India’s next consumption phase to hinge on wage growth: Sitharaman | Economy & Policy News

The next phase of India’s consumption growth, a major driver of the economy, depends on wage growth leading to an increase in discretionary spending, according to Finance Minister Nirmala Sitharaman.

“India stands at a structural inflection point: the next phase of consumption will be driven by upward mobility into brackets where discretionary spending accelerates,” Sitharaman said at the All India Management Association’s 53rd National Management Convention on Tuesday.

Private consumption, which accounted for more than half of India’s gross domestic product (GDP), recorded growth of 7.7 per cent in 2025-26 (FY26) after the government rationalised and cut rates under the goods and services tax (GST) and also exempted tax on income up to ₹12 lakh. India’s GDP rose 7.7 per cent in FY26.

At the same time, demographic changes will alter the composition of household spending, she said. As the median age rises, lower youth dependency and greater longevity are expected to shift household budgets towards healthcare, personal wellness, consumer durables and quality services.

The minister, however, cautioned corporate India against designing its consumption strategy only around the formal urban elite.

“India’s consumption base rests on working families across agriculture, rural construction, transport, and informal enterprise,” she said, adding that a strategy focused only on premiumisation for urban consumers could undermine the durability of growth.