The Middle Class Seems Missing From Our Growth Story

Our Rapid Economic Emergence Cannot Afford to Leave Such a Significant Group Behind

- TULSI JAYAKUMAR

India's economy clocked a robust 7.4% year-on-year growth in the fourth quarter of 2024-25 and is forecast to expand around 6.5% in fiscal year 2024-25. While this marks a slowdown from the 9.2% growth achieved in 2023-24, it still makes India one of the world's fastest-growing major economies. Against this backdrop, can one pin hopes on the country's burgeoning middle class to drive a consumption-led growth cycle—one reminiscent of China's transformative economic surge between 2000 and 2010?

The research centre PRICE defines a 'middle-class' Indian as someone earning between ₹1.09 lakh and ₹6.46 lakh per year based on 2020-21 prices, or belonging to a household earning ₹5 lakh to ₹30 lakh annually. It anticipates this segment expanding from 432 million people in 2020-21 to 715 million by 2030-31 and further to over 1 billion by 2047, forming 61% of India's projected population of 1.66 billion. Yet, beneath the headline numbers, a troubling pattern has emerged: urban discretionary spending remains subdued. The Reserve Bank of India's (RBI) latest Urban Consumer Confidence Survey for May 2025 underscores this caution. The Current Confidence Index, which measures consumer sentiment, stays below the neutral mark at 95.4, having dipped marginally from March. While the Future Expectations Index rose to 123.4, signalling optimism, weak present sentiment continues to weigh on spending. People expect things to improve but hesitate to spend now.