Post-COVID, India's economic growth has taken on a K-shaped trajectory, marked by pronounced inequality, a concern exacerbated by the latest GDP figures.
While the overall GDP exhibits a robust growth of 7.3%, the agriculture and allied services sector, employing over half the population, has expanded by a modest 1.8%, according to the National Statistical Organisation (NSO).
Services, growing at an overall rate of 7.7%, reveal a nuanced scenario, with trade, hotels, transport, and communication—sectors with significant employment—seeing only a 6.3% growth, indicating a concentration of growth among a select few.
Consumption growth stands at a meagre 4.4%, contrasting sharply with the nearly 11% surge in gross fixed capital formation, raising concerns about the equitable distribution of growth benefits.
However, this viewpoint is contested by prominent figures such as the Chief Economic Advisor and SBI's Chief Economist, Soumya Kanti Ghosh.
Ghosh argues that recent government programs, particularly those addressing social infrastructure like free food initiatives, have contributed to a reduction in the top 10% of the population's share of overall consumption, from 65% to 60.5%. He anticipates further improvement, potentially reducing this share to 50% over the next 6-7 years, signalling progress toward a more equitable distribution of consumption.
Pranjul Bhandari, Chief India Economist at HSBC, acknowledges earlier concerns about a K-shaped recovery but observes recent positive trends. Factors such as decreasing oil prices, improved profit margins for MSMEs, and increased rural construction activity with rising wages have contributed to mitigating the stark K-shaped phenomenon.
On the other hand, Professor Santosh Mehrotra from JNU argues that India's growth has been inherently inequitable for decades.
He highlights the lack of information with the government about a vast majority of enterprises, emphasizing that many unorganized sector workers, still recovering from demonetization, have shifted to agriculture without returning.
Insufficient growth in construction jobs further hampers efforts to draw workers away from agriculture, he added.
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