{"id":98202,"date":"2026-04-14T10:58:59","date_gmt":"2026-04-14T05:28:59","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=98202"},"modified":"2026-04-14T10:58:59","modified_gmt":"2026-04-14T05:28:59","slug":"indias-growth-model-vulnerability","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/indias-growth-model-vulnerability\/","title":{"rendered":"India\u2019s Growth Model and Rising Middle Class Vulnerability"},"content":{"rendered":"<h2 style=\"text-align: justify;\"><strong>India\u2019s Growth Model Latest News<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A recent analysis highlights structural weaknesses in India\u2019s growth model and rising middle-class vulnerability.\u00a0<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>India\u2019s Growth Model and Poverty Reduction<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">India\u2019s economic growth over the last decade has been widely recognised for its success in reducing poverty.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The proportion of people living below the <strong><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/world-bank\/\" target=\"_blank\">World Bank<\/a>\u2019<\/strong>s lower middle-income poverty line has declined significantly from over 50% a decade ago to nearly 30% in recent estimates.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This reduction has been driven by a combination of economic growth and the expansion of welfare programmes. Key enabling factors include:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Improved delivery of welfare schemes such as subsidised food and direct benefit transfers.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Expansion of financial inclusion through banking access.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Strengthening of last-mile governance mechanisms.\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">However, while poverty reduction is evident, it does not fully capture the broader picture of economic well-being.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Limits of Poverty-Based Measurement<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Traditional poverty metrics rely on a threshold approach.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">They classify individuals as either poor or non-poor based on whether their income crosses a fixed line. This method has two key limitations:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">It does not capture the quality of life above the poverty line.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">It ignores income volatility and economic insecurity.\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A World Bank perspective suggests shifting towards a \u201cwell-being spectrum\u201d approach.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This approach evaluates how far individuals are from achieving a reasonable standard of living rather than simply whether they are above or below a threshold.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Rise of a Vulnerable Middle Class<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">India\u2019s growth has led to a situation where many people have moved out of poverty but have not achieved economic stability.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This has resulted in the emergence of a \u201cvulnerable middle class\u201d.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">These households are characterised by:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Low and uncertain incomes.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Limited savings and high exposure to shocks.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Restricted access to quality education and healthcare.\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Crossing the poverty line, therefore, often marks entry into vulnerability rather than stability.\u00a0<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Structural Issues in Employment and Income<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">India\u2019s growth model reveals a disconnect between output expansion and employment generation.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Growth has been concentrated in sectors that are capital-intensive or limited in labour absorption.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Key structural concerns include:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Less than 10% of workers are in formal employment with social security.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Around 94% of informal workers earn below Rs. 10,000 per month.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Real wages have remained largely stagnant despite productivity gains.\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This indicates that economic growth has not translated into stable income growth for the majority.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Sectoral Imbalances and Labour Shift<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A major concern is the weak performance of the manufacturing sector.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Manufacturing has not expanded sufficiently to absorb the growing labour force. Between 2016 and 2021, the sector reportedly lost around 24 million jobs.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">As a result, many workers have moved back into agriculture.<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Agriculture employs nearly 46% of the workforce.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">It contributes only about 18% of total output.\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This mismatch reflects low productivity and limited income growth.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The average farm household income remains modest, indicating persistent economic insecurity.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Inequality and Concentration of Wealth<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">While a large section of the population remains vulnerable, income and wealth concentration at the top have increased.<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">The top 1% accounts for over 22% of national income.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">A small group of billionaires holds a significant share of national wealth.\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This divergence highlights that growth benefits are unevenly distributed.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It also reinforces the idea that poverty reduction alone is not sufficient to ensure equitable development.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Indicators of Economic Fragility<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Several indicators point towards growing economic fragility.<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Youth unemployment is around 45%.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Graduate unemployment is close to 29%.\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This suggests that education is not translating into employment opportunities.<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Household financial stress is also increasing.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Financial savings have declined to around 5% of GDP.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Household debt has risen, often driven by consumption needs.\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Human development indicators further reinforce this concern.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">India has high levels of child wasting and stunting, indicating long-term constraints on productivity and mobility.\u00a0<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Policy Implications and Way Forward<\/strong><\/h2>\n<ul>\n<li><span style=\"font-weight: 400;\">India\u2019s development challenge is evolving. The focus must shift from merely reducing poverty to enabling upward mobility.<\/span><\/li>\n<li aria-level=\"1\"><b>Key policy priorities include:<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Expanding labour-intensive manufacturing and MSMEs.\u00a0<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Strengthening skill development aligned with market needs.\u00a0<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Improving wage growth and linking it to productivity.\u00a0<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Expanding social security for informal workers.\u00a0<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Adopting broader measures of welfare beyond poverty lines.\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">These steps are essential to convert economic growth into inclusive and sustainable development.<\/span><\/li>\n<\/ul>\n<p><b>Source:<\/b> <strong><a href=\"https:\/\/www.thehindu.com\/news\/national\/rise-in-middle-class-vulnerability\/article70858958.ece\" target=\"_blank\" rel=\"nofollow noopener\">TH<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>India\u2019s Growth Model shows declining poverty but rising inequality and weak mobility, highlighting structural economic fragility.<\/p>\n","protected":false},"author":21,"featured_media":98212,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[6844,60,22,59],"class_list":{"0":"post-98202","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"tag-indias-growth-model","9":"tag-mains-articles","10":"tag-upsc-current-affairs","11":"tag-upsc-mains-current-affairs","12":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/98202","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/21"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=98202"}],"version-history":[{"count":4,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/98202\/revisions"}],"predecessor-version":[{"id":98205,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/98202\/revisions\/98205"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/98212"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=98202"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=98202"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=98202"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}