India’s Growth Broad-Based, Consumption Inequality Has Narrowed: Sitharaman

Union Finance Minister Nirmala Sitharaman addressed Parliament, asserting that India's economic growth over the past decade has been broad-based, with significant narrowing of consumption disparities between higher and lower income segments across both rural and urban regions. She countered criticisms of economic inequality, particularly in response to recent global reports, by highlighting data-driven evidence of inclusive progress amid robust domestic demand.

Sitharaman described India as the fastest-growing major economy, registering 8.2 percent growth in recent quarters against a global average of 3.2 percent. This performance, she noted, has persisted despite the challenges posed by the COVID-19 pandemic, underscoring the economy's transition from vulnerability to resilience through structural reforms and prudent fiscal management.

Household consumption data reveals that the bottom 40 percent of the population is accumulating assets at a substantially accelerated pace compared to the top 20 percent, resulting in a marked reduction in inequality for ownership of essential durables such as motor vehicles and refrigerators. Recent analyses from the Household Consumption Expenditure Survey corroborate this trend, showing convergence in asset possession across income groups, with motor vehicles emerging as the fastest-growing category.

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The transformation is most evident in rural India, where asset poverty—households without key durables—has fallen sharply from around 30 percent to approximately 5 percent, reflecting enhanced purchasing power among lower-income rural households. Ownership rates have surged dramatically: mobile phones nearing universal adoption from 66.5 percent to 94.3 percent; refrigerators increasing eight-fold from 2.9 percent to 22.5 percent among targeted groups; and motor vehicles rising seven-fold from 6.2 percent to 47.1 percent in bottom segments between 2011-12 and 2023-24, driven by improved infrastructure, financial inclusion, and government initiatives.

In urban areas, consumption gaps have not only diminished but reversed for certain assets, with the bottom 40 percent now exceeding the top 20 percent in television ownership at 77.4 percent versus 72.1 percent. The disparity for refrigerators has contracted from 46.3 percentage points to 12.3 percentage points over the same period, while overall urban-rural convergence in vehicle and appliance possession highlights broader access to aspirational goods, supported by rising incomes and market expansion.

Sitharaman linked this inclusive advancement to upward revisions in growth projections by international institutions and recent sovereign credit rating upgrades from agencies including Morningstar DBRS, S&P, and R&I. She emphasized India's sustained position as the fastest-growing major economy for several years, contrasting it with pre-2014 challenges of high twin deficits and elevated inflation, and affirmed that such achievements demonstrate the vitality and recognition of the nation's economic stewardship on the global stage.

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