Richest Segment in Urban India

This week we take up A4—the richest houseghousehold segment in urban India. A4 is a small segment with large families, households whose chief wage earners are graduates or postgraduates working as professionals, managers or businessmen. More importantly, they live with their children who are themselves married.

Household sizes are therefore large—more than half have more than five members. And with many earning members, just 17% of the households depend on just the chief wage earner’s income. Median household income is close to Rs6.5 lakh a year and more than one-quarter of these households earn more than Rs15 lakh a year—the highest proportion in this income bracket among all in the series.

The 600,000 households in this segment account for a little more than 1% of the urban population, but the high education and income profile makes this an important consumer segment for marketeers.

Two-thirds of the households have senior citizens while three-quarters have children, so the spectrum of goods and services consumed by this segment spans all ages. A4 households spend the highest share among all segments on services, the highest in fact on conveyance. Children are given vehicles as soon as they are eligible to drive, most graduating to four-wheelers at the earliest. Entertainment, especially at hotels, multiplexes and malls, is high on the agenda for weekends, while holidays are spent abroad or at top-end destinations within the country—this is after all an affluent segment. A4 households spend a very small proportion of their budget on rent, as 86% of them own the homes they live in.

Yet, there are some households that earn less than Rs3 lakh per year; they comprise less than one-fifth of the total. After all, not all the A4 chief wage earners have college degrees. Their family backgrounds can be quite diverse and more importantly, the sectors of employment are extremely varied—construction and real estate, manufacturing, education, health and social work all make up for around 20% of the sectoral employment each. There is also a nearly even split in this segment between those who are self-employed and those who have regular salaries.

Further, income also depends upon the opportunities to earn in the cities—a doctor or lawyer in Mumbai for instance would earn much more than one with similar qualifications in a smaller town, say Jabalpur or Jorhat. Even within large metros, there would be variations in income—a doctor in south Mumbai would have a very different practice compared with one in Jogeshwari, for instance. The point being made here is that there is still considerable variation within this segment, even though it is a much more affluent segment than the others in urban India. Consumption patterns would remain largely similar across all the households in this segment, even though the levels would differ.

A4 households are joint families, an anomaly in urban India, especially among the higher income groups. The advantages of living in the same house could be economic (saving on rent, children still to earn enough to live in separate homes) or social (the neighbourhood is a good one, close to schools or clubs, etc.). Or again, family ties just may be stronger than the individualistic need to break away.


Prasad & Ankur Singh