Economic freedom is one of the most desired fundamental human rights. It gives one confidence and ability to live in peace and to combat the hurdles of life boldly. Economic liberty includes freedom to decide how to use one’s labour and work, to enjoy the fruits of labour; the freedom to own and control private property and also to participate in a free market. Free markets and free people are the two major propellants of economic progress. We value freedom as individuals and as a society, and a good economy is one that promotes freedom.
The common belief that enthrals millions of minds is that more the GDP, the better is the condition of the people. It is not just economic size that can bring true prosperity and freedom. It ignores crucial factors like income inequality, environmental damage, health, education, and quality of life, focusing only on market transactions. GDP measures material goods and services, but leaves out the assessment of the state of freedom. Economic freedom is being measured and expressed as a numerical figure. The Heritage Foundation of America has published every year since 1995 an Index of Economic Freedom covering every country. The index takes a comprehensive view of economic freedom.
The Index Report 2025 conceded that economic freedom is under attack worldwide. India is no exception. In the 2025 Index, India ranked 128th among 176 countries. India’s status, with a score of 53 on a scale of 0 to 100, is described as ‘mostly unfree’. India is consistently being marked as ‘mostly unfree’ since 2002. Prior to that India was designated as a ‘repressed’ country. The report observed that freedom of the middle-class is stifled while the powerful are getting richer. It re commende d reb uilding the well-functioning and healthy institutions of civil society that we need and deserve. India’s GDP growth is predominantly consumption driven, about 60 per cent of the GDP. The main ‘consuming class’ is the top 10 per cent of the population.
They have the power for 66 per cent of the discretionary spending on non-essential goods in the country. They enjoy real economic freedom. Capacity to spend on non-essential goods is the critical indicator of economic freedom. This top 10 per cent group is not widening but is deepening. The Indus Valley Report 2025 published by Blume Ventures designates this top 10 per cent of population as ‘India1’, the “engine of the Indian consumer economy”. The report advocates that India1 constitutes a ‘high income country’ within India, and will be an advanced economy well before India overall becomes a developed country. India1 alone would form the tenth most populous country in the world, with 14 crore people.
In terms of per capita income, India1 would rank 63rd in the world, way ahead of India’s 140th rank, as per World Bank data. The spending pattern in the market is changing over recent years based on mostly the preferences of the top 10 per cent population. These people suggest how the consumption pattern should look like from gated communities, travel, destination weddings to luxury brands and even ‘the way our cities look’. The India1 segment prefers living in gated communities which are the concentrations of affluence. Their rights are well protected here. These are the ‘islands’ where ‘people pay a premium not for quality but for invisibility of other Indians. Currently 16 million such gated households comprise 32 per cent of the population in 50 cities. These communities have become an economic powerhouse as they account for a disproportionately large share – 45 per cent – of overall spending in top cities despite having fewer households. The trend of ‘luxury living’ in gated communities reinforces existing disparities in society.
India’s real estate market is now booming and is projected to reach the milestone of $ one trillion by 2030. The sector is driven by strong demand in residential (especially luxury), commercial housing. Share of high end to ultra luxury housing has doubled in last five years. This sector is gradually being overtaken by big builders and developers. India’s housing market is shifting as more buyers seek larger, premium homes. Survey shows 36 per cent buyers now prefer properties priced between Rs. 90 lakh- Rs 1.5 crore up from 18 per cent before Covid-19. Luxury home demand in India remained strong in 2025, with sales of Rs. 4 crore and above rising nearly 28 per cent YoY across seven major cities. Share of foreign travel expenses in outward remittances increased from 21 per cent in 2014-15 to 54 per cent in 2023-24.
India’s car market experiences slow growing passenger vehicle sales while a sharp rise has been seen in premium segment cars over the years from FY 2019-20 to 2023-24. The market forces consumers to behave in certain ways. On the other hand, the market is also energised by the high-income household’s spending, which leads to skewed growth. The luxury market has experienced exponential growth signifying economic inequality in society. This implies that while GDP increases, along with it increases inequality. Premium-brand products give high profit margins. Corporates’ rising focus on producing and selling high-margin premium luxury items divert resources, innovation, and attention away from providing affordable quality products to low-income consumers.
The monopolistic inclination of the market poses constraints for the enhancement of freedom of individuals. Without free markets and free enterprises, big corporations can exploit both consumers and their own workers thus expanding their profit. They enjoy freedom in the economy through the power of coercion. The bottom 90 per cent in India are not in a position to join the top 10 per cent. A staggering one billion Indians are left with no money for discretionary spending after meeting their basic needs. Most are operating on razor-thin margins, with rising food costs, housing, healthcare and education consuming their entire incomes. They have nothing to save; luxury is a dream. Poverty is the major obstacle to economic freedom.
The ability of individuals to find good employment opportunities and work is essential to the advancement of economic freedom. But job creation remains weak. Individuals in India are being faced with difficulties in choosing work. Inflation overshoots increase in wages, resulting in decline in real wages. Markets are not delivering what a majority in society want and need – like social security, jobs, increase in wages and better working conditions for labour. The problem is not only about poverty in the traditional sense but also about the growing financial constraints among all segments of society barring the top 10 per cent. Society faces a serious imbalance of freedom. Economic freedom in general is in danger. Freedom of a few has increased at the expense of freedom of many. The problems in our economy and society were not inevitable.
They are in a sense a matter of choice; the result of policies, rules and regulations that govern the economy. The Indus Valley Annual Report warns: “When a billion citizens can no longer participate in the non-essential economy, the ripple effects will be felt across every sector – from industry to innovation. The challenge for policymakers is to restore not just incomes, but hope.” Protection of economic freedom requires elimination of coercive power from market. Reforms in the economic sector are essential to establish balance of freedom. Economic intent of national policies should aim at breaking the shackles of poverty for good. The same people should not suffer forever. (The writer is a Cost Accountant who served as General Manager
(Finance and Accounts) of a public sector power utility.)