Middle Class To Drive 93% Of India’s Spending; 500 Cities To Emerge As Economic Hubs: FM Sitharaman

New Delhi, Jul 4 (KNN) Finance Minister Nirmala Sitharaman on Friday described India’s middle class as the primary driver of economic growth, stating that nearly 500 cities are poised to emerge as new centres of economic activity.

Speaking at the Rencontres Economiques d'Aix-en-Provence, Sitharaman noted that the middle class currently accounts for about 31 per cent of India’s population and has been expanding at an annual rate of 6.3 per cent since economic liberalisation.

Consumption-Led Growth Beyond Metros

She said, "We think 93 per cent of all spending in India will be because of the middle class or the slightly affluent consumers...and again, this middle class is not concentrated in our metropolitan cities...India's model has resulted in the development in such a way that the middle class is present not just in big cities but they are on the contrary in these tier two, tier three cities," PTI reported.

The minister emphasised that the middle class should be viewed not only as beneficiaries of economic progress but as its central force, with consumption playing a key role in sustaining growth.

Policy Support and Expansion of Opportunities

Sitharaman said the government has taken multiple steps to expand the middle class, including initiatives on financial inclusion, GST rationalisation, collateral-free lending and housing under the Pradhan Mantri Awas Yojana.

Citing an OECD study, she added that India is expected to surpass China in terms of middle-class population size between 2030 and 2035.

Role of AI and MSMEs

Addressing concerns about artificial intelligence, the minister said ongoing skilling initiatives are helping workers adapt to technological change. AI-focused training programmes, often conducted in partnership with the private sector, are being rolled out at the district level to enhance employability.

She highlighted that micro, small and medium enterprises (MSMEs) contribute nearly 40 per cent of India’s exports and are increasingly adopting AI-driven models, creating demand for skilled professionals.

Outlook

Sitharaman said India remains the fastest-growing major economy in the post-pandemic period, supported by strong domestic consumption and a growing talent pool. She added that the expansion of Global Capability Centres (GCCs) and data centres reflects continued investor confidence in India’s digital and innovation-led growth trajectory.

(KNN Bureau)