It is the best of times. It is the worst of times. Dickens wrote in the past tense, about revolutionary France. India’s paradox is in the present tense. Context defines — and designs — the prospects of prosperity.
India is witnessing five transitions running at once. Family businesses are transferring control and wealth. Business models are migrating from distribution to platforms rearranging who owns the fruits of work. There is a toll-booth model of business—wealth management, wellness coaching, wishful tourism—thriving on public savings. Governments are forced to expand welfare as consumption is bifurcating into a K-shape on rising prices. And artificial intelligence is wrenching the human interface from a sector that absorbed two decades of graduates.
None of this is accidental or contradictory. Different transitions are landing on different people. Each acts on its own. Together they compound. Viewed through GDP, India is resilient, still among the fastest-growing major economies. Viewed through employment, ownership or consumption, the K-shaped economy appears. Beneath the reassuring aggregates, almost every mechanism by which India created wealth over three decades is changing at once.
Big business is morphing as the baton passes across houses—Ambani, Adani, Birla, Goenka, Mittal. The founding generation built for scarcity—ports, power plants, refineries, telecom towers. Most of it built with the State, or sold to it. Their prime asset was political proximity and the craft of extracting clearances, spectrum, land and bank capital. That asset is personal and not passed. What passes on is capital, a portfolio of businesses and, presumably, risk appetite.
The transfer is significant. EY and Julius Baer put India on the cusp of an unprecedented inter-generational wealth transfer, with an estimated $1.5 trillion changing hands over the next decade. Some inheritors would rather run a family office than a plant. The economic payoff is immediate: professional management trims the conglomerate discount, improves capital efficiency and accelerates creative destruction.
Secession from the family philosophy often follows succession. The inheritors are not hooked on knowing the sarkar or managing regulatory whimsy. Educated globally and reared on tech ecosystems, they are betting on platforms and the personalisation of experience. Unlike the Japanese and Korean houses, they are not going global. They are betting on the Indian consumer.
Schumpeterian ‘creative destruction’ is manifest. The old corporate model—own assets, control supply chains, scale linearly—is fading. Firms once grew by adding factories, warehouses and branches. They now grow by adding networks. Asset-light platforms—asset managers, fintech aggregators, quick-commerce apps, digital exchanges—scale exponentially deploying minimal manpower. Success is visible in market valuations.
Appreciate the arithmetic. Eternal, a food service platform, is worth as much as Nestlé, an admired packaged foods enterprise in the country. Swiggy, perpetually in the red, has a market cap of around Rs 78,600 crore and sits on brokerage buy lists. HDFC Bank runs 9,689 branches across 4,175 cities and employs 2.11 lakh people. Investors pay 14 times earnings for the bank and 38 times for its sibling HDFC AMC, which employs 1,738.
Much has been written about the confidence of the Indian retail investor; the truth is more prosaic. Equity is a Hobson’s choice for a middle class struggling to preserve purchasing power against the cost of education, healthcare and aspiration. In the first six months of the year, domestic funds absorbed Rs 4.5 lakh crore even as foreign investors sold. Unsurprisingly, asset managers are hot, as are the wealth outfits and companies running market infrastructure like the NSE readying the largest IPO of them all.
Information technology built India’s middle class. For 30 years, Indian software trained engineers and billed clients for hours. AI is rewriting that script; tomorrow’s contracts will price outcomes, not man-hours. The sector faces challenges as generative systems dissolve the forms, functions and structures that generated the jobs. Yes, the global capability centres are hiring. That is the thin edge or end of the wedge. Salaries are drawn in India while value migrates, with the margin, to a multinational balance sheet.
The profits migrating from retailer to platform is real; so is the retrenchment of human interface. A dark store replaces the working capital and the shopkeeper simultaneously. This is formalisation that raises measured output and GST buoyancy while thinning the informal middle. The gainers are listed. The losers are not. The macro implication is stark. GDP grows, but employment does not keep pace. The paradox of platform boom: soaring corporate profitability alongside a shrinking wage share. Consumption data tagged as ‘premiumisation’ reflects K-shaped divergence. The aggregate is healthy. The household is trading down.
India is changing not merely how wealth is created, but who captures it. The toll-booth economy is expanding. Earnings and jobs are also challenged by the transition in consumer behaviour. Parents who expected to create wealth postponed consumption and children who expect to inherit it consume differently. To define is to limit, Wilde wrote. Every generation redefines prosperity; this one defines it by where it has been rather than by what it holds.
Every one of these transitions arrives at the same destination. Ownership of capital takes a larger share of growth and labour is left with a smaller one. The formalisation of consumption has widened the tax base, but the narrowing of the wage base has implications for the political economy. The political class has adopted a mechanism where it uses taxpayer money to compensate and preserve its market share. India’s social contract is being rewritten alongside its economic model.
The disruption is not any one technology, but the convergence of transitions happening at once. Dickens understood that contradictory truths can hold at the same moment. It is the best of times for those who own. It is the worst for those stranded in the transitions.
Read all columns by Shankkar Aiyar
The Third eye / Shankkar Aiyar
Author of The Gated Republic, Aadhaar: A Biometric History of India’s 12 Digit Revolution, and Accidental India
(shankkar.aiyar@gmail.com)
