Nilesh Shah, Managing Director and Chief Executive Officer of Kotak Mahindra Asset Management Company, has said that India is not becoming richer at the pace it should, with the country’s poorest citizens seeing improvements that fall well short of the transformative velocity needed to meaningfully shrink poverty and broaden prosperity.
Shah, who also serves on the Prime Minister’s Economic Advisory Council, made the remarks in a pointed assessment of India’s growth story, one that separates strong headline numbers from the lived reality of most Indians. The observation cuts to the heart of a structural tension in India’s economic narrative: aggregate GDP expansion and visible wealth creation at the upper end of the income pyramid coexisting with slow per capita gains and persistent deprivation at the bottom.
The gap between growth and prosperity
India has climbed impressively through the ranks of the world’s largest economies, now sitting among the top five by nominal GDP and third in purchasing power parity terms. GDP growth has been solid across recent years, driven by services, digital infrastructure, manufacturing ambitions, and capital market deepening. The number of high-net-worth individuals has risen, equity mutual fund SIP flows have hit record highs, and a broader middle class has taken shape. Per capita income in nominal terms now sits in the range of $2,500 to $3,000, a meaningful climb from a decade ago, but still low by global standards and masking enormous internal dispersion.
The core issue Shah identifies is that aggregate growth has not translated into broad-based prosperity at sufficient speed. Welfare schemes, improved access to electricity, digital banking, and mobile connectivity have delivered real gains to lower-income households. But these gains have not reached what he describes as escape velocity, the pace of improvement that would rapidly and visibly lift consumption and living standards for the bottom of the pyramid.
Why inclusive growth remains elusive
Several structural factors explain the gap. Growth in India has been disproportionately capital-intensive and skill-intensive, concentrated in sectors like information technology, financial services, and renewable energy that do not absorb large volumes of low-skilled labour. Formal, high-productivity employment has not scaled fast enough relative to the size of the working-age population entering the labour market each year. Agriculture continues to employ a large share of the workforce at persistently low productivity levels.
Rural demand and lower-income consumer spending have shown signs of lagging relative to urban and upper-income cohorts, a pattern consistent with what economists describe as a K-shaped recovery. Structural hurdles including education and skills gaps, regulatory friction for small businesses, unrealised land and labour reforms, and infrastructure deficits in tier-two and tier-three geographies further constrain the pace at which growth percolates downward.
India’s demographic profile adds urgency to the problem. A large and young population is a potential engine of growth, but only if matched with adequate employment opportunities and skill development. The demographic dividend window is finite, and the cost of missing it compounds over time.
What faster inclusive growth would require
Shah’s broader outlook on India remains optimistic over the long term, with the country seen as capable of reaching a $30 trillion-plus economy over the coming decades. But he frames the near-term challenge as a policy imperative: sustained growth of 8% or above, accompanied by deliberate focus on productivity, skilling, formalization of the small business sector, and mechanisms to unlock household assets such as gold monetization, are necessary conditions for making India’s wealth creation story genuinely inclusive rather than concentrated.
Comments are closed.