Growth over the last decade has been "broad-based" and the consumption gap among the rich and poor in both urban and rural India is rapidly shrinking, Union finance minister Nirmala Sitharaman told parliament on Monday. Calling India the fastest growing major economy, racing at a rate of 8.2 per cent when the global economic growth stands at 3.2 per cent, she cited the consumption pattern to make her point.
Actual household consumption shows that the Bottom 40 per cent (B40) of the population is acquiring wealth and assets at a significantly faster rate than the Top 20 per cent (T20), Sitharaman said. Inequality in asset ownership has declined fast, especially for key assets like motor vehicles and refrigerators.
Nowhere is this new trend more apparent than in rural areas, the minister said. Among the rural poor, "asset poverty" - defined as households owning none of the key assets - has dramatically dropped, sliding from around 30 per cent to just 5 per cent. "The Rural Poor have experienced a significant growth in purchasing power," she said.
Cellphone ownership has become near-universal, shooting up from 66.5 per cent to 94.3 per cent. Refrigerator ownership is up eight-fold -- from 2.9 per cent to 22.5 per cent. And between 2011-12 and 2023-24, ownership of motor vehicles has pushed up seven-fold, rising from 6.2 per cent to 47.1 per cent.
"In Urban India, the consumption gap is not just closing, for some assets, it has completely reversed," Sitharaman said. In a first, the Bottom 40 per cent in urban areas has more televisions -- 77.4 per cent -- than the Top 20 per cent -- 72.1 per cent.
"The ownership gap for aspirational goods like refrigerators in urban areas collapsed from 46.3 percentage points in 2011-12 to just 12.3 percentage points in 2023-24," she added.
This dramatic growth is the reason, the minister said, why every global institution is raising their growth outlook for the country in current fiscal. Stressing that no "dead economy gets a credit rating upgrade," she added that India has received rating upgrades from three major global agencies -- Morningstar DBRS, S&P and R&I.
Despite the once-in-a-Century Covid 19 pandemic, India has remained the fastest growing major economy continuously for three-four years, she said.
"Is it not something that the people of India should be recognised for India had to deal with? High twin deficits - both fiscal deficit, which was 4.9 per cent in FY13, and current account deficit, which was 4.8 per cent at the time. Inflation in food articles averaged 12.2 per cent annually in the five years ending 2013-14," she added.
