Corporate bosses are not known for their willingness to speak harsh truths, especially when the government is all-powerful and displays authoritarian tendencies. In such an environment, when the CEO of Nestle India remarks, on the back of his company’s quarterly growth numbers showing a slowdown yet again, that the country’s middle class seems to be shrinking, it should be taken seriously. This is not an anomaly or a flash in the pan given that consumption, especially of goods used by the middle class, has been stagnant for a couple of years now. The questions are: where is India’s spectacular economic growth reflected except among the wealthy and what does it forebode if the middle class is shrinking?
In 2010, India’s middle class was estimated to be around 50-70 million which expanded to around 150 million a decade later, according to the American organisation Pew Research. The decade of 2004-14 was when the growth of the middle class galloped reflecting and contributing to the booming economy; the middle class was then estimated, by international banks and financial institutions, to be around 500million. This was supposed to be the backbone of the economy, especially in the post-Covid years as the economy was expected to show recovery.
However, it appears that the recovery has been skewed in a way that only the wealthy and upper class are showing a robust consumption of goods and services while nearly 16-17 percent Indians are officially poor in the multi-dimensional poverty index. The middle class was the economy’s hope and driver of GDP, we have been told, but car sales have been down and FMCG sales are sluggish. The savings, that the middle class has been known for, have fallen too, as has been documented. Sluggish or shrinking consumption coupled with poor savings raise questions about the veracity of the GDP growth in the country. Is it really what the government claims it to be?
