Indian Economy: A “Goldilocks” Situation or a Complex Reality?

• FY2024 saw a $3.6 trillion economy and 7.6% growth, indicating a robust macroeconomic outlook.

• The economy faces challenges including volatile food inflation, persistent income disparities, stagnant real wages, and a tight fiscal space.

• The Consumer Price Index (CPI) decelerated from 4.8% in May 2024 to 2.82% by May 2025, indicating inflation within the Reserve Bank of India’s comfort zone.

• Food inflation leads to a direct cut in real income, causing families to compromise on dietary quality, incur debt, or reduce essential expenditures.

• In 2023, despite an average salary increase of 9.2%, real wage growth stood at only 2.5%, indicating inflation is eroding half of the nominal gain.

• The International Labour Organization and labour economists highlight job quality and stagnant real wages in emerging economies.

• The Gini coefficient shows fluctuations over the decade, indicating some improvement but also limitations.