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Weak recovery makes Indian middle class anxious and frugal

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These are the kind of people who would normally travel to Italy, London or the United States for their holidays, says Wilson Dass, store manager at The Collective, a luxury retailer that sells items such as cashmere coats and expensive leather bags. . Instead, they come to his shop, in Gurugram’s industrial center.

mr. Dass said he has sold many more Hackett coats and Versace bags this year, especially recently, than in previous years.

Sales are up more than 30 percent this year compared to 2019, he said, and the big winter shopping season hasn’t even started yet.

His clients, a mix of businessmen, wealthy women and the “neo-rich” of India, want to show off their Karl Lagerfeld bags and Michael Kors tracksuits, he said.

“They’ve got all this money,” Mr. Dass said. “They have to spend it somewhere.”

India’s economic statistics may reflect the exuberance of the Indian economy better than the damage. In 2015, the country changed the way it calculated growth. Considered largely more modern and endorsed by Mr Modi’s predecessor, the new approach relied on figures reported by the formal sector, such as large corporations. But it assumed that the country’s vast informal sector, which employs farm workers, day labourers, rickshaw drivers and many millions of others, would grow with the formal sector.

Contrary to that assumption, the pandemic has disproportionately damaged India’s informal economy, which employs an estimated 90 percent of the country’s workforce, although precise numbers are elusive as it’s not on the books. Since the start of the pandemic, at least 10 million Indians lost stable, high paying jobs, according to Mr. Vyas.

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