INDIA HAS EMERGED as the fastest-growing large economy in recent years, with consumption being one of the main growth drivers for several decades. However, the momentum of consumption now appears to be slowing down-we recorded a growth of about 4% in financial year 2023-24 (FY24), as against 5%+ since FY10 (with the exception of FY21). This highlights a decoupling between consumption and GDP growth, with public capital expenditure taking the lead. If we peel back the layers of this consumption story, we see that the urban rich continue to drive private consumption, while rural demand has largely stagnated.
According to the Household Consumption Expenditure Survey 2022-23, urban per capita consumption is about 71% higher than that of rural areas (compared to about 84% in FY12). As India continues to cement its path towards a Viksit Bharat, this gap needs to be bridged on priority.
Covid-19 and geopolitical challenges impacted GDP growth globally. While the US and China have explored direct cash transfers and reduced borrowing costs to boost consumption, this has presented its own challenges, including higher debt-to-GDP ratios. India, on the other hand, has refrained from fiscal measures of this kind and has focused on building infrastructure to enable long-term sustainable growth. However, what remains inevitable is the need to boost consumption even in the short term. Considering India’s inherent diversity, a nuanced approach that motivates inclusive and equitable growth is needed—one that supplements the government’s focus on infrastructure development and supports the manufacturing sector as well.
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
"Focus on the challenge of each customer"
SHASHANK KUMAR MD & CO-FOUNDER I RAZORPAY Razorpay is India's first full-stack financial solutions company
PEDAL ON THE FUTURE
THE MG WINDSOR EV, WITH ITS FUTURISTIC AND MINIMALIST DESIGN, COMBINES THE BEST OF BOTH WORLDS-COMFORT AND TECHNOLOGY
BREATHE EASY
Whether you're battling allergies, looking to remove pollutants, or simply want to breathe easier, the right air purifier can make a difference
The Taste of India in a Glass
FROM ROYAL LIQUEURS TO DISTILLED MAHUA, INDIAN HERITAGE ALCOHOLIC BEVERAGES ARE HAVING THEIR DAY IN THE SUN
LOOK BEFORE YOU LEAP
IN 2025, INVESTORS WILL NEED TO FACTOR IN VOLATILITY ACROSS ASSET CLASSES
MISSING ADVISORS
INDIA HAS JUST ONE INVESTMENT ADVISOR FOR NEARLY EVERY 200,000 INVESTORS. AT A TIME WHEN RETAIL PARTICIPATION IN THE STOCK MARKETS IS BOOMING, THIS ASSUMES SIGNIFICANCE
TURNING A CORNER
SHARED ELECTRIC MOBILITY START-UP YULU'S SHIFT TO SERVICING THE QUICK COMMERCE SECTOR IS HELPING IT GROW FAST. IT IS NOW FOCUSSING ON IMPROVING ROAD SAFETY FEATURES AS IT TURNS EBITDA POSITIVE
REALITY CHECK
INDIAN STOCK MARKETS PLUNGED BEGINNING OCTOBER FOR A HOST OF REASONS, INCLUDING A FALL IN FII OWNERSHIP. HOW DEEP WILL THE CORRECTION BE?
TRUMP'S TRADE TANGO
The return of Donald Trump as the 47th President of the US has put the global economy on edge. India, too, is unlikely to remain unaffected. How will policymakers meet this latest challenge?
"The essence of the Trump administration will be transactional”
Global investor, analyst, and best-selling author Ruchir Sharma decodes why Donald Trump won the elections, what India should do, the risks, and more