India is facing challenges and opportunities as it strives to become the world's third-largest economy, according to a recent UBS report titled "India Economic Perspectives: Five Key Questions for the Indian Economy."

The report highlights a K-shaped consumption pattern, indicating that affluent consumers are experiencing fatigue while lower-income segments may benefit from increased rural demand and public spending. Tanvee Gupta Jain, Chief India Economist at UBS Securities India, suggests that factors such as strong monsoons, rising public expenditure, and enhanced social welfare spending could stimulate demand among lower-income groups, despite the slowdown in the premium segment's growth.

The report also discusses the shift in household savings from traditional bank deposits to alternative asset classes and the implications of the Reserve Bank of India's monetary policies. As India continues to navigate its economic landscape, maintaining fiscal discipline and achieving sustainable growth remain critical challenges.