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The Bottom of The Indian Pyramid

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The Indian pyramid has too large a bottom - Not very flattering for a lady aspiring for a leaner and meaner constitution. …

The Indian pyramid has too large a bottom - Not very flattering for a lady aspiring for a leaner and meaner constitution.
Who exactly are the BOP (Bottom of the Pyramid) consumers? Our research based on available secondary data provides us with income, expenditure and savings profile for six income classifications. These classifications are based on household incomes. We define the bottom two classes (less than 75,000 pa and 75,000 to 150,000 pa) as the BOP consumers. Our estimates for 2008-09, show that of the total 70 million urban households, 39.5% or 27.7 million are BOP, by our estimates. In the rural segment BOPs are more prevalent, as many as 81.2% of the 159.3 million rural households are BOP. This is a very high proportion, and tells us that in spite of the moderate economic successes over the last 15 years, we have a long way to go.
The good news is that the direction is positive. In 2006-07, our estimates show that urban BOPs were 45.3% of the households and rural BOP households constituted 84.3% of the households. However, a cursory look at the pace of change shows that it is clearly not good enough. For instance, at this rate it will take rural households at least 25 years to reach the proportions that urban households have, which itself is not very flattering.

Source: Market Skyline of India
The urban rural divide in income is quite stark. 39.5% of the urban BOP households on aggregate earn only 15% of what the upper segment earns and one can hope that this segment will move upwards very fast. In rural India though, the BOP are so large in proportion (81% of the households) that they account for almost half the total income of rural India. Urban India is of course better off, having a marginally higher aggregate income than rural India, though it is less than half the rural households in numbers.


Source: Market Skyline of India

The precarious position of the BOP households is reflected in their low savings. The total household savings of the BOP segment is only about 80% of the others in value, though their aggregate incomes are at similar levels. This is not surprising, since they have to spend a higher proportion of their incomes on basic necessities leaving them with very little surplus

The bottom of the pyramid in India is very large. The Indian pyramid has too large a bottom - Not very flattering for a lady aspiring for a leaner and meaner constitution.

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  • 1. Indicus Analytics, An Economics Research Firm http://indicus.net/Blog/Index.php The Bottom of The Indian Pyramid The Indian pyramid has too large a bottom - Not very flattering for a lady aspiring for a leaner and meaner constitution. Who exactly are the BOP (Bottom of the Pyramid) consumers? Our research based on available secondary data provides us with income, expenditure and savings profile for six income classifications. These classifications are based on household incomes. We define the bottom two classes (less than 75,000 pa and 75,000 to 150,000 pa) as the BOP consumers. Our estimates for 2008-09, show that of the total 70 million urban households, 39.5% or 27.7 million are BOP, by our estimates. In the rural segment BOPs are more prevalent, as many as 81.2% of the 159.3 million rural households are BOP. This is a very high proportion, and tells us that in spite of the moderate economic successes over the last 15 years, we have a long way to go. The good news is that the direction is positive. In 2006-07, our estimates show that urban BOPs were 45.3% of the households and rural BOP households constituted 84.3% of the households. However, a cursory look at the pace of change shows that it is clearly not good enough. For instance, at this rate it
  • 2. Indicus Analytics, An Economics Research Firm http://indicus.net/Blog/Index.php will take rural households at least 25 years to reach the proportions that urban households have, which itself is not very flattering. Source: Market Skyline of India The urban rural divide in income is quite stark. 39.5% of the urban BOP households on aggregate earn only 15% of what the upper segment earns and one can hope that this segment will move upwards very fast. In rural India though, the BOP are so large in proportion (81% of the households) that they account for almost half the total income of rural India. Urban India is of course better off, having a marginally higher aggregate income than rural India, though it is less than half the rural households in numbers.
  • 3. Indicus Analytics, An Economics Research Firm http://indicus.net/Blog/Index.php Source: Market Skyline of India The precarious position of the BOP households is reflected in their low savings. The total household savings of the BOP segment is only about 80% of the others in value, though their aggregate incomes are at similar levels. This is not surprising, since they have to spend a higher proportion of their incomes on basic necessities leaving them with very little surplus The bottom of the pyramid in India is very large. The Indian pyramid has too large a bottom - Not very flattering for a lady aspiring for a leaner and meaner constitution.