Is India Quietly Shifting Toward Trickle-Down Economics? What It Means and Why It May Be Problematic

India today presents a puzzling picture. It’s racing ahead as one of the world’s largest economies, yet a significant portion of its population still struggles to meet basic needs. While the country now boasts the third-highest number of billionaires globally, more than 3.44 crore Indians live with incomes below the poverty threshold. This contrast isn’t just economic — it’s philosophical. And it raises a pressing question: Is India gradually embracing trickle-down economics — and could that be a risky move?

A Nation of Billionaires and the Low-Income Population: The Wealth Gap Widens

As per the Hurun Global Rich List 2025, the world currently has 3,442 billionaires — an all-time high. India has 284 of them, adding 13 new billionaires over the past year. Only China and the United States rank above it.

Yet this impressive billionaire tally hides a deeper issue. Despite being the world’s fifth-largest economy, India’s GDP per capita remains worryingly low, ranking 124th globally according to Forbes. Some projections are even bleaker, placing India at 140th out of 194 countries.

The economic divide becomes more evident when one looks at other indicators. The Global Hunger Index (2024) ranks India 105th out of 127 countries. A United Nations study also revealed that India is among the top five countries with the most people living with low incomes. It’s responsible for a significant chunk of the recent increase in global poverty, especially when measured against the $3.65/day benchmark set by the World Bank.

While poverty levels have technically reduced in recent years, the progress has been slow — and many economists argue that it’s too early for celebration.

What Exactly Is Trickle-Down Economics?

At its core, trickle-down economics is the belief that policies favoring the rich and big businesses — such as tax cuts or reduced government oversight — will eventually benefit everyone. The idea is that when wealthy individuals and corporations have more money, they’ll invest it back into the economy, creating jobs, boosting productivity, and uplifting society as a whole.

On paper, it seems logical. But does it really work in practice?

Decades of Evidence Say Otherwise

A major study conducted by researchers from the London School of Economics and King’s College London examined economic trends across several developed countries over the last 50 years. The findings? Cutting taxes for the rich did not result in notable economic or employment growth. Instead, it deepened inequality, helping the wealthy amass even more wealth while the rest of the population saw little to no benefit.

Countries like the United States and the United Kingdom — both known for their experiments with trickle-down models — have faced growing criticism over how those policies have harmed their middle and lower-income groups over time.

India’s Economic Policy: A Subtle Shift

Since coming to power in 2014, Prime Minister Narendra Modi has championed a model of governance that promotes limited government interference and a pro-business environment. His mantra — “Minimum Government, Maximum Governance” — reflects a belief in empowering the private sector to lead economic growth.

A clear example of this philosophy was the corporate tax reduction in 2019, which significantly lowered tax rates for companies. That same year, during an Independence Day speech, the Prime Minister called on the public to honour and trust wealth creators, underlining that wealth must be generated before it can be distributed — a statement that closely mirrors the principles of trickle-down economics.

To be fair, the 2025 Union Budget offered some relief for middle-income earners, with tax exemptions raised to ₹12 lakh annually (₹12.75 lakh for salaried employees). Still, critics point out that the benefits extended to individuals are modest compared to what has been provided to large businesses over recent years.

A Tale of Two Models: India and the US

Interestingly, India’s current approach stands in sharp contrast to the economic vision outlined by US President Joe Biden. During his first joint address to Congress, Biden clearly rejected the trickle-down philosophy, calling it a failure and promoting the idea of “more government, not less”.

Biden’s American Jobs Plan, announced in that speech, is a massive public investment strategy aimed at creating employment, improving infrastructure, and uplifting the working class. He argued that many of the United States’ biggest achievements — from moon landings to public education reforms — were made possible because of government spending, not despite it.

In his view, relying too heavily on private wealth to solve public problems weakens accountability and leaves large segments of society behind.

What This Means for India’s Future

The risk for India lies in assuming that economic growth at the top will automatically benefit everyone. In a country where millions still lack access to quality education, healthcare, and jobs, policies need to be more inclusive and targeted.

Relying primarily on business incentives and tax breaks for the elite might boost some metrics on paper, but without direct investment in public welfare, it’s unlikely to change the lives of those at the bottom. India’s growing wealth gap, persistent hunger issues, and slow rise in per capita income point to the need for a more balanced economic strategy.

India has the resources and potential to become a global economic leader — but that journey should include everyone, not just those at the top.

Final Thoughts: Growth for Whom?

The signs are clear. India’s current policy trajectory resembles the early stages of a trickle-down model. While such policies may stimulate short-term growth and benefit investors, they’ve also been shown to exacerbate inequality in the long run.

If India is serious about becoming a global superpower, it must ensure that its growth story is inclusive — not just rich in billionaires, but also in opportunities, equity, and dignity for all its citizens.

Now is the time to reflect, reassess, and rethink our economic direction — before inequality becomes the defining feature of India’s growth story.