact economic growth negatively.

Reach of Financial Institutions

2008-10-30T12:07:00.001Z

On an average, only 16% of Indian households have taken loans from institutional agencies. On the other hand, 22% of the households have taken loans from non institutional agencies. There are two clear indications here – a) the bulk of the population is financially underserved and rely on informal lending and b) the non institutional agencies have together achieved a much higher penetration than the institutional agencies.

If we look at another indicator of financial inclusion, namely percentage of households who hold stocks and debentures, we find that the penetration is just 5%.

There is no doubt that financial inclusion is extremely poor and financial institutions need to focus more on expanding the market rather than flog the existing markets.

Here are the top districts in terms of penetration of institutional loans. These districts have penetrations ranging from 37% to 68%. As many as 14 of these 20 are from Kerala. The districts are Kottayam, Kannur, Idukki, Ernakulam, Pathanamthitta, Kasaragod, Wayanad, Palakkad, Kollam, Thrissur, Kozhikode, Malappuram, Alappuzha and Thiruvananthapuram from Kerala and Mahe, Udupi, Satara, Kolhapur, Wardha, Shajapur (MP).

The bottom twenty districts (all less than 1% penetration) are mainly from the hill districts (Arunachal Pradesh, Manipur, Mehghalaya and J&K - Changlang, East Kameng, Lohit, Lower Subansiri, Tirap, Dhubri, Kupwara, Bishnupur, Chandel, Churachandpur, Senapati, Tamenglong, Thoubal, Ukhrul, East Garo Hills, Jaintia Hills, Ri Bhoi, South Garo Hills, West Garo Hills

The picture changes substantially when one looks at the penetration of non institutional loans. The top 24 districts have penetration ranging from 50-53%. These are - Tiruchirappalli, Nagapattinam, Thiruvarur, Thanjavur, Karur, Pudukkottai and Perambalur from Tamil Nadu, Mahe, Karaikal, Pondicherry, Yanam from Pondicherry, and Prakasam, Srikakulam, West Godavari, Krishna, Nellore, Guntur, Visakhapatnam, Vizianagaram, East Godavari, Chittoor, Cuddapah, Anantapur and Kurnool from Andhra Pradesh indicating a clear geographic pattern.

The bottom districts are again from the hill states. In fact of the bottom 64 (up to 7% penetration) - 2 are from Andaman and Nicobar, 13 are from Arunachal, 14 are from J&K, 7 from Meghalaya, 8 from Mizoram, 4 from Sikkim, 13 from Uttaranchal, and 3 from West Bengal.

At a broader level there is a clear need for enhanced services in the hill states. However, even among the relatively well off districts, it is interesting to note that TN and Andhra seem to have a very high penetration of non institutional loans as compared to institutional loans – clearly an area for capturing the low hanging fruits for the formal sector.

The Champ without airs

2008-10-30T03:37:00.002Z

What a feat? For the third time in his career Anand is world champ. Right now, he is the undisputed champ and the manner of his victory was astounding.

There are few lessons here. You don't need to be aggressive in behavior to do well, you don't need to be a media darling to do well, you just need to work hard and be focused over a long period of time.

Anand is probably the most pleasant of all the world champs you will ever see. Its great to see such a personality rule the roost

The decline is showing

2008-10-23T10:44:00.003Z

In my blog post, Aussie domination of Test Cricket likely to weaken , about a year and a half ago, I wrote:
"The fact is that match winning bowlers are rare and batsmen hog the limelight. We all know what happened to West Indies after the supply of great bowlers dried up. Batsmen cannot win test matches, it’s the bowlers who do so. I would expect the Australian domination in test cricket to end rather fast "
The events in Mohali is another link. The Aussie bowling is looking ordinary and the batting is not able to compensate for it anymore. Its an ageing team too.
Will India be able to take advantage and move ahead? Or will RSA/ England take control. Let's see.
As an aside, it is a bit odd the way Indians mix up test cricket and ODI. Whereas I would like to see the slow coaches get out of the ODI, these very same experienced guys provide the cutting edge in test cricket, where skill is at a premium and fielding agility, though useful, do not have the same level of importance.
Its sad to see Ganguly succumb to media hullabulloo and surrender his place. In fact, the lack of experience in most bowling line-ups in the world today implies that the senior batters will prevail in most cases - except when magical uncertainties such as a mendis comes up, but those are exceptions - you don't plan with exceptions in mind, do you?

