In a recent LinkedIn post, Ashish Singhal, CEO of PeepalCo, labeled the stagnation of middle-class salaries in India as “the biggest scam no one talks about.” His assertion sheds light on the financial pressures faced by India’s middle-income earners, who are grappling with rising living costs and minimal wage growth.
The Illusion of Stability
Over the past decade, individuals earning between ₹5 lakh and ₹1 crore annually have experienced a mere 0.4% compound annual growth rate (CAGR) in their incomes. In contrast, food prices have surged by nearly 80%, significantly eroding purchasing power. Despite these challenges, many middle-class families maintain appearances—continuing to make purchases and pay EMIs—often by relying on credit. This phenomenon has been described as a “well-dressed decline,” where outward signs of prosperity mask underlying financial strain.
Mounting Financial Pressures
The financial burden on the middle class is multifaceted. In cities like Bengaluru, the cost of living has escalated sharply. Housing rents in areas such as Whitefield and Koramangala have risen from ₹25,000 to ₹40,000 per month within a year. Additionally, prices for essentials like milk, diesel, and public transportation have increased, further straining household budgets.
Compounding these issues is the disparity in income growth across different employment levels. While CEO salaries in the Indian IT sector have soared by 160% over the past five years, entry-level salaries have seen only a 4% increase. This widening gap exacerbates feelings of financial insecurity among middle-class workers.
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The Broader Economic Implications
The financial challenges faced by the middle class have broader implications for India’s economy. With household debt reaching 43% of GDP and savings at a 50-year low, the middle class’s reduced spending power threatens to dampen economic growth. The Reserve Bank of India’s measures to curb excessive lending have led to decreased credit availability, pushing some individuals into deeper financial distress.
A Call for Attention
Singhal’s post has sparked widespread discussion, highlighting the need for policymakers and industry leaders to address the financial challenges confronting the middle class. As this demographic continues to bear the brunt of economic pressures without significant support, there is an urgent need for comprehensive strategies to alleviate their burden and ensure sustainable economic growth.