Consumption is the core strength of India’s GDP as 2/3rd is driven by it. Broadly, the following four factors form the basis for our investment thesis:

• Discretionary spending pick-up: The general thesis is that the average income levels of the population has crossed the threshold that takes care of the basics and incremental income will now go towards discretionary consumption.
• State-wise trends indicate an acceleration across the spectrum: Developed states, which have crossed beyond the national per-capita average income, have become the bedrock of modern retail and discretionary consumption. Meanwhile, currently poorer states can see consumption picking up as they progress thanks to improved infrastructure, shift towards manufacturing and higher labour force participation.
• Growing middle-class to spur aspirational spending: The number of middle-income households is likely to increase from 21% of population in 2018 to just over 40% by 2030, according to a World Economic Forum study. Easier access to credit and social media, along with e-commerce, have also become enablers of consumption.
• Scope in individual regions: The large size of our economy and the economic output of each geography offers scalable opportunities for regional businesses as well. It isn’t necessary for a country-wide presence for companies to scale up. 

This theme is set to play out over the next few years. As the theme draws to a close, this thematic portfolio will pick up the next great opportunity.