1. The document discusses the top-earning urban household segment in India, comprising around 5% of urban households but contributing a third of total urban consumer expenditure. 2. It notes that for these high-income households, the largest spending categories are travel/transportation, consumer services like household help, and rent. 3. The document outlines the geographic distribution of these households, with the most located in the western states of Maharashtra and Gujarat, as well as northern cities like Delhi, Chandigarh, and Faridabad.

1. Published: Mint dated 4h July, 2011
The heterogeneity
that characterizes
the modern Indian
consumer has
created a maze
that marketers
would like to
unravel in order to
target their
products and
services precisely.
In this fortnightly
series, Indicus
Analytics will
present the various
facets of urban
consumers, across
geographies and
socio-economic
groups
Indicus Consumer Data Products

2. In India, it is not just the rural-urban divide that is striking in consumer markets, but
also the diverse income segments within the urban centres. Income-wise segments
can be created in many ways, the Indicus Urban Consumer Expenditure Spectrum
takes five cuts – households earning less than Rs. 1.5 lakh per annum, between Rs.
1.5 lakh and Rs. 3 lakh, between Rs. 3 lakh and Rs. 5 lakh, between Rs. 5 lakh and
Rs. 10 lakh and finally, households earning more than Rs. 10 lakh per annum. The
top-end of urban consumers, that is the households earning more than Rs. ten lakhs
per annum is a small segment, comprising around 5% of all urban households in
India and around 6% of urban population. Yet despite being a small group, this
segment contributes to a third of total urban consumer expenditure, making it one of
the most sought after markets in India. This segment also constitutes close to half of
the total urban household savings, with the highest disposable income and earning
opportunities.

3. On an average, the three items that make up the largest share in the household
expenses are travel and conveyance, consumer services and rent. Households in
this segment can afford to own more vehicles, travel at resorts around the country or
holiday abroad. The high income also makes for large expenses on consumer
services, especially salaries of maids, drivers, tailoring and personal care services,
telephone and other communication expenses and so on. Even within personal care
services, these households would tend towards the high-end of the spectrum as they
can well afford such luxuries. Apart from those who have always been in the upper
income segments, the ‘old rich’ of urban India, there would be those households who
have made it into this category in the last decade or so.

4. For these ‘new-comers’, high end purchases are a sign of
making it into the elite and all the latest in services, brands
and gadgets are on the shopping list. The third category
that makes it into the big-ticket expenditure is rent – upper
income households would prefer to stay in neighbourhoods
and apartment societies that are again on the top-end of
urban real estate. In cities like Mumbai, renting is often still
an easier alternative to owning a flat in a good locality, a
reflection on the high real estate values. Paying top end
rents however eat into household budgets. For these ‘new-
comers’, high end purchases are a sign of making it into the
elite and all the latest in services, brands and gadgets are
on the shopping list. The third category that makes it into
the big-ticket expenditure is rent – upper income
households would prefer to stay in neighbourhoods and
apartment societies that are again on the top-end of urban
real estate. In cities like Mumbai, renting is often still an
easier alternative to owning a flat in a good locality, a
reflection on the high real estate values. Paying top end
rents however eat into household budgets.

5. The two western states of Maharashtra and Gujarat house the highest share
of these rich households, with more than 10% of the urban rich Indians in this
segment. Looking at the distribution region-wise, the largest share overall
comes from the northern region, which also has the largest population; here
it is the cities of Delhi, Chandigarh, Faridabad etc. which have a high share
of rich households. While Mumbai and Delhi top the list of cities with the
highest share of urban Indian rich households in this segment, apart from the
other large metros cities like Ahmedabad, Surat, Vadodara, Rajkot, Nagpur,
Ludhiana, Vishakhapatnam, Faridabad and Coimbatore rank amongst the
top 20.

6. The broad segment of households earning more
than Rs. 10 lakhs per annum will have within it
various categories of households whose
expenditure and savings characteristics would vary
depending on region, city, occupation and life-stage
of the chief wage earner etc. While there would be
even finer income cuts possible in this segment, by
and large this broad segment is the one seen to be
shopping in the malls, eating out often,
experimenting with the new tastes and fashions and
so on - this is the class all urban Indians ultimately
aspire to belong to.