“Income growth is the foundation, but aspiration is shaped by far more than income.”“Urbanisation broadens reference points, credit accelerates consumption, digital platforms expand possibilities, and evolving social norms encourage self-expression,” she said.
Today, food still takes up the biggest chunk of household spending, but its share is shrinking.
Increasingly, consumers are choosing older SUVs, premium variants and better-equipped vehicles instead of stretching their finances for a new entry-level car.“That is why premium and value segments can thrive simultaneously,” Upadhyay said.
“Premium and discretionary categories are growing meaningfully faster than basic consumption.
Consumers are becoming more willing to spend more on products and experiences they value, while remaining conscious of prices in routine categories.Rising aspiration does not necessarily mean households spend indiscriminately.
Live Events
Scarcity to choice
The car stopped being just a car
Mass consumption to premiumisation
Holidays enter the household budget
The Indian wallet is becoming global
From saving for security to investing for wealth
The middle class moves to centre stage
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When India woke up free on August 15, 1947, Independence did not immediately change the economic realities of everyday life.The country had inherited poverty, low literacy, food insecurity and minimal industrial capacity. For the average family, Independence was as much about the promise of better material life as it was about political freedom.One widely cited reconstruction by economist Amartya Sen and Jean Drèze put the share of Indians living below the poverty line at around 60% in 1947, while broader historical economic estimates generally place the poverty rate in 1947 between 70% and 80%.The precise number is debated but the larger picture is not.Poverty was pervasive and household consumption was overwhelmingly concentrated on necessities.For the first few decades, therefore, India's economic story was fundamentally about getting more people to the starting line.As the economy grew, urbanisation accelerated and employment diversified beyond agriculture, households gained access to goods that were once out of reach.A television was followed by a refrigerator, washing machine, two-wheeler and, eventually, a car.The family that once aspired to own a scooter may now be choosing between an SUV and an electric car. Savings, too, have moved beyond bank deposits, gold and property, with mutual funds, equities and insurance becoming increasingly familiar.One of the evidence of changing aspirations appears in the household budget.The numbers show that Indians are not just spending more. They are also spending differently.Poonam Upadhyay, Director at Crisil Ratings, describes the shift as “not from spending less to spending more, but from having limited options to having abundant choices.”“Earlier, aspiration centred on securing roti, kapda aur makaan. Today, it is about choosing which food to eat, which brand to wear and which locality to call home,” she said.According to Upadhyay, rising incomes have created the capacity to consume, while urbanisation, wider credit access and digital platforms have expanded the range of choices available to households. “Consumption is no longer organised around necessity; it is increasingly shaped by preference,” she said.As per the latest Household Consumption Expenditure Survey 2023-24 by the Ministry of Statistics and Programme Implementation (MoSPI), average monthly per-capita expenditure rose 9.3% in rural India and 8.3% in urban India.More importantly, the gap between what rural and urban households spend has been narrowing.In 2011-12, average urban spending was 84% higher than rural spending. By 2022-23, that gap had fallen to 71%, and it narrowed further to around 70% in 2023-24, according to data reported by The Times of India.This shows that the Indian consumption story is becoming more and more about households across the country gaining access to a wider range of choices.Upadhyay said income growth remains the foundation of this transformation, but is not the only factor driving aspiration. “Income growth is the foundation, but aspiration is shaped by far more than income.”“Urbanisation broadens reference points, credit accelerates consumption, digital platforms expand possibilities, and evolving social norms encourage self-expression,” she said. “Aspiration today is less about purchasing power and more about perceived possibility.”Increasingly, she said, consumers are influenced not only by what they earn, but by what they believe is within reach.Food offers perhaps the simplest way to see this transition.A few decades ago, a large part of the household budget had to go towards putting enough food on the table. Today, food still takes up the biggest chunk of household spending, but its share is shrinking. It accounts for about 47% of monthly expenditure in rural India and 40% in urban India.That leaves more of the household wallet available for everything that comes after the essentials: transport, healthcare, entertainment, housing, consumer electronics, personal care and other goods and services.And that means the Indian consumption story is, quite literally, moving beyond the plate.The automobile offers another window into changing aspirations.For decades, the traditional Indian car-buying journey involved purchasing a small hatchback and upgrading over time. But a report by Redseer Strategy Consultants showed that consumers are increasingly using the used-car market to move up the automotive ladder.Upadhyay said this shift is part of a broader pattern of selective premiumisation rather than broad-based affluence. “Consumers are trading up in categories that shape identity and experience, while staying value conscious in everyday purchases.”Redseer estimates that India's used-car market could become a nearly $70 billion opportunity by FY31, with annual sales potentially rising from about 6 million vehicles currently to 9-10 million.Nearly 65% of used-car buyers are first-time owners, according to the report.But these buyers are not necessarily looking only for the cheapest vehicle. Increasingly, consumers are choosing older SUVs, premium variants and better-equipped vehicles instead of stretching their finances for a new entry-level car.