Budget 2025: Renowned economist and former Governor of the Reserve Bank of India, Raghuram Rajan, has highlighted concerns about India’s GDP growth and, specifically, issues related to the middle class ahead of Budget 2025. He mentioned that the GDP growth forecast is around 6.4%, but the lower middle class in India is struggling, which is quite worrying. In an interview with Mojo, Rajan stated, “While the GDP story sounds nice, the underlying facts haven’t changed.” He expressed his concerns about the fact that demand and consumption in India are not growing strongly, except at the upper end. The lack of job opportunities is hurting the lower middle class.
On January 7, the National Statistical Office (NSO) projected that India’s GDP would grow by 6.4% in the fiscal year 2025, marking the slowest rate in four years. Additionally, private final consumption expenditure fell from 7.4% in the previous quarter to 6% in the July-September quarter.
Discussing these figures and the GDP growth story, Rajan remarked that we have reached a point where we are growing at a stable pace, but it’s hovering around 6%, which is not a new development. He pointed out that this is concerning because 6% is not enough for us, and we aren’t reaping the benefits of the population dividend. He also emphasized that the private sector needs to step up. In the upcoming budget, the government might announce significant measures to boost consumption in the country. Finance Minister Nirmala Sitharaman has had several rounds of discussions with economists and various stakeholders, focusing particularly on increasing consumption. The PHDCCI noted in its pre-budget memorandum that the Indian middle class is currently facing a 30% tax rate.
