FM Sitharaman says India's middle class is driving growth through rising consumption
Aix-en-Provence, July 3
Union Finance Minister Nirmala Sitharaman on Friday said India's growing middle class has become the country's "engine of growth", driven by rising consumption and supported by government measures such as financial inclusion, digital connectivity, tax relief and social welfare schemes.
Addressing a session on "How to promote the rise of a new middle class?" at Les Rencontres Économiques d'Aix-en-Provence 2026 in France, Sitharaman said consumption by the middle class has been a key factor behind India's economic growth in the post-pandemic period.
"In India, the middle class is the engine of the growth. And since after COVID, you've seen India remaining the fastest growing large economy. Primarily, it is because of the consumption, which is triggering from the middle class," she said.
The Finance Minister said the middle class currently accounts for 31 per cent of India's population and has been expanding steadily since economic reforms.
"Between 1995 and 2021... the middle class is growing at a 6.3 per cent annual rate. And as per OECD's projection, India will surpass China in absolute number terms in its middle class population size between 2030 and 2035," she said.
She added that India's growth model has ensured that the middle class is not limited to metropolitan cities but is spread across tier-II and tier-III cities, helping distribute economic activity more widely.
"We see the middle class not just as a beneficiary of growth, but actually the engines of growth. It is their consumption... which is making the economy grow," Sitharaman said.
Explaining how the government aims to expand the middle class, Sitharaman said financial inclusion through Jan Dhan accounts, easier access to credit and digital payments have helped millions enter the formal economy.
She said government-backed loans without traditional collateral requirements have enabled small entrepreneurs to build businesses and improve their credit profiles, while digital payment systems available even on feature phones have strengthened financial inclusion.
Highlighting policy support, the Finance Minister said the government has reduced GST rates across several commodities, expanded investments in education and skills, particularly for women in STEM fields, and promoted training in emerging sectors such as animation, visual effects, gaming and digital content creation.
She also pointed to recent income tax relief as a measure to boost household spending.
"People earning 1.2 million rupees up to that number don't pay any tax at all. As a result we've allowed people to have more money in their hands which again goes into the consumption cycle," she said.
Concluding her remarks, Sitharaman said universal health insurance coverage and affordable generic medicines have reduced household expenses, further strengthening the purchasing power of the middle class.
The Finance Minister is currently on a four-day official visit to France to participate in a series of high-level engagements aimed at strengthening the India-France Strategic Partnership and deepening cooperation in investment, technology, innovation and economic ties.
— ANI
Reader Comments
Finally, some recognition for the middle class! We're not "rich" but we're not poor either, and we pay taxes, educate our kids, and fuel the economy with our consumption. The Jan Dhan accounts and digital payments have really helped in rural areas too - even my mother in a small town uses UPI now! But I wish they'd do more about housing affordability and healthcare costs.
As an observer of Indian economy from abroad, the middle class story is indeed impressive. The 6.3% annual growth in middle class population since 1995 is remarkable. But I wonder if the consumption-driven model is sustainable without matching growth in formal employment. China's middle class grew with manufacturing jobs; India's seems more service-oriented. Still, the digital infrastructure story is truly world-class.
The FM's point about middle class spreading to tier-2 and tier-3 cities is spot on. I moved back to my hometown in UP from Bangalore during COVID, and the consumption boom here is real - new malls, restaurants, and even startups! But what about job quality? Many are still in informal sectors without proper benefits. We need more formal jobs to truly sustain this growth.
A good speech but let's be real - the middle class is not just about consumption. We're also the ones bearing the brunt of rising education costs, healthcare expenses, and rent inflation. The tax relief helps a bit, but ₹12 lakh limit means only a portion benefits. And the government's focus on women in STEM is nice, but what about equal pay and career growth? Still, credit where due - digital payments and Jan Dhan have genuinely empowered many.
D We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.