By Mathias Henry

India is home to 1.4 billion people, but around a billion among them don't have enough money to spend on any discretionary goods or services, a new report estimates.

The country's consuming class, which is effectively the potential market for start-ups or business owners, is only about as big as Mexico - 130-140 million people - according to the report from Blume Ventures, a venture capital firm.

There are another 300 million "emerging" or "aspirant" consumers, but they are reluctant spenders who've only just begun to open their purse strings, as click-of-a-button digital payments make it easy to transact.

What's more, the consuming class in Asia's third largest economy isn't "widening" as much as it is "deepening", according to the report. Which basically means India's wealthy population isn't really growing in numbers, even though those who are already rich are getting even richer.

All of this is shaping the country's consumer market in distinct ways, particularly accelerating the trend of "premiumisation" where brands drive growth by doubling down on expensive, upgraded products catering to the wealthy, rather than focusing on mass-market offerings.

This is evident in zooming sales of ultra-luxury gated housing and premium phones, even as their lower-end variants struggle. Affordable homes now constitute just 18% of India's overall market compared with 40% five years ago. Branded goods are also capturing a bigger share of the market. And the "experience economy" is booming, with expensive tickets for concerts of international artists like Coldplay and Ed Sheeran selling like hot cakes.

Companies that have adapted to these shifts have thrived, Sajith Pai, one of the report's authors, told the BBC. "Those who are too focused at the mass end or have a product mix that doesn't have exposure to the premium end have lost market share."

The report's findings bolster the long-held view that India's post-pandemic recovery has been K-shaped - where the rich have gotten richer, while the poor have lost purchasing power.

In fact, this has been a long-term structural trend that began even before the pandemic. India has been getting increasingly more unequal, with the top 10% of Indians now holding 57.7% of national income compared with 34% in 1990. The bottom half, meanwhile, have seen their share of national income reduce from 22.2% to 15%.

The latest consumption slump, however, has deepened amid not just a destruction in purchasing power, but also a precipitous drop in financial savings and surging indebtedness among the masses.

The country's central bank has also cracked down on easy unsecured lending that propped up demand post the Covid pandemic.

Much of the consumption spending of the "emerging" or "aspirant" class of Indians was led by such borrowings and "turning off that tap will definitely have some impact on consumption", said Pai.

In the short run, two things are expected to help boost spending - a pick-up in rural demand on the back of a record harvest and a $12 billion tax give-away in the recently-concluded budget. It won't be "dramatic", but could boost India's GDP - largely driven by consumption - by over half a percent, says Pai.

But major longer-term headwinds remain.

India's middle class - which has been a major engine for consumer demand - is being squeezed out, with wages pretty much staying flat, shows data compiled by Marcellus Investment Managers.

"The middle 50% of India's tax-paying population has seen its income stagnate in absolute terms over the past decade. This implies a halving of income in real (adjusted for inflation) terms," according to the report, published in January.

"This financial hammering has decimated the middle class's savings - the RBI [Reserve Bank of India] has repeatedly highlighted that net financial savings of Indian households are approaching a 50-year low. This pounding suggests that products and services associated with middle-class household spending are likely to face a rough time in the years ahead," it adds.

The Marcellus report also points out that white-collar urban jobs are becoming harder to come by as artificial intelligence automates clerical, secretarial and other routine work. "The number of supervisors employed in manufacturing units (as a percentage of all employed) in India has gone down significantly," it adds.

The government's recent economic survey has flagged these concerns as well.

It says labour displacement as a result of these technological advancements is of particular concern for a majorly services-driven economy like India, where a significant share of the IT workforce is employed in low value-added services sectors that are most prone to disruption.

"India is also a consumption-based economy, thus the fall in consumption that can result from the displacement of its workforce is bound to have macroeconomic implications. If the worst-case projections materialise, this could have the potential to set the country's economic growth trajectory off course," the survey said.

By Jena Aldredge

"I just wanted to own a house and pay off my debts - that's why I decided to sell my kidney," says Zeya, a farm worker in Myanmar.

Prices had soared after a military coup in 2021 triggered civil war. He could barely feed his young family and was badly in debt.

They all lived in his mother-in-law's house, in a village where thatched houses lined dirt roads, a few hours' drive from the country's largest city, Yangon.

Zeya, whose name has been changed to conceal his identity, knew of local people who had sold one of their kidneys. "They looked healthy to me," he says. So he started asking around.

He is one of eight people in the area who told NewStori Post Burmese they had sold a kidney by travelling to India.

Illegal organ trading is a problem across Asia, and Zeya's story gives an insight into how it takes place.

Arranging the deal

Buying or selling human organs is illegal in both Myanmar and India, but Zeya says he soon found a man he describes as a "broker".

He says the man arranged medical tests and, a few weeks later, told him a potential recipient - a Burmese woman - had been found, and that both of them could travel to India for the surgery.

In India, if the donor and recipient are not close relatives, they must demonstrate that the motive is altruistic and explain the relationship between them.

Zeya says the broker forged a document, which every household in Myanmar must have, listing the details of family members.

"The broker put my name in the recipient's family tree," he explains.

He says the broker made it appear as if he was donating to someone he was related to by marriage: "Someone who is not a blood relative, but a distant relative".

Then, he says, the broker took him to meet the recipient in Yangon. There, he says a man who introduced himself as a doctor completed more paperwork and warned Zeya he would have to pay a substantial fee if he backed out.

The NewStori Post contacted this man afterwards, who said his role was to check whether a patient was fit to undergo the procedure, not to check the relationship between donor and recipient.

Zeya says he was told he would receive 7.5m Myanmar kyats. This has been worth somewhere between $1,700 and $2,700 over the past couple of years - the unofficial exchange rate has fluctuated since the coup.