“That is why premium and value segments can thrive simultaneously,” Upadhyay said. “Indian consumer is not trying to buy more of everything; they are choosing what is worth paying more for.”The aspiration has therefore evolved from simply commuting, to owning a car, and now to accessing a better lifestyle and status through it.That appetite is also visible in the new-car market.On August 10, 2026, Maruti Suzuki chairman R C Bhargava said India's passenger vehicle market could grow to 6.1-6.3 million units annually by FY31, from 4.64 million in FY26.The company expects renewed demand for small cars alongside strong SUV sales.Upadhyay pointed to SUVs as a particularly clear example of the premiumisation trend. “Premium and discretionary categories are growing meaningfully faster than basic consumption. SUVs, for instance, now account for two-thirds of passenger vehicle sales, up sharply from less than one-third a decade ago.”“Similar trends are visible in travel, premium smartphones and experiential spending,” she said, adding that premiumisation is no longer confined to a few niche segments but has become “a defining feature of consumer demand across multiple categories.”The same pattern is playing out across consumer goods.An earlier ET Online report found that premiumisation remained resilient even as inflation pressured mass-market consumption. Companies including Hindustan Unilever , Diageo India, Shoppers Stop Reliance Retail and Metro Brands said consumers were cutting back in some lower-priced categories but continuing to upgrade in others.Upadhyay's assessment reinforces this distinction: the trend is better understood as selective premiumisation rather than a broad-based shift into affluence. Consumers are becoming more willing to spend more on products and experiences they value, while remaining conscious of prices in routine categories.Rising aspiration does not necessarily mean households spend indiscriminately. Instead, consumers increasingly prioritise certain purchases and trade up where they believe the additional spending is worthwhile.The smartphone market illustrates this.A May 2026 Kotak Mutual Fund report, cited by ET, found that smartphones priced above Rs 30,000 increased their market share from 20% in 2020 to 26% in 2025 even though overall smartphone sales remained broadly flat.The premiumisation story extends beyond products to experiences.Kotak's report estimated that India's live-events industry had reached around Rs 20,861 crore, comparable with the organised footwear market. Ticketed live events increased from about 19,000 in 2022 to 34,000 in 2025.Concerts, sporting events and entertainment are increasingly competing for the household wallet alongside conventional consumer goods.Perhaps nowhere is the change in aspiration more visible than travel.International holidays were once an occasional luxury for a small section of Indians. They are increasingly becoming a recurring expenditure for the expanding middle class.According to the Ministry of Tourism, Indian nationals made a record 32.83 million outbound trips in 2025, up 6.3% from the previous year.RBI's Liberalised Remittance Scheme data tells a similar story. Indians remitted nearly $29 billion overseas under the scheme in FY26, with more than $16.4 billion going towards travel.A June 2026 Wise report cited by ET Online found that 78% of surveyed Indian international travellers planned to increase overseas travel spending following the reduction in TCS on foreign travel expenses.The new aspiration basket increasingly extends beyond physical purchases.Overseas education, international investments, imported electronics, global streaming services, software and AI subscriptions are adding a foreign-currency dimension to household consumption.As per ET report, India's expanding middle class is increasingly spending on goods and services priced directly or indirectly in dollars.Additionally, RBI data cited by ET showed that Indians invested more than $2.65 billion in overseas equities and debt in FY26. In March 2026 alone, overseas equity and debt investments under LRS stood at $440 million, up 43% from a year earlier.For generations, bank deposits, gold and property formed the backbone of household wealth.Equity and mutual funds are now becoming a much bigger part of the picture.The Economic Survey 2025-26 said the share of equity and mutual funds in annual household financial savings rose from 2% in FY12 to more than 15.2% in FY25.Monthly SIP contributions increased around sevenfold, from less than Rs 4,000 crore in FY17 to more than Rs 28,000 crore during April-November of FY26.The investor base has also expanded dramatically, from around 3.1 crore people in FY20 to more than 11 crore by FY25.RBI data cited in the Economic Survey showed equity and investment funds rising from 15.7% of household financial assets in March 2019 to 23% by March 2025.This represents a change in the very definition of financial aspiration.Earlier, wealth was often associated with owning a house, gold or land. Increasingly, it also means building a portfolio capable of generating wealth over time.This transformation is creating a new engine for India's economy.Finance Minister Nirmala Sitharaman, in July, said that middle-class and aspirational consumers could account for 93% of India's spending by 2036.She also said nearly 500 cities could emerge as new centres of economic activity, with India's middle class increasingly spread across tier-II and tier-III cities rather than concentrated in the biggest metros.According to figures cited by the Finance Minister, 31% of India's population is currently middle class and the segment has grown at 6.3% annually since 1995.The geographical spread needs to be highlighted as India's consumption story is no longer limited to Mumbai, Delhi, Bengaluru or Chennai.The next wave of consumption is likely to come from smaller cities and towns as rising incomes create new consumers.
