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Business Standard
30-07-2025
- Business
- Business Standard
Best of BS Opinion: India's bold visions, sour gaps, and ripe debates
Every monsoon, when the fruit cart rolls into our lane, we usually spot the cherry box and instinctively reach for the reddest ones, until an old neighbour chuckles and informs us that the darkest ones are sweeter. Not all cherries are the same — some are crimson and glossy, others dusky and firm, a few are unexpectedly sour. Yet together, in one basket, they tell a richer story of variation than uniformity. That's what today's policy landscape feels like: a mix of bright ideas, deep-rooted challenges, and uncertain flavours. Taken separately, each issue raises its own questions. Taken together, they speak to the complexity of India's ongoing transformation. Let's dive in. The draft National Telecom Policy 2025, for instance, is a glossy red cherry, plump with promises of universal 5G, Rs 1 trillion in annual investment, and sweeping employment. But when you bite into it, the lack of short-term strategy and blind spots around industry stress, spectrum clarity, and PSUs leaves a sour aftertaste, notes our first editorial. If it has to deliver, the final version will need to ground itself in the messy soil of current telecom realities. A deeper red cherry, full of nostalgia and earthy depth, comes in the form of India's new National Cooperative Policy. Once a purely agrarian pillar, cooperatives now span 30 sectors. The government envisions a 30 per cent jump in cooperatives and digital revamps of PACS. But many cherries in this basket are bruised, like 40 per cent of PACS are defunct, and regulatory overlaps persist, highlights our second editorial. If digitisation, governance reforms, and export-readiness don't come together, this vision could rot on the tree. In his column, Ajay Tyagi cautions that India's grand cherries — Net-Zero 2070 and Viksit Bharat 2047 — might be all glossed if we don't define what sweetness actually means. Without measurable targets, time-bound plans, and political consensus, these could become overripe dreams that fall before harvest. Meanwhile, Tulsi Jayakumar peels back the skin on another kind of cherry — India Inc's promoter-run firms. Built for continuity, they are now exposed to boardroom fissures and weak governance. She argues it's time to evolve the model: rebalancing control, reforming boards, and restoring investor trust. And in The New Geography of Innovation: : The Global Contest for Breakthrough Technologies, Ajit Balakrishnan offers a fresh handful altogether. Mehran Gul's debut isn't a tech brochure, it's a global tasting tray. From Station F in Paris to China's AI breakthroughs, Gul dismantles the myth that Silicon Valley has the sole recipe for invention. What makes this book juicy isn't the data alone, but the 200 voices inside it, each shaping a new geography of ideas. Stay tuned!
Mint
25-06-2025
- Business
- Mint
The mystery of India's missing middle class: Is it really part of our growth story?
Next Story Tulsi Jayakumar Enough data points to the inability of this class to lead a consumption boom, a la China's. The consequences of this may be significant. India's economic emergence simply can't afford to leave such an important chunk of the population behind. If India's middle class stays on the margins of its growth story, the economic consequences could be significant. Gift this article 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. 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. Inflation expectations also weigh on consumption. Retail inflation eased to 2.82% in May, prompting a 50-basis-point rate cut by RBI. Yet, price pressures remain intense in essentials such as rent, education, healthcare and personal care. Softening food prices and improved real incomes brought some respite, but high urban living costs constrain discretionary expenditure. A deeper worry lies in the labour market. In May, India's unemployment rate, according to the official Periodic Labour Force Survey (PLFS), rose to 5.6% from 5.1% in April, with joblessness among urban youth aged 15-29 surging to 17.9%. Even amid high growth, job creation has not kept pace. Many new jobs remain informal or gig-based, offering little security or upward mobility. This employment shortfall undermines income security and confidence within the middle class. Private estimates from the Centre for Monitoring Indian Economy (CMIE) paint a stark picture, showing a shrinking labour force and involuntary exits from employment. CMIE places India's labour force participation rate at 40-45%, against the PLFS's 50-55%, a discrepancy explained by differing definitions: CMIE follows the International Labour Organization's income-based criteria, while PLFS includes unpaid or nominally productive work. Either way, a large proportion of people without stable jobs means households are understandably cautious about big-ticket discretionary spending. India's middle-class dilemma becomes sharper when compared with China's experience. Between 2000 and 2010, China's middle class expanded rapidly, fuelled by mass job creation in export manufacturing and sustained wage growth. By 2010, around 40% of its population was middle class. This powered booms in its markets for housing, automobiles, travel and durables. It was backed by policy interventions aimed at affordable housing, employment generation and broad access to credit for asset creation. India, despite rapid urbanization, has not matched this with comparable factory employment or city housing initiatives. Credit, a crucial enabler of middle-class consumption, has expanded but unevenly. Digital lending has surged but remains concentrated in small-ticket but high-cost personal loans for immediate consumption. As flagged by a Fitch Ratings report in January 2025, this rise in unsecured retail lending poses asset quality risks for banks. For middle-class households, a lack of formal job contracts and reliable income documentation limits access to affordable credit for high-expense purchases. If India's middle class stays on the margins of its growth story, the economic consequences could be significant. Domestic demand may stay fragile, increasing reliance on public investment and exports. Inequality risks would deepen if growth benefits just the wealthy, while consumer-facing sectors would grapple with weak demand and stunted expansion potential. A persistently cautious middle class may have social and political ramifications. Rising aspirations without economic security often leads to public frustration and mistrust in institutions. This could make it harder to turn growth into broad-based prosperity. Also Read: Let a middle-class boom fend off a middle-income trap India could take a leaf out of China's story, which recognized early the crucial role of a thriving middle class in sustaining economic development and social stability. Its 14th Five-Year Plan (2021–2025) aims to expand the middle-income group, a goal reinforced by President Xi Jinping at the 2022 Communist Party Congress, where he committed to 'substantially grow" this group. India has all the required building blocks for a consumption-led recovery—but the blueprint is incomplete. Unless we create good jobs, raise real incomes and improve access to housing and affordable credit, the middle class may remain left out of the story. That, in the end, is a problem both for the economy and our social fabric. These are the author's personal views. The author is professor, economics and policy, and executive director, Centre for Family Business & Entrepreneurship at Bhavan's SPJIMR, Mumbai. Topics You May Be Interested In Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
