Bengaluru and Chandigarh Overtake Delhi and Mumbai as India's Richest Cities by Average Household Income

Bengaluru and Chandigarh have emerged as India's richest cities based on average household income, overtaking Delhi and Mumbai, according to a Business Standard report based on People Research on India's Consumer Economy (PRICE) and Tata Sons Research.

As a result, Bengaluru and Chandigarh households earning an average annual income of ₹28.3 lakh are ranked at the top. The report is indicative of a shift in India’s economy and the fact that it is no longer a place of prosperity in big cities.

Another notable factor is Vadodara in Gujarat, where the average household income is ₹26 lakh per year. That is far ahead of Mumbai where the average annual household income is ₹24.2 lakh, highlighting the economic strength of emerging urban centres.

This paper challenges the long-held perception that India’s biggest metro cities dominate consumer spending. Indeed it indicates the country’s purchasing power is more broadly changing and a few non-metro cities have strong household incomes and consumption levels.

Chandigarh is also the first in household consumption, so not only do residents earn more but they spend a lot on goods and services. Thiruvananthapuram, Vadodara, Tiruppur, Surat and other major consumer markets follow.

We find that India’s economic growth is becoming more geographically diverse as incomes and spending are increasing outside the country’s biggest metros. This trend is expected to influence business strategies, retail expansion, real estate development and investment decisions as companies increasingly focus on high-growth Tier-2 and Tier-3 cities.

Experts believe the report reflects changing employment patterns, fast urban development, expanding industries and improving infrastructure of several Indian cities. Bengaluru’s thriving technology sector and Chandigarh’s high quality of living have been a big reason for their top rankings.

There is also little doubt that businesses cannot be content to rely only on Delhi and Mumbai as the driving force behind consumer demand now that the research also shows businesses need to look to other cities as they are growing. As disposable incomes rise in several areas, firms might be more likely to go to the cities where people can afford to spend money and the economy is growing and will be able to do more and more in a sustained way.

The report substantiates the view that India’s consumer economy is evolving very quickly, and that new economic centers are becoming central to the country’s growth story.