India is transitioning to a 4C economy, but at what price?

India’s social-economic journey, with behaviour fuelled by digital access, has shifted to ‘4C economy’. Characterised by Consumption, Choice, Content and Creator-driven dynamics, this has consequences on the overall populace.

India boasts a demographic landscape with a significant focus on its younger population. With approximately 356 million individuals aged between 10 and 24, accounting for over a quarter of India’s total population, the youth demographic represents a powerful force driving economic and social change. Moreover, India is projected to remain the youngest country in the world until 2030, with the median age expected to be 31 years by then. This youthful cohort not only shapes consumer preferences and behaviours but also fuels entrepreneurial ventures and technological innovation, making them integral to India’s sustenance of its 4C economy.

At its core, the 4C economy is a departure from traditional models, redefining the essence of commerce and human interaction.

Consumption, the cornerstone of economic growth, now transcends mere transactions, evolving into an experience-driven phenomenon. In this era of heightened consumer expectations, businesses are compelled to innovate, offering personalised solutions that resonate with the discerning Indian consumer. The younger audience wants their experiences and memories to be rich, from a simple meal outing to a holiday or a shopping adventure to edutainment.

There is a discernible shift towards experiential consumption, where individuals prioritise enriching experiences over material possessions. Be it attending music festivals, exploring unique dining experiences, or seeking adventure travel, millennials and Gen Z are driving the demand for immersive and memorable experiences. This trend aligns with the notion of consumption in the 4C economy, where products and services are valued for their utility and the experiences they facilitate. Ownership is often secondary—a clear break from a more depraved generation, for whom ownership served as a buffer against future uncertainty and often became a surrogate for achievement.

Choice, once a luxury reserved for the elite, is a fundamental right in the 4C economy. Empowered by technological advancements and a large middle-class base, Indians embrace a newfound freedom in selecting products, services and lifestyles that align with their values and aspirations. This fosters healthy competition and catalyses creativity and innovation across industries. But this comes at what could be ‘unloyalty’— the consumers experiment with choices without any brand loyalty.

Central to the 4C economy is Content, the lifeblood of the digital age. In an era of information overload, compelling content is a powerful tool for engagement, differentiation, and brand loyalty. From immersive storytelling to influencer marketing, businesses harness content’s power to forge meaningful connections with consumers, driving brand affinity and advocacy. A product is much more than its physical attributes—it is meant for personal gratification and self-expression.

Perhaps the most profound aspect of India’s transition to the 4C economy lies in the rise of the Creator. Enabled by digital platforms and democratised access to information, individuals are transforming into entrepreneurs, artists, and thought leaders, leveraging their creativity and expertise to carve out niches in diverse industries. This democratisation of entrepreneurship not only fuels economic growth, but also fosters a culture of innovation and empowerment, enabling individuals to realise their full potential. The younger generation is leveraging their creativity to carve out niches and monetise their passions, from YouTube vloggers to Instagram influencers to LinkedIn thought leaders to indie musicians on streaming platforms.

Contra-view

While the transition to the 4C economy presents numerous opportunities for growth and innovation, it’s essential to acknowledge potential counterarguments and challenges associated with this shift. One contra view concerns the risk of widening socio-economic disparities amidst this transition. As India embraces a more consumption-driven economy, those from lower socio-economic backgrounds may be left behind, unable to afford the experiential and choice-driven consumption favoured by wealthier segments of society. This could exacerbate existing inequalities and deepen social divides.

Additionally, the rapid pace of technological change and digital transformation may inadvertently exclude certain segments of the population, particularly those in rural or less digitally connected areas. While the rise of the creator economy offers new opportunities for entrepreneurship and self-expression, there’s a risk of the benefits not getting equally distributed, with access to resources and opportunities disproportionately favouring urban, educated and tech-savvy individuals.

The emphasis on consumption and choice in the 4C economy also raises questions about its environmental sustainability. As consumption patterns evolve and consumer demand for goods and services grows, there’s a risk of increased resource depletion, pollution, and waste generation, exacerbating environmental challenges such as climate change and biodiversity loss.

Finally, while the rise of digital platforms and content creation democratises access to information and expression, it raises concerns about misinformation, online harassment, and privacy violations. The proliferation of fake news and algorithmic biases on social media platforms can exacerbate societal divisions, and undermine trust in institutions.

(Srinath Sridharan is a policy researcher and corporate adviser. Lloyd Mathias is a business strategist and angel investor)