An equity research report by Goldman Sachs has shed light on the rapidly expanding segment of affluent consumers in India, projecting significant market implications and investment opportunities.

The report, titled “The rise of ‘Affluent India“, identifies approximately 4% of India’s working-age population, equating to around 60 million consumers, as ‘affluent,’ with a per capita income exceeding US$10,000.This segment has witnessed a remarkable 12% compound annual growth rate (CAGR) from 2019 to 2023, starkly outpacing the overall population growth of about 1% CAGR. Goldman Sachs anticipates this number to burgeon to approximately 100 million by 2027.
Markets and wealth effect
Over the last three years, India has witnessed a notable surge in the value of both financial and tangible assets, contributing to a growing wealth effect in the ‘Affluent India’ segment. The primary asset categories experiencing this significant uptick in value from FY19 to FY23 are equities, gold, and real estate. The most substantial increases have been observed in equities and gold, whereas the real estate sector has experienced a more pronounced appreciation rate in the last 3 to 4 years.
Significant growth in market capitalization: The Indian stock market has experienced a substantial growth in market capitalization, rising by 80% from January 1, 2020, to January 1, 2024. This period marks a significant recovery and growth following the market fall due to the COVID-19 pandemic.
Increase in retail participation: The participation of retail investors in the Indian equity market has seen a notable increase. This is evident from the growth in the number of demat accounts, which are electronic accounts used to trade shares. These accounts have grown from approximately 41 million in the fiscal year 2020 to about 114 million in the fiscal year 2023.

Rising household investment in equities: There has been a consistent and large increase in the net flow of household savings into shares since FY17. This trend, coupled with strong market returns, suggests a continued rise in retail participation in the equity markets.
Ownership patterns: The ownership of equities by consumers occurs through two primary channels – direct retail shareholding and mutual funds. Both avenues have seen growth in recent years. Specifically, the ownership of BSE 200 by direct retail investors increased from 8.5% in December 2019 to 9.8% in September 2023. Similarly, the ownership of domestic mutual funds in the BSE 200 grew from 8.1% in December 2019 to 9.2% in September 2023.
Financial indicators: There has been a marked growth in income tax filings for higher income brackets, bank term deposits above a certain threshold, and a significant increase in the number of credit cards, which are mostly used by higher-income consumers. The total spend on credit cards has increased by 2.5 times since FY19.

A paradigm shift in consumption
‘Affluent India’ is reshaping consumption patterns across various sectors. Industries like leisure, jewelry, out-of-home food, healthcare, and premium brands are experiencing robust growth, driven by the expanding affluent consumer base. This segment’s growth is expected to maintain a mid-teens CAGR over the medium term, indicating sustained high valuations for related businesses.
Divergence in growth rates: Premium vs. broad-based consumption
The study reveals that companies catering to high-end consumption have outperformed those addressing broader consumption bases. The growth rate of companies targeting high-end consumers has outpaced those addressing broader consumption. This divergence is evident across multiple sectors, including FMCG, footwear, fashion, and automotive, where premium brands and products are growing faster than their mass-market counterpart

As ‘Affluent India’ expands, it’s expected to disproportionately impact categories with significant consumption from the top 50-60 million consumers. Comparisons with other large economies like China and Brazil, which have similar per capita incomes, suggest that there will be significant growth in sectors such as leisure, hotels, recreation, out-of-home food, durables, and medical services in India.
Risks and opportunities
While acknowledging the growth potential, the report also cautions against possible risks like increased competitive intensity and potential corrections in asset prices that could dampen the wealth effect.