So GDP for the Quarter ending Jun 2026 grew at 7.8%, well most of us are no economists, and thank God for that, as we know the academic economists can only talk theory, far divorced from the on ground situation. Economy for most of us relates to the money available for spending, some savings and the ever increasing costs, what these economists like to call ‘inflation’. We commoners choose the Hindi equivalent ‘महँगाई डायन खाए जात है’, some of you may recall this song from the cult classic movie ‘Peepli Live’. But when an ex Finance Secretary decides to cast aspersions on this data, it is quite obvious that he has an axe (pun intended) to grind.
The economic mumbo jumbo of double deflation, the shifting to base data etc is all Greek and Latin to us. Surprisingly, there are no takers for this raging controversy amongst the so called wizards such as Chidambaram, Raghu Raman though has expressed his curiosity about the number of jobs, if the economy is really doing so well. A very valid observation, most of us would agree. While we may not understand these matters, the barren job market is quite visible and naturally causes serious concern. We thankfully are past that stage of seeking jobs, happily retired veteran with a generous pension, but the youngsters today, our so called demographic dividend has to rely on just gig work for employment. Contractual labour was a term associated with farm hands or civil construction workers, essentially unskilled or semi-skilled ones. But today even governments resort to this contractual hiring of even teachers and doctors. The primary reason for that is not the bloated government machinery being right sized, on the contrary the bureaucracy finds ways of rising unabated. Having adopted adhocism as a policy, the powers that be have discovered their method of controlling expenditure by saving on salaries, pensions and other ancillary benefits which form part of the package. Imagine they have even resorted to schemes like Agnipath for the Armed Forces for a similar cost cutting exercise.
The private sector too is bound in shackles by trade unionism and hence prefer to outsource their requirements rather than hiring on a permanent basis. But even then we are the fastest growing economy and that too without being a manufacturing and export oriented one. We have seen China, Vietnam, South Korea, Japan rise economically due to precisely this reason. We have chosen the consumerism model, the American style, where economy is driven more by expenditure and to an extent by service sector. Consumer driven economy is ok for a developed nation as they have outsourced their requirement of manufacturing to developing world.
The drawback of this model is that our energy requirement has grown exponentially over the years, what with the proliferation of two wheelers and cars in almost every household. Automobile sector has grown, no doubt, but even that is primarily for domestic consumption. While these items are highly desirable and indicators of financial growth and well being of the society, imagine if we had invested in public transport at massive scales, requirement of mobility of the population would have been met to quite an extent, which would have reduced the oil import bill as well. Mobile phones and internet have been drivers of our economy, no doubt and the purchasing power with the common man has also increased considerably due to policies like direct benefit transfer and free rations to almost 80 crore people.
So bottom line is manufacturing jobs are not available and with the advent of AI, the service sector especially IT, our cash cow is seriously under cloud. With Bill Gates advocating reservations for humans, I am sure we too ought to take notice of the elephant in the room. To be fair to the government, they had attempted to pursue the Chinese model of SEZs for providing a fillip to the industry, but Land Acquisition bill met the same fate as that of the Farmer’s bill. Economic reforms in India are not conducted by consensus, as that runs contrary to electoral politics, they have to be shoved down our collective throats. Same is the state of Reforms of the Labour laws, these are tough calls which the governments have to take even if they are not popular, rather than relying purely on freebies to win elections.
If economic reforms are pursued in right earnest, the potential for growth in double digits is not far fetched. May be it is time to smell the coffee…
16 thoughts on “IS CONSUMER DRIVEN ECONOMY THE RIGHT CHOICE FOR INDIA? ”
Sir, you have again hit the bull’s eye.. economy is said to be rising despite per capita income having hardly changed, other than counting free bees distributed across the country as their income..
kudos to your capability of bringing out truth 🫡👏👏
I recall an ad by Pepsi “yahi hai right choice baby”. Unfortunately this is not the right choice, as correctly identified by you. But the million$ question remains, who is finally going to BSL the cat is economic reforms our will our potential just tension a figment of imagination?
The majority of the Indian population (LIG ) will have difficulty in procuring basic things with this poor wage structure and inflation. How much India can sustain? I wonder!!
well covered.
Namaste Suyash,
You have captured the essence of all that happened in the past , that which is happening in the present along with that which ought to happen to ensure sustainable growth and real enhancement of lives of the Citizens.
Well covered article Sir. Decades of mismanagement since Independence in the name of Garibi Hatao and continuing Election freebies alongwith regressive Reservation policies are no doubt the stumbling block. However, the work on cleaning and strengthening the pillars of economic growth is ongoing, best to say ” slow but steady”.
Well crafted article , generally making SENSE. An interesting read.
Well said Suyash !
Dear Suyash,
You have very aptly touched upon the state of affairs of Indian economy.
This growth of 7.8% in the first qtr is basically not due to increased manufacturing n exports but due to domestic consumption .The lowering of GST last October enabled owners of two wheelers to upgrade to four wheelers which did clear the backlog in automobile industry.
AI n Robotics is fast replacing the humans in almost all the sectors of economy.I agree with Bill Gates that in future the humans will be competing with the AI n Robotics hence there will be a need for Human reservation in all the sectors of economy.
The GenA n GenZ has to evolve to remain relevant in future.
well analysed.
You have correctly identified the key issues driving both the economy and the scarcity of ‘real’ jobs. Skilling and vocational training was considered the best solution to burgeoning demographic dividend conundrum. This route doesn’t seem to have taken off adequately. Unemployable engineers and over qualified gig workers are but the symptom of a malaise affecting our whole system. It reflects poor planning and then coming up with quick fixes like contractual teachers etc.
“दिल माँगता है 7.8% for the next 15 years”.
India doesn’t merely need 7.8% GDP growth. It needs 7.8% growth of the right kind.
So, India’s real economy would be roughly three times today’s size by 2041.
You have correctly identified the key issues driving both the economy and the scarcity of ‘real’ jobs. Skilling and vocational training was considered the best solution to burgeoning demographic dividend conundrum. This route doesn’t seem to have taken off adequately. Unemployable engineers and over qualified gig workers are but the symptom of a malaise affecting our whole system. It reflects poor planning and then coming up with quick fixes like contractual teachers etc.
Well my read is that the job market is dull; the AI overhang looms large; and the Govt doesn’t seem to have got its act together to proactively address this challenge, leave alone resolve it.
We are racing to the precipice of social unrest.
I had brought up exactly this concern on one of your earlier blogs as well, Suyash, and I would be happy to be proven wrong.
From Humour to seriously yours.
Whatever the numbers…the prices and expenses have not come down…India may be growing…Indians are not
Hi Syash,
Thank you for sharing your views on this complicated Subject in such simple words. Nicely put down the relevant points