Wednesday, 2 April 2025
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Economy

The Economic Divide: How the U.S. and India Mirror Each Other

  • In both India and the U.S., the top 10% of earners drive consumer spending.
  • Economic disparities leave the majority with limited discretionary income.
  • Rising income inequality raises concerns about long-term economic stability.

The economies of India and the U.S. are increasingly reliant on their wealthiest citizens to sustain growth. In India, a small elite—termed “India1″—fuels most consumption, with over a billion people having minimal spending power.

This pattern of “premiumization” benefits luxury brands and high-end services while excluding large sections of the population from economic participation.

How the Wealthy Are Driving Growth in Modi’s India and Trump’s America

India’s high overall consumption growth is misleading when viewed per capita. The nation’s economic expansion is disproportionately driven by a small, affluent segment, while the majority of citizens remain unable to participate in discretionary spending.

In the U.S., a similar trend has emerged, where the top 10% of earners are the primary drivers of economic activity. Their spending on luxury goods, real estate, and travel helps sustain business growth, while the middle and lower classes struggle with rising costs.

This dynamic has created a fragile economic structure in both nations, where growth depends on a concentrated group of consumers. Policymakers face the challenge of broadening economic benefits to ensure long-term stability and inclusivity.

If left unchecked, this widening gap between high-income spenders and the rest of the population could lead to social and economic consequences, from reduced economic mobility to slower national growth.

While India and the U.S. differ in many ways, their economies are converging in one key aspect—relying on their wealthiest citizens to maintain consumption-driven growth. Addressing income inequality will be essential for building a more balanced and resilient economy.

“A nation’s greatness is measured by how it treats its weakest members.” – Mahatma Gandhi

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