Even for those who find work, something has quietly gone wrong with the economics of middle-class life. <\/p>\n
Over the past decade, the average middle-class income taxpayer’s annual income has grown by around 50,000 rupees – roughly the price of a decent smartphone. In isolation, that sounds like progress. Against the actual cost of living, it is a slow erosion.<\/p>\n
Recent research shows a vegetarian thali (an Indian meal comprising several small dishes) now costs 11% more, external<\/a> each year, an entry-level car or motorcycle rises by 7 to 8% annually, external<\/a> and medical costs climb at 14%, external<\/a>. <\/p>\n Our estimate – based on spending patterns for typical middle-class households across rent (10-13%), food (7-9%), healthcare (around 14%) and education (8-10%) – suggests that the true cost of living is doubling roughly every eight years, implying an effective inflation rate of about 9% for this group. <\/p>\n A family that lived comfortably on 1m rupees in 2016 would now need close to 2m a year.<\/p>\n Their salary, in most cases, has barely moved. The middle class is on a treadmill, and every year the belt speeds up.<\/p>\n The debt is real, and it is growing.<\/p>\n The gap between what people earn and what life costs has to be filled somehow. Increasingly, it is being filled with borrowed money. India’s non-housing household debt as a share of income now exceeds that of the United States and China. <\/p>\n Nearly half of all Indian families have taken personal loans; 67% of borrowers, external<\/a> had their first loan before the age of 30. For those carrying debt, nearly 40% of annual, external<\/a> income goes to servicing it.<\/p>\n This borrowing isn’t building anything. It is financing holidays, smartphones, school fees and hospital bills – consumption and survival, not investment. <\/p>\n