India’s Per Capita Income Set to Surpass $5,000 by 2031: Franklin Templeton

India is on the verge of a major economic transformation, with per capita income projected to cross $5,000 by 2031, according to a recent Franklin Templeton report titled “Beyond Necessities: India’s Affluence-Driven Growth.” This surge in income is expected to reshape consumer behaviour, drive premiumisation, and establish India as a leading consumption-led economy in the next decade.

Rising Incomes to Trigger Lifestyle Spending

The report highlights that India’s per capita income has already exceeded $2,600 in FY2025 and is likely to double within the next six years. This growth will push the nation into an “affluence trigger zone,” where consumption patterns shift from basic needs to aspirational products and services. As more households rise into higher income brackets, discretionary spending is expected to account for a larger share of total consumption.

Wealth Effect and Expanding Affluent Class

Equity markets, real estate, and gold are contributing significantly to household wealth creation, boosting consumer confidence and spending power. The proportion of upper-middle and rich households in India is projected to rise from 11.1 per cent in 2010 to nearly 24 per cent by 2035, meaning that one in four households will have substantial discretionary spending capacity. This evolution is set to create a structural shift towards a more consumption-driven economy.

Premiumisation and Shift in Consumption Mix

With per capita income on a steady upward trajectory, the share of non-essential items in overall consumption is forecast to climb from 36 per cent currently to 43 per cent by FY2030. Premium segments are already outpacing mass-market categories—premium detergents are growing at a 26 per cent CAGR compared to 7 per cent for standard products, while green tea consumption is rising 25 per cent against 10 per cent for regular tea. This trend reflects a maturing consumer base increasingly driven by quality and brand value.

Exam Oriented Facts

• India’s per capita income projected to reach $5,242 by 2031.
• Share of affluent households to increase from 11.1% in 2010 to 24% by 2035.
• Non-essential consumption expected to rise to 43% by FY2030.
• Premium goods growing up to three times faster than mass-market products.

Affluence to Drive Future Economic Growth

The top 20 per cent of Indian households contribute nearly 85 per cent of total savings, reinforcing their influence on national consumption trends. With consumption already forming around 60 per cent of India’s GDP, rising affluence, urbanisation, and digital access are set to redefine the country’s growth path. As this convergence continues, India is poised to transition from necessity-led to aspiration-led demand, anchoring its next phase of economic expansion on the spending power of its growing middle and affluent classes.