LONDON: A new report challenges India’s claims of economic prosperity, exposing the harsh truth of India’s economic disparity. The Indus Valley Annual Report 2025 highlights that while India has a population of 1.4 billion, nearly a billion people lack the financial strength to spend on non-essential goods and services.
According to Blume Ventures, a venture capital firm, India’s true consumer market is much smaller than its population suggests. The report states that only 130-140 million individuals belong to the “consuming class,” comparable to Mexico’s consumer base. Another 300 million people are labeled as “emerging” or “aspirant” consumers. They remain cautious with spending, despite digital payment systems making purchases more accessible.
However, the study finds that India’s economic disparity is not shrinking but intensifying. The number of wealthy individuals is not increasing significantly. Instead, those already rich are accumulating even more wealth, while the financial struggles of the poor and middle class persist. This shift has fueled “premiumisation,” where companies target the rich with luxury goods instead of focusing on mass-market products.
This trend is visible in multiple sectors. Sales of ultra-luxury homes and high-end smartphones are booming, while lower-cost alternatives see weak demand. Affordable housing now makes up only 18% of the market, a sharp decline from 40% five years ago. Branded goods dominate, and India’s “experience economy” is flourishing, with high demand for expensive concert tickets for international artists like Coldplay and Ed Sheeran.
Sajith Pai, the report’s author, points out that businesses catering to the mass market are struggling. Those failing to offer premium products are losing market share, reinforcing India’s economic disparity.
The findings confirm that India’s post-pandemic recovery has been K-shaped. The wealthy have grown richer, while those with lower incomes face declining purchasing power. Economic inequality has been growing for decades. In 1990, the top 10% of earners controlled 34% of national income. Today, they hold a staggering 57.7%, while the bottom 50% has seen its share drop from 22.2% to just 15%.
The financial strain on the middle class is worsening. Stagnant wages, rising debt, and declining financial savings have left many struggling. The Reserve Bank of India has restricted unsecured loans, further limiting consumer spending. Many “aspirant” consumers relied on such borrowing to sustain their purchasing habits. With credit access tightening, spending patterns are expected to shift significantly.
Short-term relief may come from a record harvest and a $12 billion tax cut, which could boost GDP slightly. However, the long-term outlook remains grim. Middle-class incomes have stagnated for a decade, with inflation cutting real earnings in half. Household savings are now at a 50-year low, according to the Reserve Bank of India. These pressures suggest that industries relying on middle-class spending will suffer in the coming years.
The employment crisis adds to the uncertainty. Automation and artificial intelligence are eliminating white-collar jobs in urban areas. The number of supervisors in manufacturing units is shrinking, while routine clerical tasks are being replaced by AI. The Indian government’s economic survey warns that job displacement due to technology is a major threat. As IT workers in low-value roles face growing risks, consumption could decline further, leading to broader economic instability.
If the worst-case scenario unfolds, India’s projected economic growth could be severely disrupted. The report paints a stark contrast to India’s claims of economic success, revealing a reality where the rich thrive while the majority face India’s economic disparity at an alarming scale.
