New Delhi: Finance Minister Nirmala Sitharaman has said that India’s expanding middle class has become the primary engine of the country’s economic growth, with consumption-led demand playing a crucial role in sustaining India’s position as the world’s fastest-growing major economy in the post-pandemic period.
Addressing a panel discussion titled “How to Promote the Rise of a New Middle Class?” at the prestigious Rencontres Économiques d’Aix-en-Provence hosted by Aix-Marseille University in France, Sitharaman highlighted the growing importance of India’s middle class in driving economic activity. She noted that consumer spending by the middle class has created a virtuous cycle of demand, production, investment, and employment, contributing significantly to the country’s robust economic performance after the Covid-19 pandemic.
The Finance Minister stated that India’s middle class has been expanding steadily at an average annual rate of 6.3 per cent since 1995, following the economic liberalisation reforms. Referring to projections by the Organisation for Economic Co-operation and Development (OECD), she said India is expected to surpass China in terms of the absolute size of its middle-class population between 2030 and 2035.
Sitharaman also cited estimates from the World Economic Forum (WEF), which suggest that India’s consumption landscape is undergoing a major transformation. Nearly 500 cities are emerging as new centres of economic activity, reflecting the widening geographical spread of economic growth. According to her, by 2036, nearly 93 per cent of all consumer spending in India is expected to come from the middle class and slightly affluent households.
Emphasising that economic growth is becoming increasingly broad-based, the minister said the expanding middle class is no longer concentrated only in metropolitan areas. Instead, tier-II and tier-III cities are witnessing significant growth, resulting in a more balanced distribution of wealth and economic opportunities across the country.
Highlighting government initiatives aimed at strengthening the middle class, Sitharaman pointed to financial inclusion through the Pradhan Mantri Jan Dhan Yojana, expanded access to formal banking, and the success of credit guarantee schemes that enable first-time entrepreneurs to obtain collateral-free loans. She also cited World Bank and IMF estimates indicating that 248 million people have moved out of multidimensional poverty.
The Finance Minister further underlined the government’s focus on digital connectivity and digital payments, saying these measures have improved the creditworthiness of small businesses and expanded access to financial services. She also referred to lower GST rates on several items, investments in girls’ hostels, skill development programmes in animation, visual effects, gaming and digital media, and the establishment of university townships dedicated to training and education.
Sitharaman said these initiatives collectively aim to create a larger, more resilient middle class capable of sustaining long-term economic growth while ensuring that the benefits of development reach a wider section of society.
