A recent report by Blume Ventures has shed light on a major economic divide in India. According to the report, 100 crore Indians lack the financial ability to spend beyond their basic needs. Despite India’s large population of over 1.4 billion (143 crore), only a small portion—about 13-14 crore people—fall into the "consuming class." This group has enough disposable income to afford non-essential goods and services.

Understanding the Economic Divide

The report highlights that India's economy relies heavily on consumer spending. However, the majority of the population is unable to participate in this spending cycle. The consuming class, which makes up around 13-14 crore people, is the primary target for most businesses and startups. These individuals can afford luxury items, entertainment, travel, and other discretionary purchases.

On the other hand, there is a large segment of around 30 crore people known as "emerging" or "aspirant" consumers. These individuals have started spending more due to the rise of digital payments and increased financial accessibility. However, they remain cautious buyers, prioritizing essential needs over luxury items. The report describes them as “heavy consumers but reluctant payers.” This means that while they engage with brands and services, they often look for free or highly affordable options.

The remaining 100 crore people are largely unable to afford anything beyond their basic needs. For this group, survival is the main focus, and non-essential expenses are a luxury. This economic gap raises concerns about long-term financial stability and growth in the country.

Impact on Businesses and Startups

For startups and businesses, this economic divide presents both challenges and opportunities. Most companies focus on the consuming class, as they are the ones who have the financial capacity to buy products and services. However, with such a small percentage of the population having disposable income, businesses need to rethink their strategies.

One potential approach is to cater to the emerging consumers by offering affordable and value-for-money products. Companies that can create innovative, budget-friendly solutions will have a better chance of expanding their customer base. Digital payments, installment plans, and microfinance options can also help bring more people into the purchasing economy.

Additionally, businesses must focus on financial inclusion initiatives. By helping lower-income groups improve their earning potential, companies can indirectly grow their own market. This could involve skill development programs, better wages, or accessible financial services that empower people to spend beyond necessities.

The Role of Digital Payments

One positive trend in India’s economy is the increasing use of digital payments. Platforms like UPI (Unified Payments Interface) have made it easier for people to conduct transactions, even with small amounts of money. This has encouraged many emerging consumers to engage in online shopping, subscription services, and digital entertainment.

However, while digital payments have improved accessibility, they have not fully addressed the core issue—low disposable income. Many people still hesitate to spend on non-essential items because their financial situation remains uncertain. Businesses must focus on trust-building and affordability to encourage long-term spending habits.