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India's consumption stack
A report by venture capital firm Blume Ventures says that relative to large economies, India’s consumption growth is amongst the highest. However, it claims that India’s consumption numbers look good on an overall basis, but not on a per capita basis. «We take a look at why this is so. We look at how India1, India’s top 10%, drives the Indian economic engine, and find that India1 is not widening as much as deepening. Finally, we show how India1’s high share of consumption shapes the India consumer market in many distinct ways,» says Indus Valley Annual Report 2025.
After the COVID-19 pandemic triggered India's worst economic contraction in its post-independence history, aggressive government spending was coupled with historically low repo rates from the RBI to push the economy forward, the report says. The RBI's extended low interest rate regime sparked an unprecedented surge in personal borrowing leading to a consumption boom, sparking a V-shaped recovery. Since the revival of the Indian economy was achieved through aggressive government spending, it doubled the fiscal deficit between FY20 and FY21, eventually resulting in a rise in money supply. The combination of expanded money supply, along with surging personal credit, and resurgent consumption pushed inflation steadily upward, the report says.
Seeing inflation
