- July 4, 2026
FM Nirmala Sitharaman Says India’s Middle Class Will Power 93% of Consumer Spending by 2036
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Sitharaman says India’s expanding middle class will remain its growth engine, with rising consumption, financial inclusion and AI-led opportunities shaping the next decade.
Union Finance Minister Nirmala Sitharaman. (File Photo)
India’s growing middle class will play a defining role in the country’s economic expansion over the next decade, with the segment expected to account for the overwhelming share of consumer spending by 2036, Finance Minister Nirmala Sitharaman has said.
Addressing the Rencontres Économiques d’Aix-en-Provence, an economic forum held at Aix-Marseille University in France, Sitharaman on July 3 said India’s development strategy has focused on expanding the middle-income population through financial inclusion, welfare measures and wider economic opportunities, helping the country maintain strong growth after the Covid-19 pandemic.
Middle class remains India’s growth engine
Highlighting the role of household consumption in supporting the economy, Sitharaman said the middle class has emerged as the key driver of India’s growth. “The middle class is the engine of growth. After Covid, India has remained the fastest-growing large economy, primarily because of consumption driven by the middle class, which has created a virtuous cycle of economic activity.”
She said the middle class, along with the slightly affluent population, is projected to contribute 93% of India’s total consumer spending by 2036.
According to the finance minister, nearly 31% of India’s population currently belongs to the middle class. She noted that the segment expanded at an annual rate of 6.3% between 1995 and 2021 and, citing projections by the Organisation for Economic Co-operation and Development, said India is expected to overtake China in the absolute size of its middle-class population between 2030 and 2035.
Tier-II and Tier-III cities emerging as new growth centres
Sitharaman said the rise of the middle class is no longer limited to metropolitan cities, with smaller cities increasingly contributing to economic activity and consumption. Referring to projections by the World Economic Forum, she said around 500 Indian cities are expected to emerge as new economic hubs, reflecting rising incomes and changing consumption patterns across the country.
“The middle class is not only a beneficiary but also the engine of growth in the economy.” She added that the expansion of the middle class beyond metros has led to a more balanced distribution of economic activity across regions.
Financial inclusion and welfare programmes driving income growth
The finance minister said government initiatives have helped more households move into the middle-income category. She highlighted financial inclusion measures, welfare schemes and digital connectivity as important contributors to this transition.
According to Sitharaman, around 248 million people have been lifted out of multidimensional poverty. She also said improved digital infrastructure has strengthened people’s creditworthiness, while reductions in Goods and Services Tax (GST) rates on several products have supported household consumption.
AI adoption creating new opportunities for businesses
Sitharaman also linked the country’s expanding middle class with India’s growing strength in artificial intelligence. She said nearly 40% of India’s exports come from Micro, Small and Medium Enterprises (MSMEs), many of which are increasingly adopting AI-based business models and hiring professionals capable of implementing AI solutions.
“We are now seeing AI-ready young people going to industries to equip them with AI capabilities. India has the largest number of AI Global Capability Centres and data centres in the world because of its skilled manpower,” Sitharaman said.
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