BT India @ 100: Experts call for growth-led reforms to address rising inequality

As India navigates its next wave of economic expansion, growing pressure on the middle class and widening inequality remain critical concerns. At Business Today’s India @100 event held on August 8, a panel of experts explored the structural challenges fuelling this inequality and the reforms necessary for inclusive growth.

During a session titled "A Less Unequal India: Growth That Includes Everyone," Dheeraj Nayyar, Chief Economist at Vedanta, underscored the pivotal role of economic growth in reducing inequality. “The only real path to greater equality is through sustained growth,” he stated.

Economist and former IMF executive director Surjit Bhalla emphasised that India’s focus has veered too heavily toward redistribution at the cost of growth. “We’ve had reforms, yes — but they’ve often come without growth, focusing instead on redistribution. Still, India’s consumption inequality remains among the lowest globally. That’s a major achievement,” said Bhalla.

However, he cautioned that real progress hinges on reigniting growth. “The question now is whether we can also do tremendously well on growth. That’s where I remain optimistic — but we need reforms that target growth issues, not just redistribution,” he added.

Bhalla identified two critical areas for reform: agriculture and manufacturing. “Agriculture has been largely excluded from the reform agenda. It’s a sector we’ve long neglected. Similarly, high tariffs are stifling manufacturing competitiveness,” he pointed out.

Abheek Barua, former Chief Economist at HDFC Bank, argued that sluggish private investment is a major bottleneck. “Big-ticket private investments aren’t materialising. Consumer-facing companies have been battling prolonged demand issues, and persistent regulatory uncertainty hasn’t helped. There’s also a lack of innovation — startups here have mostly been glorified forms of jugaad, as even government ministers have admitted. The private sector seems to have lost momentum, further challenged by disruptive technologies like AI,” said Barua.

Nayyar highlighted that private investment — both domestic and foreign — is driven by incentives and predictability. “Investors will put their money where returns are attractive and stable. In India, however, structural issues remain. Land is scarce and expensive, power tariffs are uncompetitive, freight costs are high, and bureaucratic clearances that should take 90 days drag on for years. How do you expect private capital to commit in such a setting?” he asked.

The panel agreed that for India to grow inclusively and equitably, structural reforms — particularly those focused on enabling private sector growth — must take center stage.