Rise of middle-income households in rural India outpaces urban growth | Deloitte India Report

Rural India is experiencing a remarkable surge in the number of middle-income households, transforming the economic landscape of the country. This growth is driven by a combination of factors, including rising income levels, growing discretionary spending, shifting online preferences, omnichannel customer experiences, the emergence of new channels, and robust payment and logistics infrastructure.

In an interview with CNBC-TV18, Anand Ramanathan, Partner and Consumer Industry Leader-Consulting at Deloitte India shared insights from its new report highlighting the rapid growth of middle-income households in rural India.

According to the report, middle-income households in rural India are experiencing remarkable growth rates, far surpassing their urban counterparts. This upward trajectory suggests a shifting economic landscape, with rural areas becoming crucial contributors to India's expanding middle class.

Ramanathan emphasised that players with a strong presence in tier-II and III cities are well-positioned to benefit from this demographic shift. As rural areas become increasingly significant markets, companies that have established themselves in these regions will enjoy a competitive advantage and witness substantial growth.

The report also predicts a shift in the contribution of different city tiers to India's overall economic landscape. Going forward, tier-II and III cities are expected to contribute approximately 66 percent of the country's growth, while tier-I cities will account for the remaining 33 percent. This projection underscores the rising prominence of smaller cities and towns in India's economic narrative.

Another significant finding highlighted in the report is the surge in interest in contactless shopping following the pandemic. The health and safety concerns brought on by the global health crisis have prompted a widespread shift in consumer behaviour.

As a result, contactless shopping methods, such as e-commerce and online transactions, have gained considerable popularity. The report suggests that this trend is likely to persist in the post-pandemic era, further propelling the growth of online retail in both urban and rural areas.