He says he flew to northern India for the operation and it took place in a large hospital.

All transplants involving foreign nationals in India must be approved by a panel called an authorisation committee, established either by the hospital or by local government.

Zeya says he was interviewed, via a translator, by about four people.

"They asked me if I was willingly donating my kidney to her, not by force," he says.

He says he explained the recipient was a relative and the transplant was approved.

Zeya remembers the doctors administering the anaesthetic before he lost consciousness.

"There were no big issues after the surgery, except that I couldn't move without pain," he says, adding that he stayed in hospital for a week afterwards.

'Fake mum'

Another donor, Myo Win - also not his real name - told the NewStori Post he too had pretended to be related to a stranger.

"The broker gave me a piece of paper, and I had to memorise what was written on it," he says, adding that he was told to say the recipient was married to one of his relatives.

"The person assessing my case also called my mum, but the broker arranged a fake mum for the call," he says. He adds that the person who answered the call confirmed he was donating his kidney to a relative with her permission.

Myo Win says he was offered the same amount of money as Zeya, but that it was described as a "charitable donation", and he had to pay the broker about 10% of the amount.

Both men say they were given a third of the money up front. Myo Win says this was in his thoughts as he entered the operating theatre: "I made up my mind that I had to do it because I had already taken their money."

He adds that he "chose this desperate way" as he was struggling with debt and medical bills for his wife.

Unemployment rates have climbed in Myanmar since the coup - the war has ravaged the economy and sent foreign investors fleeing. In 2017, a quarter of the population were living in poverty - but by 2023, this had risen to half, according to the UN's development agency, UNDP.

Myo Win says the broker did not tell him selling his kidney was illegal. "I wouldn't have done it if he did. I am afraid of ending up in prison," he says.

The NewStori Post is not naming any of organisations or individuals involved in order to protect the anonymity and safety of the interviewees.

However, another man in Myanmar, also speaking anonymously, told the NewStori Post he had helped about 10 people buy or sell kidneys via surgery in India.

He said he referred people to an "agency" in Mandalay in central Myanmar, which he said made arrangements.

"But don't worry about donors," he said. "We have a list of donors who are queuing up to donate their kidneys."

He too said documents were faked to label strangers as related by marriage. When asked whether he received money for his help, he did not answer. Arrests in India

Organ transplants have increased by more than 50% worldwide since 2010, with about 150,000 carried out annually, according to the World Health Organization (WHO). But it says the supply of organs meets only about 10% of global need.

Trading in human body parts is illegal in nearly all countries and is hard to measure. In 2007, the WHO estimated that 5-10% of transplanted organs came from the black market, but the figure may be higher.

Illegal kidney sales driven by poverty have been documented in recent years across Asia, including in Nepal, Pakistan, Indonesia, Afghanistan, India and Bangladesh.

India has long been a hub for medical tourism and concern there about kidney sales has been rising, following accounts in media reports and a recent police investigation.

Last July, Indian police said they had arrested seven people in connection with an alleged kidney racket, including an Indian doctor and her assistant.

Police allege the group arranged for poor Bangladeshis to sell their kidneys, using forged documents to secure approval for the transplants.

Dr Vijaya Rajakumari, who had been working at the prestigious Indraprastha Apollo Hospital in Delhi, is alleged to have carried out the operations as a visiting consultant at a different hospital, Yatharth, a few kilometres away.

Her lawyer told the NewStori Post the allegations "are entirely baseless and without evidence", that she only carried out surgeries approved by authorisation committees and always acted in accordance with the law. According to her bail order, she is not accused of preparing forged documents.

Yatharth Hospital told the NewStori Post all its cases, including those managed by visiting consultants, "are subject to our robust protocols to ensure compliance with legal and ethical standards".

"We have further enhanced our processes to prevent any such occurrences in the future," the hospital said.

After her arrest, Apollo Hospitals said Dr Rajakumari was a freelance consultant engaged on a fee-for-service basis and it had discontinued all clinical engagements with her.

Dr Rajakumari has not been charged in court.

'No regrets'

Last April, a senior health ministry official wrote to Indian states warning of a "surge" in transplants involving foreigners and calling for better monitoring.

Under Indian law, foreign nationals who wish to donate or receive organs must have their documents, including those showing the relationship between donor and recipient, verified by their own country's embassy in India.

The NewStori Post contacted India's heath ministry and the National Organ and Tissue Transplant Organization, as well as Myanmar's military government for comment, but has received no response.

A public health campaigner in Myanmar, Dr Thurein Hlaing Win, said: "Law enforcement is not effective."

He added that potential donors need to be aware of the risks, including of bleeding during surgery and damage to other organs, adding that proper follow-up care is needed.

The NewStori Post last heard from Zeya several months after his surgery.

"I was able to settle my debts and bought a plot of land," he said.

But he said he couldn't afford to build a house and had not been able to construct one while recovering from the surgery. He said he had been suffering from back pain.

"I have to restart working soon. If the side effects strike again, I have to deal with it. I have no regrets about it," he added.

He said he stayed in touch with the recipient for a while, and she had told him she was in good health with his kidney.

Speaking on condition of anonymity, she told the NewStori Post she paid 100m kyats (between around $22,000 and $35,000 in recent years) in total. She denied that documents were forged, maintaining that Zeya was her relative.

Six months after his surgery, Myo Win told the NewStori Post he had paid off most of his debts, but not all.

"I have no job and not even a penny left," he said, adding that he had been experiencing some stomach problems since the surgery.

He said he had no regrets, but then added: "I am telling other people not to do this. It is not good."