Insights into the Financial landscape of the country

2008-10-20T11:21:00.001Z

Indian Financial Scape provides insights into the financial landscape of the country. It presents nearly 250 different variables at district level. The product helps enhance a professional’s understanding of the markets. A few samples of unusual insights are presented below. There are many more interesting ones available in the product.

Fastest growing districts in terms of Personal Loans (Personal loans, as defined by RBI includes all loans taken by individuals – secured and unsecured)

Unit		%
Year		2001-02 to 2007-08
		Personal loans - growth rate of SCB`s credit
State	District

Karnataka	Bangalore Rural	77
Meghalaya	West Garo Hills	74
Arunachal Pradesh	Changlang	72
Arunachal Pradesh	East Siang	72
Arunachal Pradesh	Papum Pare	72
Arunachal Pradesh	West Kameng	72
Bihar	Katihar	72
Uttar Pradesh	Sant Kabir Nagar	71
Haryana	Jhajjar	70
Assam	Hailakandi	69
Gujarat	Narmada	69
Haryana	Panipat	68
Haryana	Rohtak	67
Haryana	Sonipat	67
Haryana	Faridabad	62
Jammu & Kashmir	Pulwama	62
Mizoram	Champhai	60
Bihar	Araria	57
Chhattisgarh	Rajnandgaon	57
Uttar Pradesh	Baghpat	56

Arunachal Pradesh is an unusual place. Not much is known about it and it has a small base. Yet, on a sustained basis, over a 6 year period, four of its districts have figured among the top 6 districts in India in terms of growth in personal credit. Haryana is another place which has seen a boom with four of its districts figuring in the top 15.

Fastest growing districts in terms of Professional and other Services credit

Unit		%	%
Year		2001-02 to 2007-08	2001-02 to 2007-08
		Professional & other Services - growth rate of SCB`s credit	Personal loans - growth rate of SCB`s credit
State	District

Gujarat	Rajkot	51	26
Chhattisgarh	Korba	47	34
Punjab	Bathinda	47	50
Andhra Pradesh	Krishna	46	18
Rajasthan	Ajmer	46	31
Rajasthan	Kota	44	25
Madhya Pradesh	Katni	44	12
Chhattisgarh	Kanker	44	34
Rajasthan	Ganganagar	43	31
Sikkim	South Sikkim	42	26
Sikkim	North Sikkim	42	53
Arunachal Pradesh	Lohit	42	-16
Rajasthan	Jodhpur	42	36
West Bengal	Haora	42	17
Sikkim	East Sikkim	42	16
Rajasthan	Sikar	41	51
Orissa	Sambalpur	41	34
Haryana	Rewari	40	-11
Andhra Pradesh	Nalgonda	40	21
Haryana	Mahendragarh	40	33

The growth in credit in this category has been much lower than in the personal credit category. The districts that have grown fastest are those that are not in the top pecking order, yet they are not very small either. Lohit, in Arunachal Pradesh is unusual because it shows a negative growth in personal credit. Its possible that personal credit were routed through Professional credit in reality. Rewari is another standout – high growth in Professional combining with a negative growth in personal credit.

