Worry about middle India

Middle India has not recovered from a series of shocks

The Indian “K-shaped recovery” involves booming stock prices and a happy world of start-ups, alongside difficulties in most households. Middle India has suffered from numerous shocks in recent years. The recovery after the second wave did poorly from September 2021 onwards, and then Omicron came along. Sustained economic stress has led to drawing down assets and increasing borrowing. This will hamper the demand side of the economy, particularly in the product categories where many deciles of the income distribution are important customers.

The right way to think about the state of the economy today is to compare against pre-pandemic conditions, and