Winner, but for how long?

India Inc's fortunes will soon change, unless higher household income supports demand

THERE IS NO gainsaying the necessity of rapid capital accumulation in a country like India, which wants to sustain the present high-growth phase, and has ambitions of a "developed-country" per capita income of $12,000-15,000 in nearly three decades from now. Capital, as it is heaped up, enables creation of new fixed assets and working capital, and greatly aids assimilation of technologies for higher production efficiency. But undue concentration of capital is highly deleterious, as it raises the incremental capital output ratio. The monumental jump in the share of large corporate groups in the gross domestic product (GDP) has caused capital/income deprivation for the rest of the economy, even when the external world is volatile. It's staggering: corporate profits quadrupled between FY20 and FY23 to hit a 15-year high in FY24, even as the nominal GDP grew just 47% between FY20 and FY24.