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Monday, February 3, 2025, 1:25 pm

Monday, February 3, 2025, 1:25 pm

Middle class will be saved by whom?

Middle class will be saved by whom?
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The economy relied on the middle class to generate GDP, but vehicle and FMCG purchases have declined. The middle class’s reputation for saving money has declined. Sluggish spending and low savings raise concerns about the country’s GDP growth rate.

Corporate leaders are often reluctant to confront difficult truths, especially when the government is powerful and autocratic. Nestle India’s CEO’s warning that the country’s middle class is diminishing, following a drop in quarterly growth numbers, should be taken seriously.
Consumption, particularly among the middle class, has been stagnating for several years, so this is not an isolated incident.

The questions are: is India’s economic progress just visible among the elite, and what does the decreasing middle class mean for the country?
According to Pew Research, India’s middle class grew from 50-70 million in 2010 to approximately 150 million a decade later.

During 2004-14, the middle class had rapid expansion, contributing to the flourishing economy. International banks and financial organizations projected the middle class to be approximately 500 million. The economy was projected to rebound in the post-Covid years, with this intended to serve as its foundation.

The recovery appears to be lopsided, with only the wealthy and upper class consuming goods and services, while approximately 16-17 percent of Indians are classified as poor according to the multi-dimensional poverty index. Although the middle class was expected to drive GDP, vehicle purchases and FMCG sales have declined. Middle-class savings have also decreased, as evidenced by verifiable data. Slowing consumption and low savings create concerns about the country’s GDP growth. Are the government’s assertions accurate?

Dr. Abhishek Verma


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