HOUSEHOLD ECONOMY 2024 – YEAR END REVIEW

HOUSEHOLD ECONOMY 2024 – YEAR END REVIEW

NEWS: India retained its title as the fastest-growing major economy in 2024.

 

WHAT’S IN THE NEWS?

Contrasting Economic Realities

  • Despite macroeconomic achievements, millions of households faced challenges such as:
    • Rising costs of living.
    • Stagnant incomes.
    • Deteriorating living standards.
  • Families are pinning hopes on better income prospects and improved affordability in 2025.

Food Inflation: A Pressing Concern

  • Drivers of Inflation:
    • Erratic monsoon patterns disrupted agricultural output.
    • Global supply chain issues and higher input costs escalated food prices.
    • Staples like grains and vegetables witnessed sharp price spikes (e.g., tomatoes and onions).
  • Impact on Families:
    • Middle- and lower-income households had to cut discretionary spending to afford essentials.
  • Government Measures:
    • Releasing buffer stocks and banning certain commodity exports provided limited relief.
    • Inflation control remained a significant challenge despite these efforts.

Fuel Prices: A Persistent Burden

  • High Fuel Prices:
    • Volatile global crude oil prices and unchanged excise duties kept petrol and diesel prices high.
    • Rising fuel costs impacted transportation, logistics, and agricultural operations.
  • Urban vs. Rural Impact:
    • Urban commuters faced higher commuting expenses.
    • Rural communities struggled with increased diesel costs, affecting farming operations.
  • Outlook for 2025:
    • Stabilizing global oil prices or revising taxation policies will be critical to easing fuel price pressures.

Rising Healthcare Costs

  • Surging Healthcare Expenses:
    • Diagnostic tests, medicines, and hospital services saw significant price hikes in 2024, outpacing general inflation.
    • Many families faced high out-of-pocket expenses during medical emergencies, despite improved insurance penetration.
  • Government Interventions:
    • Initiatives like Ayushman Bharat attempted to bridge affordability gaps.
    • However, private healthcare costs remain largely unregulated.
  • Recommendations for 2025:
    • Expand public health infrastructure.
    • Introduce regulations for private sector healthcare costs to alleviate financial stress.

Middle Class and the Stock Market

  • Shift to Equities:
    • Rising costs led middle-class families to explore stock markets for higher returns compared to traditional savings.
    • Digital platforms and financial literacy programs fueled increased participation.
  • Challenges:
    • Market volatility exposed many investors to risks.
    • Global uncertainties and potential economic slowdowns may impact equity markets in 2025.
  • Future Outlook:
    • Diversification and enhanced financial education will be crucial for sustaining this trend.

Government Infrastructure Push

  • The government focused on infrastructure development, which showed promise but did not translate into widespread job creation in smaller cities.
  • Employment opportunities remain a significant concern for citizens, especially in rural and semi-urban areas.

Ripple Effects and Economic Outlook for 2025

  • Inflation Concerns:
    • Food inflation may persist in 2025 due to potential domestic production challenges and geopolitical uncertainties.
  • Fuel Prices:
    • Unless crude oil prices stabilize or taxation policies change, high fuel costs will continue to burden households and businesses.
  • Hopes for Monsoons:
    • A better monsoon forecast could ease agricultural pressures, stabilizing food prices.
  • Citizen Sentiment:
    • There is cautious optimism for 2025, with families hoping for:
      • Affordable healthcare.
      • Improved housing policies.
      • Greater control over price hikes.

Lessons from 2024

  • The year highlighted the disconnect between macroeconomic growth and the struggles of everyday citizens.
  • Addressing key issues such as affordability, job creation, and cost regulation is essential for inclusive growth.

Toward a Balanced Economic Narrative in 2025

  • India faces the challenge of balancing high economic growth with the tangible needs of its citizens.
  • Policies in 2025 should aim to:
    • Ensure affordability in food, fuel, and healthcare.
    • Expand employment opportunities, especially in smaller cities and rural areas.
    • Build a more inclusive economic future, learning from the hardships of 2024.

Source: https://www.thehindubusinessline.com/economy/indias-growth-paradox-a-year-of-economic-highs-and-household-lows/article69068048.ece#:~:text=The%20year%202024%20was%20a,incomes%2C%20and%20diminishing%20living%20standards