India’s Economy Under the NDA

 India’s Economy Under the NDA: Growth optics, middle-class squeeze, and a rising wealth mountain

Thesis: Headline growth is real, but the distribution of gains is highly skewed. Independent research shows India’s top tail has captured outsized income/wealth since 2014, while job quality, household demand, and food inflation have pressured the middle class. 

1) Inequality at historic highs

The World Inequality Lab (Paris School of Economics) reconstructs long-run series using tax tabulations, national accounts, rich lists, and surveys. Their 2024 paper finds India’s top 1% now takes ~22.6% of national income and ~40% of national wealth—among the highest recorded for India in a century.

This concentration is mirrored by billionaire and HNWI trends. Hurun reports a record jump in Indian billionaires in 2024/25; Knight Frank tracks brisk growth in HNWIs and UHNWIs. These private lists aren’t perfect, but the direction is clear: the top is compounding rapidly.

2) Middle class: smaller than expected, slower to recover

Pew Research Center estimates ~32 million Indians fell out of the middle class in 2020; pandemic scarring lingered longer in India than in many peers. While recovery is underway, the lost rung matters for demand and savings.

On the ground, CMIE’s high-frequency household surveys show flat-to-soft consumer sentiment through 2024, with optimism concentrated in cities but fragile overall—consistent with a stretched middle class delaying discretionary spends.

3) Jobs: quantity vs. quality

Independent labour economists argue the post-2014 jobs story is skewed toward self-employment, unpaid family work, and agriculture, not stable, formal, wage jobs. Reuters’ synthesis of private research notes only ~21% of workers earned regular wages by 2022/23 and that much of the “new jobs” are lower quality.

Azim Premji University’s State of Working India 2023 shows persistent structural issues: manufacturing hasn’t scaled employment, and social identity gaps remain; mobility still channels many into informal regular wage or casual work, limiting income security.

4) Prices and the paycheck pinch

Private macro houses (e.g., CRISIL) highlight that even as headline CPI oscillated near 4–5% in 2024–25, food inflation stayed stubborn and spiky—eroding real disposable income for salaried/middle-class households who can’t hedge prices with asset gains.

5) Why the “wealth mountain” keeps growing at the top

Asset-price channels: A long bull market in equities and private assets disproportionately benefits those already owning them (top deciles). Wealth reports and bank moves into India’s wealth market (UBS/HSBC) reflect this structural tailwind.

Market power & profits: Oxfam’s 2024 research links rising billionaire wealth globally to concentrated corporate power and shareholder-first distributions, patterns also visible in India’s profit-share dynamics.

Tax/redistribution architecture: Independent inequality scholars argue India’s tax-redistribution mix is light on wealth/inheritance taxes and thin on universal social spending, amplifying top-end accumulation relative to median incomes.

6) Net effect on the middle class

Earnings: Slow formal job creation + informality cap wage growth and benefits.

Expenses: Volatile food inflation and high urban service costs bite monthly cash flows.

Balance sheets: Limited equity/real-asset exposure means the middle class doesn’t fully share market-driven wealth gains enjoyed by the top. Together, this compresses discretionary consumption and savings, even while GDP grows.

7) A constructive future vision (research-backed levers)

These aren’t partisan; they’re the levers independent researchers repeatedly point to:

Jobs first industrial policy: Manufacturing and tradables that absorb labour at scale; tie PLI-style incentives to net formal jobs created and median-wage growth. (Synthesizing APU/independent labour research.)

Human-capital compulsion: Big, targeted investments in school quality, nutrition, and primary health—the World Inequality Lab stresses these to counter extreme top-end concentration.

Tax mix modernization: Debate time-bound wealth/inheritance surtaxes, broader capital-income bases, and windfall-profit rules alongside simpler GST for essentials—ideas seen across WIL/Oxfam research (adapted to India).

Household balance-sheet deepening: Nudge affordable index investing, expand retirement coverage, and lower costs of long-term instruments so middle-class savings also ride asset cycles, not just bank deposits. (Consistent with wealth-report findings on asset-led gains.)

Competition & antitrust: Curtail excessive concentration and related-party advantages so productivity gains diffuse beyond a few conglomerates; aligns with Oxfam’s corporate-power analysis.

Bottom line

Independent evidence paints a clear picture: rapid wealth creation at the top, a cautious and sometimes fragile middle, and job quality as the binding constraint. Without a policy mix that squarely targets formal job creation, human-capital depth, fairer taxation of extreme wealth, and genuine competition, India risks building a taller wealth mountain while the middle plateau erodes. The growth story is not in doubt; who benefits from it still is.

Sources (non-government): World Inequality Lab; Azim Premji University; CMIE; CRISIL Research; Hurun/Knight Frank wealth studies; Reuters/Pew summaries of private research.