FM Sitharaman says India's middle class is driving growth through rising consumption

Aix-en-Provence [France], July 3 (ANI): 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)