India’s center class is dealing with an financial squeeze, with incomes largely stagnant over the previous decade, at the same time as consumption surges. In accordance with Saurabh Mukerjea, Founder and Chief Funding Officer of Marcellus, the section incomes between ₹5 lakh and ₹1 crore per yr has seen no actual revenue development in 10 years, at the same time as inflation has eroded buying energy by practically 50%.
Each lower-income and ultra-rich teams have witnessed an increase in earnings, additional deepening revenue inequality. With synthetic intelligence (AI) and automation threatening jobs and an explosion in client credit score fueling spending, issues over sustainability and monetary stability are rising.
Regardless of flat incomes, spending at airports, purchasing malls, and on-line platforms has skyrocketed within the final 5 years. The explanation? A surge in loans and credit score growth.
“Consumption has elevated massively, however the place did the cash come from? Loans,” Mukerjea stated in a podcast with Raj Shamani, explaining how Indians have borrowed closely to keep up their life.
Nevertheless, with AI and automation decreasing job safety, the looming query stays: who will repay these loans?
Mukerjea warns that the rising use of AI throughout industries will inevitably result in job losses, regardless that firms keep away from explicitly stating it.
“Each CEO I converse to talks about how a lot AI they may use. They don’t say how many individuals they may let go, nevertheless it’s apparent that if AI replaces people, jobs can be misplaced,” he famous.
This shift is elevating issues about the way forward for employment in India, as companies make investments closely in automation to chop prices and enhance effectivity.
Politicians, Mukerjea factors out, are more and more specializing in the lower-income section as a result of that’s the place the most important vote financial institution lies. The usage of Direct Profit Transfers (DBT) by way of Jan Dhan-Aadhaar-Cellular (JAM) infrastructure has enabled focused monetary assist, making it simpler for governments to safe electoral assist.
“Large vote financial institution politics is at play. Direct money transfers at the moment are extremely focused, making it straightforward for governments to concentrate on lower-income teams slightly than the center class,” he defined.
Whereas the center class struggles, the ultra-rich section—these incomes over ₹1 crore yearly—has grown sevenfold within the final decade, in line with revenue tax information.
“These are the brand new kings and queens of India. They run the nation, finance political methods, and drive luxurious markets,” Mukerjea remarked.
Gross sales of luxurious properties, high-end vehicles, and premium merchandise have surged, whereas reasonably priced housing and mass-market items wrestle.
India’s client economic system is deepening, not widening—which means the rich are getting richer, whereas the center class faces stagnation. This shift is reshaping market dynamics, with manufacturers specializing in premiumization slightly than catering to mass customers.
With family financial savings at a 50-year low, rising debt, and job uncertainties looming, the subsequent decade could also be more and more polarized between the booming wealthy and the squeezed center class.
