"Consumption is one of the most attractive investment opportunities in India"

Q 1: Your take on the recent Household Consumption Expenditure Survey? Have you observed any great change in urban or rural consumption pattern?

As per the Household Consumption Expenditure Survey 2012-23, there are 3 key takeaways: 

Real consumption growth moderated to 8.8% CAGR in 2012-23 from 13.3% CAGR in 2005-12. Consumption growth is linked to GDP growth which itself has moderated from 7.3% in FY2005-12 to 5.7% in FY2012-23, primarily due to the Covid shock. Still, the share of consumption within GDP rose from 56.2% in FY12 to 58.5% in FY23.

Rural consumption grew faster in the last decade. Rural spends grew by 9.2% CAGR vs urban at 8.5% CAGR. While the absolute level of spend of urban India is higher, rural India's spending has grown faster in the last decade. This has narrowed the gap in the rural-urban spending.

Significant shift in consumption basket is visible. A rise in income levels led to faster growth in discretionary items (as compared to food) and products up the value chain. Share of foods for rural/urban has declined from 59.4%/48.1% in 1999-2000 to 46.4%/39.2% in 2022-23.

Q2: Which are your overweight bets for the next financial year?