Incomes for India’s middle class—those earning between ₹5 lakh and ₹1 crore annually—have remained flat for the last decade, according to Saurabh Mukherjea, Founder and CIO of Marcellus Investment Managers.
In a conversation with The Federal, Mukherjea highlighted how income stagnation in this band, which accounts for 75% of the country’s income tax returns, is being quietly overlooked even as wage growth continues below and above this income tier.
“We’re a free market economy now, not a socialist one. The market has driven technological revolutions in factories, and now it’s doing the same in white-collar offices through AI,” he said. But this revolution is squeezing India’s middle-income earners—compressing wages, shrinking job availability, and ultimately eroding upward mobility.
Mukherjea explained that he studied a decade’s worth of income tax data and defined the “true” middle class as equidistant from both the poor and the rich. This cohort—roughly 40 million tax filers—is now caught in a wage trap. “Not everybody is stagnant obviously, some are rising, some are falling. But on average, incomes between ₹5 lakh and ₹1 crore have been stagnant.”
The forces driving this stagnation? Technology and political focus. Entry-level IT jobs that once offered ₹2-3 lakh annually—critical stepping stones for the Indian middle class—are disappearing as robots and automation take over. “Any repetitive job is under threat. Coding is just the first of many white-collar roles that AI will disrupt,” Mukherjea warned.
Meanwhile, he observed that incomes below ₹5 lakh are rising steadily—“and rightly so”—because that’s where the votes lie. “Roughly 60 crore Indians earn below ₹5 lakh. That’s 90% of the electorate. No politician can afford to ignore that vote bank.”
On the other end, incomes above ₹1 crore are also climbing. “Primarily business people, not salaried executives,” he noted. That leaves the squeezed middle—the salaried class with aspirations but shrinking economic bandwidth.
“If you earn between ₹5 lakh and ₹1 crore in India, you should proudly call yourself part of the middle class,” Mukherjea said. But pride aside, the message from the data is clear: India’s middle class is no longer moving up the ladder—it’s being slowly edged out of relevance.
