Weak drivers

Budget should have measures to resuscitate the middle class

The context of Budget 2025-26 has brought into focus the need to raise the employment intensity of India's economic growth and address the stagnation of income and wage levels.

It also simultaneously rekindled the debate over the size, status, and potential of India's “middle class”. Policymakers have noticed that those belonging to relatively “well-off” socio-economic classes are also seeking tax reliefs from the Budget, disguising themselves as part of the middle class.

At the same time, anecdotal evidence of a “shrinking” of the median and below segments of the middle class is being corroborated by consumption market surveys. Kantar reported that the number of lower middle-class households was down 25% in 2024 compared to 2019, while the affluent ones surged 86%.

To be sure, this trend is also mirrored in income-tax data — taxpayers with income above ₹50 lakh a year account for almost half of gross total income reported by all taxpayers in the assessment year (AY) 2023-24.