The narrative of India’s economic growth as one of the fastest in the world is compelling. Yet, beneath the surface, India’s middle class, often heralded as the driving force of its consumption-driven economy, faces a reality that is becoming increasingly challenging to ignore. Despite steady GDP growth rates, consumption patterns and purchasing power among middle-income households show clear signs of stagnation or even shrinkage.
This dichotomy between impressive macroeconomic numbers and the lived realities of a sizable portion of the population should be at the forefront of India’s economic discussions. Historically, the middle class has been pivotal in shaping demand, spurring industries ranging from FMCG to automotive and driving the nation’s domestic consumption. However, recent reports from both consumer goods and automotive sectors indicate troubling trends.
Many FMCG companies have noted a marked slowdown in sales within the middle-income segment, highlighting the diminishing consumption capacity of what was once their primary market. Auto dealers, too, are struggling with high inventories, a symptom of waning demand that contradicts the notion of broad-based prosperity. While luxury segments like SUVs continue to attract affluent buyers, entry-level car sales are declining, suggesting that many middle-income households are unable to participate in this apparent economic success story.
This gap between GDP growth and real, distributive prosperity reflects a K.
