If growth in credit outflows is considered for FY23, it is a mere 2.5% for ‘large industry’ but 18.7% for ‘personal loans’. Not long ago, ‘large industry’ accounted for 80% of credit to ‘industry’ and credit to ‘large industry’ is always considered more important because they anchor growth and generate better quality and better-paying jobs.

Inversion in tax collections

Same is the case with higher tax collections (reflecting higher income). There is a robust rise in direct and indirect tax collections in FY23. But here is the rub.

The financial health of households – which provides maximum capex to the economy as flagged earlier – is progressively weakening, thereby also increasing inequality as benefits of growth goes to the top.

The tax data for FY16 to FY21, released in February 2023, shows both pre-pandemic slowdown (demonetization and GST impact) and pandemic crisis disproportionately hurt the lowest income group (Rs 0-5 lakh), while sparing higher income groups and corporate entities.

The number of taxpayers in the lowest bracket (₹0-5 lakh) fell in three out of the six fiscals – progressively by -1.6 lakh in FY17, -35.5 lakh in FY20 and -51.7 lakh in FY21. There can’t be worst sign for sharply rising poverty.

Inversion in auto sales

Auto sales have recovered too. Total auto sale (cars, two-wheelers, three-wheelers etc.) recovered from multi-year low of 176 lakh units in FY22 to 212 lakh units in FY23. This, however, remains far lower than 262.7 lakh units sold in FY19.

But more importantly, this growth in FY23 hides growing inequality. This is what RC Bhargava, chairman of the Maruti Suzuki India, has repeatedly raised. On April 26, 2023, he said: “The country has to become a little bit more wealthy for people to be able to afford these (small) cars”, he said. He had first raise this in October 2022, saying that people’s ability to buy small cars had eroded and would continue to decline next year.

The wholesale data provided by the Society of Indian Automobile Manufacturers (SIAM) proves it.

One, it shows, the sale of high-end cars (SUVs and luxury cars) surpassed that of entry level cars by 22,180 units in FY22 – which increased by 2.6 lakh units in FY23.

Two, two-wheeler sales – indicator of financial health of poorer households in rural, semi urban and urban areas – increased to 158.6 lakh units in FY23, from 135.7 lakh in FY22. But it is far below 262.7 lakh units sold in FY19.

Total auto sales and two-wheeler sales indicate that poorer households can’t afford what they could in FY19 (up to which data is available). Add the population of 18 year olds added to the population and the automobiles they could have bought and the true magnitude of the backsliding of the economy – at least for the poorer households – would be clear.

Inversion in housing, mobiles and FMCG

The same pattern is seen in several other sectors – pointing to growth benefiting those at the top and bypassing those who constitute the majority.

Housing: Housing sector is booming (23% up in first three months of 2023, compared to corresponding period of 2022) but like car sales, there is an inversion here too. As per Anarock Research, the share of affordable house sales, priced below ₹40 lakh, has halved from 40% in 2018 to 20% in 2022. In the first three months of 2023, their market share (in sales) in seven top cities slipped to 18%, while that of mid-segment houses, priced at ₹40 lakh-₹1.5 crore, dominated with 36% and that of luxury houses, priced at ₹80 lakh-₹1.5 crore, came second with 25% – as per the latest CII-Anarock report. Naturally, the focus has shifted to building more mid-segment and luxury houses.

Smartphones: Counterpoint Research says even as India’s smartphone shipments have declined, the premium segment is seeing robust growth – with its share almost doubling in the first three months of 2023, compared to that of 2022.

FMCG goods: Biggest FMCG company Hindustan Unilever’s sales are up 10% in the first three months of 2023 (Q4 of FY22), but in rural areas and lower income groups, demand continues to be sluggish with -7% fall in sales for FY23. The rural areas are home to about 70% of India’s population.

The conclusions that can be drawn from the seven points made so far are clear: (a) hype over growth indicators without reading the fine prints – elephants in the room – is misleading and would lead to wrong estimations for future growth (b) the real remedial measures would continue to elude policymakers – as is the case for the past many years. The choice is not really between positive growth indicators but attention to details and preparing plans, strategies to improve the economic fundamentals.

India economic indicators

What gets missed in India’s growth indicators