Fastest growing districts in terms of Trade Credit

Unit		%
Year		2001-02 to 2007-08
		Trade Credit - growth rate of SCB`s credit
State	District

Tamil nadu	Nagapattinam	49
Chhattisgarh	Rajnandgaon	47
Meghalaya	Jaintia Hills	44
Haryana	Jhajjar	40
Karnataka	Bangalore Rural	40
Uttar Pradesh	Mahoba	40
Gujarat	Kheda	39
Orissa	Ganjam	39
Haryana	Gurgaon	38
Himachal Pradesh	Kinnaur	38
Uttar Pradesh	Gautam Buddha Nagar	38
Sikkim	East Sikkim	37
Jammu & Kashmir	Leh (Ladakh)	37
Bihar	Madhubani	37
Arunachal Pradesh	West Kameng	36
Uttaranchal	Rudraprayag	35
West Bengal	Medinipur	35
Andhra Pradesh	Medak	35
Haryana	Panchkula	34
Nagaland	Mon	34

Data Source: Indicus Analytics

Housing Pattern of Indian Cities

2008-10-01T05:05:00.003Z

What type of houses do urban Indians live in? What is the difference across various cities? Here are some answers

40% of the urban Indians live in fairly large houses, defined as 3 bedrooms or more. In the smaller towns the proportion goes up to as much as 51%. However, in the 5 mega cities the proportion of people living in large houses goes down very significantly, to reach a low of just about 13% in Mumbai. Interestingly, more people in Bangalore and Kolkata appear to enjoy the benefits of staying in larger houses than in Delhi. The proportion living in very small houses is very high in Mumbai, as much as 2.5 times its closest rival. In fact 75% of Mumbai respondents were living in apartments that were less than 1000 sq feet in size.

In terms of square feet, 90% of urban Indians live in houses smaller than 2,000 sq feet.

The data presented here is applicable for SEC A and B only, who represent about 30% of urban India.

Source: Indicus Research

Urban Consumer Demography

2008-09-30T10:13:00.004Z

Urban India’s population pyramid today has a narrow base and a protrusion in the middle that tapers off at the top. On an average, across Alpha, Beta, Gamma and Delta* cities; there is a nearly identical demographic pattern as depicted.

This age distribution points to the classic youth bulge indicating the need for a focus on education and other employability enhancing investments. With a smaller percentage of the population being dependent today, the iron is hot and this is the time to strike. Efficient workforce planning can help the economy cash in on the mettle of the youth and also generate the base for old age income security provisions which will be a must when this bulge ages.

As far as consumption habits are concerned, a cross sectional scrutiny of average propensity to consume (APC) reveals Alpha & Beta cities exhibit a higher average APC with lower dispersion while Gamma & Delta cities display a smaller average APC with greater dispersion. This means that there exists a greater propensity to consume more consistently in mature cities and a comparatively higher propensity to save in the developing cities with lesser consistency. It is important to note that the APC on an average is high lying in the band of 0.7-0.8. So is consumption the new fad in urban India or the mere result of a desire for upward social mobility? An analysis of trends in national incomes proves otherwise and reinforces the Keynesian concept of induced consumption. Consumer spending has risen as a result of increasing personal disposable incomes. This is evident in average per day per capita income (PDPCY) estimates of Alpha, Beta, Gamma and Delta cities which is Rs. 228, Rs. 154, Rs. 169 and Rs. 170 respectively. These numbers are significantly higher than the national PDPCY, thus underscoring the dualism in the Indian economy on one hand and the well being of urban India on the other.

co written with Ritika Mankar (ritika.mankar@gmail.com)

Is there a clear relationship between credit growth and market growth?

