Indian economy is known for domestic consumption, in 2022 private consumption was 60.55% which is increased by 1.45 points to 62% of India’s GDP as per Se 2024.
After exemption in tax of individual households up to 12 lakhs will further boost the consumption sector. The consumption sector is going to play major role for India’s [**economic growth**](https://www.wealthplys.com/blog-detail.php?slug=indian-economy-2030) story and this sector is set to rise in the long term.
As per S&P Global India’s nominal GDP will grow to [**$7.3 trillion by 2030**](https://www.wealthplys.com/blog-detail.php?slug=indian-economy-2030), almost double from it’s current GDP. Also, by 2030 India's share of Global GDP will grow from 3.6% to 4.6%.
Before going ahead let’s discuss key drivers for strong growth of the consumption sector and the Indian economy:
**Per Capita Income:** Rising GDP per capita income from $442 in 2000 to $2940 in Jan 2025 (source IMF). It is projected to reach $4200 by 2029 due to higher participation of the young population in the economy, and an increased working-age population.
Increased investment in infrastructure and government policy reforms in [**manufacturing**](https://www.wealthplys.com/blog-detail.php?slug=major-factor-investment-possibilities-of-indias-automotive-sector) and other sectors. Also, the government has taken initiatives to boost private consumption, reviving domestic demand and increasing capital expenditure.
**Digital Economy Growth:** Digital presence in India expanding rapidly, The Indian economy has seen several changes in digital space like the development of digital infra, promoting innovation, and empowering citizens. National Digital Communication Policy (NDCP) 2018 has supported this digital infrastructure development and expanding broad base connectivity.
As per mid-2024, there are 650 million users using smartphone and more than 950 million internet users subscribed for the internet. India’s digital economy going to reach around trillion-dollar valuations in coming years with better rural development, skill development with improved digital infrastructure, and expansion of internet access to remote areas. Further out of 644131 villages in the country have access to 3G/4G mobile connectivity, 95.15% of villages have internet access in India. (villages data as per Registrar General of India)
How digital penetration has significantly expanded in the last 10 years, with internet subscribers from 251 million to 954 million in 2024 and internet penetration from 14% to 52% in the same period.
**Demographic Dividend: The** Indian economy has a potential growth trajectory, the reason for India's demographic dividends, and key drivers are urbanization, the government's huge investment in infrastructure, and the expanding middle class, Indian middle class is expected to reach by 38% of the total population by 2030 and 60% by 2047.
More than half a percentage of consumption will be driven by the middle class by 2030-31.
**Government Initiatives:** Government initiatives like Startup India, and Make in India. India has 2.87% share of global manufacturing, whereas China has 31.63%.
Due to government initiatives and China+1 has make India a favorable destination for foreign companies. India is going to be the next manufacturing hub reason behind rising working-age population, and increasing per capita income that further will boost consumption, expanding middle class, and urbanization. Also, manufacturing shifted to India due to multiple reasons like a monthly minimum wage Rs. 5074 in India compare to China Rs. 24596, which is very high, a geo-political issue, a trade war, India has high working age population, and mass consumption. Foreign companies are looking at India as an alternative investment opportunity against China.
**Infrastructure Development:** Last but not least government spending on infrastructure plays a crucial role to boost the economic growth of the country like railway, road, power, and ports. The Indian government has taken remarkable infrastructure development in the past few years.
Final conclusion, India is on the growth track to become [**3rd largest economy by 2047**](https://www.wealthplys.com/blog-detail.php?slug=indian-economy-2030). That is up to us that how we can as individual can be a part of this and take the opportunity of this new era.
**Written By**
**Surendra Jauhari**
[**www.wealthplys.com**](http://www.wealthplys.com/)