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India's middle class expanded at an annual rate of about 6.3 per cent between 1995 and 2021, and 31 per cent of the country's population is middle class today, Finance Minister Nirmala Sitharaman said at France's Les Rencontres Économiques d'Aix-en-Provence 2026 on Friday. She was speaking on the topic of how to promote the rise of a new middle class.
Sitharaman cited OECD projections showing that India is expected to overtake China in the absolute size of its middle-class population between 2030 and 2035. She added that 93 per cent of all consumer spending is projected to come from middle-class and affluent households by 2036.
The finance minister said India's middle class has become the driving force behind the country's growth rather than a byproduct of it, with post-COVID consumption by the middle class contributing to India remaining the fastest-growing large economy.
The FM also highlighted that India's wealth has spread beyond metropolitan cities such as Mumbai, Delhi, Kolkata, Chennai and Bengaluru into hundreds of smaller Tiers II and III cities, with roughly 500 such cities positioned to become new hubs of economic activity.
Policy Interventions Behind The Expansion
Sitharaman traced the expansion of the middle class to a series of government interventions beginning with the 2014 financial inclusion push under the Jan Dhan scheme, supplemented by sovereign-guaranteed low-interest loans, GST rate cuts and a nationwide digital payments rollout accessible even on basic feature phones. She said these measures helped roughly 248 million people move out of multidimensional poverty, citing World Bank and IMF data.
On taxation, Sitharaman noted that the income threshold below which Indians pay no tax has risen to Rs 12 lakh from Rs 2.5 lakh under the old tax regime. Health support measures include an annual insurance cover of Rs 5 lakh per family and a network of government pharmacies selling generic medicines at roughly 80 per cent below market cost.
The FM also cited subsidised housing loan interest rates for middle-class buyers and concessional, collateral-free enterprise loans for women and members of Scheduled Castes and tribal communities, which she said have contributed to more than 100 unicorn startups emerging in India within seven years.
Positioning The Middle Class For AI
On artificial intelligence, Sitharaman argued that decades of investment in STEM education have positioned India's middle class to lead in AI adoption rather than be displaced by it. She pointed to government-backed, district-level AI skilling camps developed in partnership with private companies, designed around the specific skills employers need.
The finance minister also noted that roughly 40 per cent of India's exports come from micro, small and medium enterprises, many of which are adopting AI-driven business models, and that India hosts more global capability centers than any other country in the world.
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