2008-09-29T07:48:00.001Z

The fastest growing cities out of 112 top cities of India

Growth rates (CAGR)	Market Size Growth Rate	Deposit Growth Rate	Credit Growth Rate
Silvassa	23	14	71
Gandhinagar	22	10	54
Bokaro	19	7	-4
Surat	17	11	18
Thiruvallur	17	11	28
Agartala	16	13	32
Chandigarh	16	13	7
Thanjavur	16	5	20
Kohima	15	9	26
Noida	15	28	43

The slowest growing cities out of 112 top cities of India

Growth rates (CAGR)	Market Size Growth Rate	Deposit Growth Rate	Credit Growth Rate
Guntur	8	7	16
Gwalior	8	6	9
Jabalpur	8	3	0
Nellore	8	7	22
Varanasi	8	6	13
Kanpur	7	7	13
Kavaratti	7
Vijayawada	7	7	24
Dhanbad	6	12	15
Kancheepuram	2	16	22

With the exception of Bokaro, and to a certain extent Chandigarh, the 10 fastest growing cities grew on the back of high credit growth. However, this is not a general rule as a look at the slower growing cities reveal. Cities such as Vijaywada, Kancheepuram, Nellore and Guntur did not display a robust growth in spite of high credit growth. Deposit growth, on the other hand is an effect of market growth and in general grows in the wake of market growth. This is generally borne out by the facts, though a few notable exceptions exist – Thanjavur, Kohima, Bokaro (among the fast growing cities) and Dhanbad and Kancheepuram (slow growing cities)

data source: Indicus Analytics

Kolkata – The Mythical Metro

2008-09-27T19:26:00.002Z

Kolkata has been one of the great centres of modern India. However, the city has been slipping rather badly over the last 30 odd years. Those who have lived in Kolkata know it, and those outside can sense it. The remarkable thing is that Kolkata continues to be clubbed among the top 4 cities and is classified as a Metro city. The nomenclature hides some startling facts.

I just looked at some of the data from Kolkata, Bangalore, Pune and Hyderabad. Why? Because, the other three are not classified as metros. Yet, most people instinctively know that these are more vibrant economic centres. The data, kind of reinforces the feel:

City	% Households with 4 Wheelers	Annual Total Household Income of Households (Rs crore)	Market Size (Rs crore)	No. of Households with Annual Household income > Rs.1 million
Hyderabad	16%	29,520	20,860	71,717
Bangalore	9%	60,185	41,008	115,439
Pune	8%	44,594	33,494	109,061
Kolkata	13%	34,991	28,234	49,212

Estimates for 2008-09, source: City Skyline of India

In terms of total annual incomes for households, not only is Kolkata almost half of Bangalore but also smaller than Pune and only slightly larger than Hyderabad. Its market size is also smaller than both Bangalore and Pune and there are less millionaire households in Kolkata than the other three cities (by a wide margin).

The myth of Kolkata, the metro city is precisely that – a myth.

The Double Tragedy of Bihar

2008-09-26T04:12:00.002Z

It has been some time since the massive floods ravaged Bihar. Already it has disappeared from the front pages and the main media. That the disaster affected over 3 million people is a monumental tragedy. The second tragedy is more insidious – that these people do not matter. That is the reason it has receded from the front pages. The media and the people are merely confirming the facts. The facts are grim – the region affected does not matter on the economic map of the country. That is the second tragedy, one that has insidiously occurred over the last 60 years.

The key affected districts are – Araria, Madhepura, Purnea, Saharsa and Supaul. Some of these regions have had high profile representation in the political space too. These districts are extremely backward and hence agriculture is the mainstay (other sectors are virtually absent). The share of agriculture in the GDP of these districts is 44% (the All India share of agriculture is 19% and in Bihar it is nearly 30%). Other grim facts:

These districts depend on agriculture but agriculture doesn’t depend so much on them – they account for just 16% of Bihar’s agriculture, which itself is just 5% of India’s agriculture
Of the total GDP of the country, these districts have a share of just 0.3%

The total economy of these affected districts is so small that it is fair to say that they just about exist on the economic landscape. This is the bigger tragedy. These guys don't seem to matter.

"Does it take much of a man to see his whole life go down, To look up on the world from a hole in the ground, To wait for your future like a horse that's gone lame, To lie in the gutter and die with no name?

Only a hobo, but one more is gone, Leavin' nobody to sing his sad song, Leavin' nobody to carry him home, Only a hobo, but one more is gone"