Heeding to the route for higher disposable incomes: The Social and the Economic

One parliamentary meeting

Since the 1st of February 2025, during a Lok Sabha discourse on the national budget for 2025 to 2026, finance minister Nirmala Sitharaman amongst the many changes to the budget, also involved new tax breaks that on the surface would help curb the ills of inflation on basic goods, and also ease the conditions for many consumers, especially on the basis of income tax. Although on surface, this seemed like a recognition of a persistent problem that has been a highlight over the past couple of years, this was criticised for being an ineffective policy due to consumer spending being eased at a time of rising unemployment and persistent youth unemployment where many individuals have found themselves in either the informal economy or performing work at low wages and unable to spend beyond basic needs. 

The Shadow

Adding to Nirmala Sitharaman’s seemingly growing unpopularity as a finance minister amongst voters both online and in newspapers, a recent report by the capital research firm Blume Ventures has indicated that nearly 90% of the population don’t have a disposable income and can only purchase basic necessities. While many newspapers have summarised this report in bite sized commentary with the focus primarily on inequality in economic growth, what makes these developments concerning to outright disturbing, is not the inequality or the fact that 90% of Indians live at the standards of sub saharan Africa, but the fact that both a limited consumer environment for businesses to expand, and a minimal participation in an economy from consumers in their spending patterns is a worrying sign of an impending recession, which would disproportionately affect most of the population.

Glitter and Dirt 

The conditions of Inequality and unemployment have both been driving forces of worrying trends where workers are unable to receive or even bargain for higher wages. Despite the economic growth after the covid era and India being the world’s 5th largest economy, many workers and labourers across the country have not felt this growth especially in their wages and living standards. In the case of salaries, although reports have emerged which predict average salaries would rise by more than 9%, this is dwarfed due to rising inequalities with the stark differences between wealth and resources amongst classes. The minimum wage for many people starting for unskilled labour nears 23,000 which when considering both the average urban and rural household spending of between 3000-6000 rupees with rents, and savings, there isn’t much that can be spent on goods outside of basic needs which hurts consumer participation in the long run.  

The frustration

Back in December 2023, the country watched in shock when parliament was breached by 6 people. Although some media outlets tried to frame this as an attack by extremists, a quick background report by both the Indian Express and Hindustan Times revealed how unemployment was a driving force behind all 4 individuals. Neelam Azad, one of the individuals involved in this incident, was a highly educated professional and even helped her community register for programs like MGNREGA Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), struggling to find a teaching job. Anmol Shinde, who was training to join the army, also struggled significantly as well. In some regions, civil service has been a large employer. Many of these are popular due to their high incomes in comparison to other professions. Due to a lack of hiring and at worst, lack of government attention and insight into policy, many aspirants and individuals have had to settle for low paying work. In regions like North East India and Jammu Kashmir, government policies like AFSPA and the revocation of 370 have created unstable consumer classes and business environments due to fear which have prompted unemployment, lower salaries, many individuals working in the informal sector, and even migrating to cities for retail work. The civil service for instance, which is a major employer in some states, is typically affected by such policies which can also hurt economic participation and salaries. Through lack of insight and also a lack of attention to policy, this has also contributed to widening inequality in economic growth and inequality in the consuming class

The legacy

Higher incomes are a key for economic growth. Although youth unemployment, abusive working conditions, and taxation are persistent issues. If India wants to see growth across the country and everyone prospering, local insights to policy must be present. Stable and trusted environments for business and capital to flourish and grow must be protected. Lastly, paying people more in both private and public sectors of the economy to ensure greater disposable income in a long process to growth can ensure both economic and social change with a likelihood to see both incomes rise and inequality reduce, and a decrease in worries of a recession.

Written By: Rakshith Muthukumar

Picture Credits: Zee Business