S&P Global reported that India’s GDP rose 7.8% in the June quarter, higher than expected. Inflation is now forecast at 3.2% this fiscal year after food prices dropped. The Reserve Bank of India may cut interest rates by 25 basis points.

Domestic demand remains strong as consumer spending and government investment continue to rise. India stands out in Asia-Pacific for resilient growth despite global challenges. Higher U.S. tariffs and slower global trade have slowed other regional economies.

China, by contrast, faces weaker exports and slowing domestic consumption. S&P expects China’s GDP to grow 4% in the second half of 2025 and 2026. Falling housing sales and low consumer confidence are adding pressure.

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The middle class, spanning urban professionals, salaried workers, and small business owners, has long been a key driver of domestic demand. Policies aimed at boosting disposable income, simplifying taxation, and promoting digital financial inclusion are increasingly targeted at this segment. Measures like income tax relief, housing schemes, and support for small and medium enterprises (SMEs) underline the government’s intent to nurture a robust, financially empowered middle class.

By focusing on the middle class rather than solely on large corporates, Modi’s government aims to strengthen grassroots economic participation and broaden political support. Economic experts argue that while corporates drive investment, the middle class sustains consumption, which is crucial for GDP growth and job creation. Programs promoting digital payments, affordable housing, and skill development are designed to expand opportunities for this demographic.

Politically, middle-class engagement can translate into stronger voter turnout, influencing local and national elections. Analysts suggest that policies enhancing purchasing power, reducing inflationary pressures, and incentivizing entrepreneurship are strategic moves to consolidate support among urban and semi-urban voters.

In short, India’s middle class has become the new focus of government policies and political strategy. By targeting this segment, Modi seeks not only to drive economic growth but also to solidify a key voter base, marking a significant shift from corporate-centric approaches toward inclusive development.

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