With a GDP growth rate of 6.5 per cent in the April-June quarter, India is poised to return to growth, and that could put a damper on the country’s economic woes.
But the country faces a dilemma.
At a time when the government is seeking to revive the economy, the biggest beneficiaries are the rich, while the rest of the population is facing unemployment.
The GDP figures show that the middle class is the biggest beneficiary of the economic boom.
In the April quarter, the middle income group in India grew by 2.4 per cent to $7,400 crore.
The middle class, or the top fifth of the GDP bracket, grew by a staggering 10.7 per cent and now has a net worth of $11.3 trillion.
The rich got richer too.
In April, the top 10 per cent of the rich’s net worth, or about $6.3 billion, grew 21.4 percent.
This is an increase of $2.7 trillion from the year before.
The poor, or below the poverty line, grew more slowly, by just 1.3 per cent.
But they are still growing faster than the rich.
In June, the bottom 40 per cent saw a gain of 2.7 percentage points, and in the top 20 per cent, the gain rose by 10.2 percentage points.
The government has promised to increase taxes and the price of living.
But a key part of its programme is its plan to bring down the cost of basic goods and services by 30 per cent by 2022, a target the government has already achieved.
While the government may be able to make some changes, many of the gains have been offset by the fall in the inflation rate.
The fall in inflation rate has hurt the economy.
The country’s gross domestic product has shrunk by 5.7 percent since June to $10.4 trillion, or 1.5 percentage points lower than a year ago.
It is also less than the 2.6 percent inflation rate it experienced in the third quarter of last year.
India is in the middle of the worst recession since the Great Depression, with the worst unemployment since the 1990s.