In the past few years, India’s economic narrative has been built around a dual image — a rising global powerhouse and a nation where development benefits are claimed to reach every corner. However, when we dig deeper into the numbers and the lived reality of common households, a different story emerges. Real wages have been stagnant or growing far slower than inflation, while the cost of living — from groceries to education and healthcare — has consistently climbed.

On paper, GDP growth figures remain healthy, often making headlines. But beneath the statistical sheen, the benefits of that growth are unevenly distributed, flowing disproportionately to a select group of individuals and industries. For the average middle-class or working-class family, the economic landscape feels less like a rising tide lifting all boats and more like a widening gap between those who can afford to thrive and those just trying to survive.

Stagnant wages vs rising costs

One of the most significant indicators of this imbalance is the stagnation in real wages. While nominal incomes in many sectors have gone up, inflation-adjusted earnings often reveal no real improvement in purchasing power. Over the last decade, inflation in essential goods and services — particularly food, housing, and fuel — has outpaced wage growth. This leaves families with less disposable income despite working longer hours or taking on additional jobs.

The urban middle class, traditionally considered India’s economic backbone, is particularly squeezed. Rent in metropolitan cities has surged, public transport costs have risen, and even basic staples such as vegetables and cooking oil have seen significant price spikes. The rural population faces its own set of challenges, including fluctuating agricultural incomes, poor infrastructure, and limited access to affordable healthcare.

The inequality factor

Data from various studies, including those by global institutions like the World Inequality Lab, show that India’s wealth gap is widening. A small fraction of the population controls a disproportionately large share of the country’s wealth, while millions remain in precarious financial conditions.

While stock markets and corporate profits have seen record highs, these gains barely trickle down to the broader population. The job market, meanwhile, is struggling to generate enough stable, well-paying employment opportunities, especially for the youth. Many new jobs are concentrated in the informal sector, offering little job security or social protection.

Fiscal constraints and limited policy action

Even when governments recognise the imbalance, their fiscal space — the ability to spend without risking financial instability — is limited. A high fiscal deficit means that large-scale welfare or stimulus programmes can add to public debt burdens, making policymakers cautious.

India’s public debt is already a concern for international credit rating agencies. This often forces the government to rely on indirect taxation, such as GST, which tends to hit the poor and middle-income households harder. Direct support measures, while impactful, are often short-term fixes rather than structural solutions.

The household perspective

For the average household, the macroeconomic debates about fiscal deficit targets, foreign investment, or GDP rankings often feel distant. What matters most is whether monthly budgets balance without cutting corners on essentials. When healthcare bills, school fees, and electricity costs eat into savings, even a modest rise in fuel prices can become a significant financial stress point.

Surveys have shown that more families are dipping into their savings or taking on personal debt to maintain living standards. This raises long-term concerns about financial security, especially with limited social safety nets.

The way forward

To bridge the gap between economic growth and real-life improvements, several steps could be considered:

• Wage growth policies: Linking wage hikes to inflation to protect purchasing power.

• Progressive taxation: Ensuring the wealthy contribute a fairer share to public finances.

• Social protection expansion: Strengthening health, unemployment, and pension schemes.

• Targeted subsidies: Reducing the cost of essentials for vulnerable groups.

However, such measures require political will and the fiscal capacity to sustain them. In a global environment of rising interest rates, geopolitical tensions, and climate-related disruptions, India’s room for manoeuvre remains limited.

Conclusion

The Indian economy may be growing, but growth alone does not ensure fairness. As long as real wages remain flat, costs continue to rise, and wealth remains concentrated, the idea of a “perfectly balanced” economy will remain an illusion for the majority. The challenge ahead is not just to increase the size of the economic pie, but to ensure that more people get a fair slice.

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