India’s Growth Equals Rich People’s Growth - Not the Country’s, Not Yours

India’s economy has been one of the fastest growing major economies in the world in recent years. According to the World Bank, India’s GDP grew by about 6.5 percent in FY25, and forecasts suggest it could reach 6.8 percent in FY26, driven by private consumption and industrial activity.

But when we look beneath the headline figures, a troubling pattern emerges. Growth is not reaching all people equally. A small segment is capturing most of the income gains, while large parts of the population remain economically stagnant or just barely progressing. India’s growth rate is among the highest for large economies, with continued expansion in services, construction, utilities and manufacturing. India’s share of the global economy has also doubled from 1.6 percent in 2000 to about 3.4 percent in 2023.

But GDP growth alone does not measure how income is distributed among people. A country can grow fast at the top while much of its population sees little change in real living standards. According to inequality studies by the World Inequality Lab:

• India’s top 1 percent share of national income was about 22.6 percent in 2022-23.
  
• India’s top 1 percent wealth share was about 40.1 percent in the same period.
  
• The top 10 percent of Indians now capture roughly 58 percent of national income, while the bottom 50 percent get a much smaller share.
  

This means economic growth adds more to those who are already at the top, widening income and wealth gaps. India’s employment structure plays a key role:

• Around 85 percent of India’s workforce is in the informal sector, with many earning low and irregular incomes.
  
• Informal workers often earn very little capital income and lack job security.
  
• Only a small percentage of workers are in formal salaried roles with stable wages.
  

This means the majority of workers benefit less from high GDP growth compared to workers in formal sectors who tend to be higher paid. Although agriculture employs about 46 percent of the workforce, it contributes only around 15 percent of GDP.

This disconnect shows that many people produce less value per person in livelihood sectors like farming than in high productivity industries. Growth in output does not translate into equal increases in incomes for those workers. Government data sometimes shows a falling Gini coefficient, a measure of inequality, suggesting improved equality. But experts caution that such measures often understate the full scale of inequality, especially at the extremes of wealth and income distribution.

This means headline inequality measures might look better while the reality of who benefits from growth tells a very different story. While absolute poverty in India has fallen sharply over the decade, large numbers of people still experience economic insecurity. According to development estimates, poverty dropped from around 61.8 percent in 2011-12 to 28.1 percent in 2022-23, pulling hundreds of millions out of extreme deprivation.

However, many workers continue to earn close to poverty lines even after growth, and lack of social protection means they remain vulnerable to rising prices and income shocks. Much of India’s growth is urban and services-oriented. Rural regions and agrarian communities, where a majority of poor and near-poor households reside, benefit far less. Around 70 percent of India’s poor still live in rural areas where growth has been slower.

This uneven geographic spread of opportunities contributes heavily to persistent inequalities. Even as India’s middle class expands, the share of economic gains it captures is not proportional to the country’s GDP growth. The top 10 percent’s share of income rising from around 34 percent in 1990 to nearly 58 percent today shows that the largest gains are at the top end of the income spectrum, not evenly spread. Historical inequality research shows that India’s highest levels of top income and wealth concentration today are higher than under British rule prior to liberalisation reforms. This suggests that structural economic forces; not just recent policies - shape long-term inequality patterns. Many economists argue that while growth is essential to reduce poverty and raise average incomes, redistribution through taxation and public spending is necessary to ensure shared prosperity. Without this, growth results chiefly in rising profits and asset appreciation at the top, while wages and living standards for the bottom remain slow to improve.