Of every three rupees traded on India's largest stock exchange, one comes from a small retail investor. Those investors have lost money this year. The economy, meanwhile, is expanding faster than any other major one.
The IMF expects India to grow 7% this year. The US is projected at 2.3%, Germany and the UK at 1.3%, Japan at 0.7%. Only China, at 4.5%, comes anywhere close. On paper, India leads the field by a distance.
So why does the growth feel unreal in so many homes? Because the chain between the headline number and the household budget is broken at several points. Food prices start it. In September, India's headline inflation rose to 5.54%, up from 4.82% in August. Food inflation crossed 7%, after sitting below 6% a month earlier. Transport costs rose about 15%, and a rise in the cost of moving goods usually lands on the shopper's bill.
The Reserve Bank of India treats price rises of 4 to 6% as acceptable. September's figure sits above that range. The RBI responded earlier this month by raising interest rates to cool the economy. Rent, transport, healthcare, education and fuel all cost more, and a rate rise does not shrink any of those bills. If the economy looks strong in the data and weak in the monthly budget, which of the two do families believe?
People do not buy GDP. They buy food.
That is the whole gap in six words. A growth rate is an average over the economy, while a grocery bill is paid by one household.
Savers hoped the stock market would fill the gap. Retail investors poured in, and they now account for roughly a third of all trading on the NSE. This year the Nifty, the index tracking India's largest listed companies, fell about 15%. An investor who put ₹1 crore into it in January has already lost ₹15 lakh. The last two years brought either negative returns or none at all.
The SIP, or systematic investment plan, is the most common route for small savers because it lets them put a fixed small sum into the market each month. This year it earned 4.5%, the return the Nifty 50 delivered. That is less than inflation's 5.54% in September. Savers who followed the standard advice are falling behind.
Then comes income. The government's labour survey, released earlier this year, found that only about 24% of Indian workers draw a regular salary or wage. More than half work on their own account. Another 20% are casual labourers. Roughly 70% of the workforce has no fixed salary, and their earnings are irregular, unpredictable and often flat.
Our economy is growing and expanding. The problem is that many Indians do not feel this growth.
Prices rise on a schedule while incomes do not. For a daily wage worker or a small shopkeeper, a 7% GDP figure is a statistic about someone else's year.
Consumption and infrastructure investment are strong, and the 7% figure is real. But that is only half the story. The other half is how much of it reaches the people producing it. India no longer needs only fast growth. It needs growth that reaches every home, and for now seven in ten workers have no salary slip to show where it went.