india unlocking the missing middle
TRANSCRIPT
“
Elite (11M HHs, 4%)>$37k annual gross HH incomeWealthiest class in IndiaAffluent (26M HHs, 9%)$18.5k-$37k annual gross HH incomeTop 6-10% of highest income HHsAspires (66M HHs, 23%)$7.4k-18.5k annual gross HH incomeMiddle Class- Looking to trade up & aspire to upgrade (Disposable Income - 60%)Next Billion (103M HHs, 500m, 36%)$3.3k-$7.4k annual gross HH incomeNew Consumers- HHs have some disposable income (33%), total spend $1 T
Strugglers (80M HHs, 28%)<$3.3k annual gross HH incomeHHs with the majority of spend on basic needs such as food, shelter, power & water
India 2020
India 1Elite, Affluent and Aspirers (Current Opportunity)
India 2 Next Billion (New Opportunity)
India 3 Strugglers
The Missing Middle
Large informal economy
> 45% of GDP
Informal employment80% of workforce
Low per capita spending
97% of population
lives on < US$10 per day
Lack of data Only 3% of population pays taxes
Unlocking India 2 (Bharat) Potential in 3 Steps
India StackTechnology
backbone for presence-less, paperless and
cashless economy
Financial InclusionPayments,
Lending, Savings
2nd DerivativesHealthcareEntertainmentConsumer CleantechSupply Chain Tech…
Digital Identity1 Billion have Aadhaar
Mobile200 M smartphones350 M have internet25 M smartphones sold per quarter
India is changing
GST70 Mn entities with digital invoices. Pulling in smaller enterprises into the formal economy
PRESENCE-LESS LAYER
Aadhaar Authentication
Unique digital biometric identity with open access of
nearly a Billion users
CONSENT LAYER National Policy on Data Sharing
Provides a modern privacy data sharing framework
PAPERLESS LAYERAadhaar e-KYC,E-sign, Digital
Locker
Rapidly growing base of paperless systems with
billions of artifacts
CASHLESS LAYER IMPS, AEPS, APB, and UPI
Game changing electronic payment systems and transition to cashless
economy
COMMERCE
(GSTn)SUBSIDIES
(DBT)BILLS
(BBPS)OTHE
RS
I N D
I A
S
T A
C K
TOLLS(ETC)
JAM Jan Dhan, Aadhaar, Mobile
India Stack
Source: UIDAI, NPCI, TRAI Website, Conversations with NPCI, eMudhra, Deity officials
3 BnAuthentications of 500M unique ids
1.075 Bn
Enrolments In 6 years since launch
340 MneKYC in 3 years75 Mn unique ids
349 MnAPB Accounts Linked1.2 B Transactions worth 4.5 B USD in 3 years>2.5
Mne-Sign in 15 months>0.8 Mn unique ids
2.9 MnDigilocker users & 15 months
4.8 MnUploaded Docs
2M+UPI VPA in Just under 2 Months
252 Mn
Jan Dhan bank accounts
200 MnSmartphones1060
MnPhone numbers
Jan Dhan
Aadhaar Mobile
Time
Winning ‘Next Billion’ Consumers needs new mindset
Pene
tra tion
S-Curve 1 focused on India 1
S-Curve 2 focused on India 2 (Bharat)
Almost fully penetratedCreated winners like FK, Amazon India, HDFC BankCopy-paste business models
Sizeable discretionary spending power and appetite: - Consumption Spend is $1T in 2020- Unrecognized profit pools- China scale: 36% of population = ~500M people
Unknown and unverified business modelsChina or US Copy-paste business models won’t work
India 2 | Financial Inclusion
India StackTechnology
backbone for presence-less, paperless and
cashless economy
Financial InclusionPayments,
Lending, Savings
2nd DerivativesHealthcareEntertainmentConsumer CleantechSupply Chain Tech…
2.0x86% 690M
Payments
Currency in
circulation
withdrawn
Card base now
activated. 2.5x card
transactions in 1 month
Digital transactions are up 2x. Share of
payments 3xTotal value of digital payments by 2020 is estimated to be
USD 1 Trillion
Consumer Lending
Debt penetration remains low, with <30% households having any form of debt
Overall household debt to GDP is < 20%, with banking sector consumer loans to GDP at ~10%
High Degree of Financial Exclusion
http://pn.ispirt.in/ispirt-the-india-stack-pilot-commercialization-of-techno-creative-innovations/
● 79% of enterprises in India have < 10 employees
● Lending to smaller enterprises is at a significantly higher rate
● With increasing digitization, share of bank lending should increase and cost of lending should come down
● Consumer and SME loans to grow 5x over the next 10 yrs.
SME Lending
High Degree of Financial Exclusion
93% of MSMEs are reliant on self finance
or no finance
Institutional Sources 5%
Non-Institutional Sources 2%
Self-Financed 93%
India 2 | 2nd Derivatives
India StackTechnology
backbone for presence-less, paperless and
cashless economy
Financial InclusionPayments,
Lending, Savings
2nd DerivativesHealthcareEntertainmentConsumer CleantechSupply Chain Tech…
Opportunity is large...
HealthcareIndia needs 4x doctors and 2x nurses to serve the population
EntertainmentLocal language
internet users set to cross 500 Mn by
2020
40m to the next Billion
Homegrown solutions are finding success tapping this opportunity and attracting capital
Technology unlock has raised India’s consuming class to ~ 350mn people vs < 60mn earlier
Inflection point in growth for solutions that leverage this tech infrastructure
16
“”