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India’s economy is growing, but that isn’t translating to well-being for many Indians

The high unemployment rate and low food consumption level show that the relatively high growth of the past three years is not trickling down to a large section of the population.

Written by: Pulapre Balakrishnan

4 min readJun 23, 2026 11:21 AM IST First published on: Jun 23, 2026 at 06:20 AM IST

The ripple effect of the war in west Asia has led to a discussion on the state of the economy. The diagnosis, however, is mostly wrong. Observers have claimed that the growth model pursued by the government has run out of steam. According to reports, the deliberations at the most recent meeting of the Prime Minister’s Economic Advisory Council revolved around how to ensure that growth does not falter and how reforms can advance “ease of living”. What’s missing in both cases is the realisation that while the economy is growing quite fast, it may not be delivering the outcomes we would like.

For well-being, we should be looking at consumption and the standard of living. Serial NSS household expenditure surveys point to slower growth of consumption after 2011-12. The Household Consumption Expenditure Survey 2023-24 also enables an assessment of the standard of living. From it, we find that the consumption expenditure on food does not translate to two thali meals at Rs 30 each per day for 50 per cent of the rural population and 20 per cent of the urban population. Food subsidy raises their consumption level, but the all-India figure for those who consume less than two thali meals a day is 30 per cent. This reflects high food deprivation. It may be read along with data from the UN’s Food and Agricultural Organisation on the affordability of a healthy diet, which shows that 50 per cent of India cannot afford one.

Let us turn to employment next. While the unemployment rate has declined over the past five years, in 2025 it was still higher than it was in 2011-12, when growth was actually lower. The same pattern holds for youth unemployment, except that in 2025 it was still close to 10 per cent, which is thrice the figure for the labour force as a whole.

The high unemployment rate and low food consumption level show that the relatively high growth of the past three years is not trickling down to a large section of the population. It has been claimed that inequality in India has been growing from what is already a high base. While precise numbers on the income distribution may not be available, we have data consistent with rising inequality. I refer to the decline in real wages over the past five years. Real wages decline when the cost of living rises, as it is now. We also know that the cost of living rises mainly due to rising food prices. With expenditure on food being a large part of household budgets, less will be available for other goods and services when food becomes costlier. As food prices rise, the consumption of other goods by workers slows. This gets reflected in employment. This is the chain that links the food price, real wages, consumption and employment. Rising profits, which may accompany declining real wages, would lead to higher demand for relatively capital-intensive goods, whose employment-generating impact is less.

The solution offered by some economists that India needs “more reforms” is off the mark. It has been suggested that reforms should be undertaken to attract foreign direct investment. While foreign investment is an important source of foreign exchange, given its form and size in relation to the economy, it is not the factor behind high unemployment or low standard of living. That factor is food price. The real price of food, which is its price relative to that of all other goods, has risen by over 30 per cent since 2011-12.

The PMEAC reportedly discussed ease of doing business in India, an important dimension pertaining to non-agricultural activity. But this segment is facing a demand shortage, while ease of doing business is concerned with the supply side. If the rising price of food is the problem, then its production is what we should be focussing on. Reforms would have a role if they can contribute to steadying, if not lowering, the real price of food. Yield is the critical factor in restraining that price. Interventions to raise it are what is most needed now.

The writer is honorary visiting professor, Centre for Development Studies, Thiruvananthapuram