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India unlocking the Missing Middle

40m to the next Billion - Technology unlock has raised India’s consuming class to ~ 350mn people vs < 60mn earlier

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India unlocking the Missing Middle

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  2. 2. Elite (11M HHs, 4%) >$37k annual gross HH income Wealthiest class in India Affluent (26M HHs, 9%) $18.5k-$37k annual gross HH income Top 6-10% of highest income HHs Aspires (66M HHs, 23%) $7.4k-18.5k annual gross HH income Middle Class- Looking to trade up & aspire to upgrade (Disposable Income - 60%) Next Billion (103M HHs, 500m, 36%) $3.3k-$7.4k annual gross HH income New Consumers- HHs have some disposable income (33%), total spend $1 T Strugglers (80M HHs, 28%) <$3.3k annual gross HH income HHs with the majority of spend on basic needs such as food, shelter, power & water India 2020 India 1 Elite, Affluent and Aspirers (Current Opportunity) India 2 Next Billion (New Opportunity) India 3 Strugglers
  3. 3. The Missing Middle Large informal economy > 45% of GDP Informal employment 80% of workforce Low per capita spending 97% of population lives on < US$10 per day Lack of data Only 3% of population pays taxes
  4. 4. Unlocking India 2 (Bharat) Potential in 3 Steps India Stack Technology backbone for presence-less, paperless and cashless economy Financial Inclusion Payments, Lending, Savings 2nd Derivatives Healthcare Entertainment Consumer Cleantech Supply Chain Tech …
  5. 5. Digital Identity 1 Billion have Aadhaar Mobile 200 M smartphones 350 M have internet 25 M smartphones sold per quarter India is changing GST 70 Mn entities with digital invoices. Pulling in smaller enterprises into the formal economy
  6. 6. 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 LAYER Aadhaar 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) OTHERS INDIASTACK TOLLS (ETC) JAM Jan Dhan, Aadhaar, Mobile India Stack
  7. 7. Source: UIDAI, NPCI, TRAI Website, Conversations with NPCI, eMudhra, Deity 3 Bn Authentications of 500M unique ids 1.075 BnEnrolments In 6 years since launch 340 Mn eKYC in 3 years 75 Mn unique ids 349 Mn APB Accounts Linked 1.2 B Transactions worth 4.5 B USD in 3 years >2.5 Mn e-Sign in 15 months >0.8 Mn unique ids 2.9 Mn Digilocker users & 15 months 4.8 Mn Uploaded Docs 2M+ UPI VPA in Just under 2 Months 252 MnJan Dhan bank accounts 200 MnSmartphones 1060 Mn Phone numbers Jan Dhan Aadhaar Mobile
  8. 8. Time Winning ‘Next Billion’ Consumers needs new mindset PenetrationS-Curve 1 focused on India 1 S-Curve 2 focused on India 2 (Bharat) Almost fully penetrated Created winners like FK, Amazon India, HDFC Bank Copy-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 models China or US Copy-paste business models won’t work
  9. 9. India 2 | Financial Inclusion India Stack Technology backbone for presence-less, paperless and cashless economy Financial Inclusion Payments, Lending, Savings 2nd Derivatives Healthcare Entertainment Consumer Cleantech Supply Chain Tech …
  10. 10. 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 3x Total value of digital payments by 2020 is estimated to be USD 1 Trillion
  11. 11. 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/
  12. 12. ● 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%
  13. 13. India 2 | 2nd Derivatives India Stack Technology backbone for presence-less, paperless and cashless economy Financial Inclusion Payments, Lending, Savings 2nd Derivatives Healthcare Entertainment Consumer Cleantech Supply Chain Tech …
  14. 14. Opportunity is large...Healthcare India needs 4x doctors and 2x nurses to serve the population Entertainment Local language internet users set to cross 500 Mn by 2020
  15. 15. 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
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