In today’s Finshots, we trace the journey and rise of India’s middle class from independence to the present day. And just a heads-up. This one’s a Finshots special and a little longer than our usual stories.

But before that here’s a quick recap of all the things we covered this week. On Monday we talked about what happens to electric vehicles when they become second hand. On Tuesday we told you why Titan is eyeing the US to grow its jewellery business, even though Americans aren’t exactly known for splurging on gold. On Wednesday we broke down HUL's Kwality Wall's demerger. On Thursday we discussed why Jio wants to disrupt ITR filing.

Now, on to today’s story.

The Story

While the poor are offered addiction as a way to escape thinking too much, working people are encouraged to shop.

This is a quote from the book “Where We Stand: Class Matters” by Bell Hooks. And it perfectly describes how the poor find temporary escape in distraction, while the middle class gets sold the dream of moving up in life. Buy a better phone, a bigger fridge, or maybe just a fancier dinner out, look successful and feel like you’ve climbed up the economic ladder!

And it’s this urge to upgrade that makes them the engine of consumption in any country, fuelling the economy one purchase at a time.

In India, this engine is getting bigger by the year. Today, the middle class makes up nearly a third of our population. And by 2047, when independent India turns 100, the share is expected to nearly double — making up close to 60% of the country.

But here’s the thing. There’s no single definition of who qualifies to be middle class.

A decade ago, any household with a disposable income of ₹6–7 lakhs a year (after saving and paying taxes) could call itself middle class. But things have changed over the years. Researchers at the People Research on India’s Consumer Economy (PRICE) today define it as economically secure households, unlikely to slip into poverty and earning anywhere between ₹5 lakhs and ₹30 lakhs a year. Now that’s a wide range, and that’s because it’s the total income they’re talking about. If you knock off savings and essentials from it, it leaves an average of around ₹5–6 lakhs per household for discretionary spending.

Even the government’s new tax regime quietly acknowledges that anyone earning between ₹4‒12 lakhs a year deserves a tax break, so that they have more cash to spend. More money in their pockets means more demand for everything from bikes to branded clothes.

So yeah, this is the class that’s not constantly worried about survival but is always aspiring to move up. And they’re the reason why so many sectors boom.

But how did they come about in the first place?

Well, let’s take a trip down memory lane and trace the journey from the days of independence to now.

Before independence, India’s middle class was tiny. We’re talking about a sliver of British-trained elites such as lawyers, teachers, doctors and civil servants.

In 1947, the country had 35 crore people. Most were still reeling from the partition, struggling for food, shelter and stability. Only 1–5% of this population consistently had food on their plates, chappals on their feet and a place that they could call home. That was the middle class.

For years, this group stood apart. They had the right connections and access to respectable jobs — living lives far removed from the broken, poverty-stricken India outside their circles. But these circles weren’t expanding very quickly.

That’s because the government, meanwhile, focused on building dams, steel plants, coal mines and automobile factories, but shielded them from foreign competition with stiff import tariffs. The “license raj” kept businesses under tight control, requiring permits for almost everything. Banks and key industries were nationalised. And economic growth limped. For context, India’s share of the world economy, which had already fallen from 24% in 1700 (during the end of the Mughal rule) to 4% in 1950, stagnated further to around 3.5% for decades. Per capita income barely grew 1.3% annually.

Then came the early 1980s. The private sector started adding jobs. And a “new” middle class that was defined not just by profession, but also by consumption, emerged. Many came from families who had grown up barefoot, without electricity or enough food but now, had small, yet stable jobs or little shops. They made enough to send their children to English-medium schools so that they could one day grow up to become doctors, engineers or accountants.

Owning a Bajaj Chetak scooter, a black-and-white TV, or even a pair of jeans became symbols of success. It was like the middle class was catching up with the West, but in their own traditional way. From a circle of less than 2 crore in 1947, their numbers grew to about 7 crore by the early 1980s.

As a New York Times article describes it:

Between 1970 and 1980, annual sales of scooters, motorcycles and mopeds nearly quadrupled, to more than 400,000. Sales of cars and jeeps nearly doubled, to 60,000 annually, from 1975 to 1981. Television sets have tripled, to more than 2 million, since 1977…

And in a new buying craze, Indians are purchasing 20,000 video cassette recorders a month. Hundreds of video libraries have sprung up in the big cities. Between 1978 and last year [1982], production of cookies, a luxury food, increased nearly 50 percent; wristwatches, 20 percent, to 5.3 million, and toothpaste 23 percent. Soft drink sales doubled to 1.7 billion bottles. Cosmetics and beauty aids have become a $100-million-a-year business.

But despite all this consumption, growth just wouldn’t take a leap until liberalisation happened.

Until 1990, India’s GDP growth had always remained under 4% a year. But other Asian economies such as Thailand, Indonesia and South Korea were growing at a much faster pace, anywhere between 6-9% a year. Faced with a balance-of-payments crisis, the government unleashed economic reforms. Import barriers fell, foreign investment flowed in and private industry was unleashed. The result was a boom.

GDP growth shot up and stabilised at 6–7% a year. For the first time, millions of jobs appeared in new industries. Technology and services boomed. Call centers, software companies and multinationals opened offices in cities. Young college graduates, for the first time, saw high-paying white-collar jobs in IT and finance. Not just that, even folks like carpenters, street vendors, decorators and drivers moved up to be included in the lower middle class, since most of these sectors had, and still have, minimal barriers to entry, allowing many from poor households to easily “move up” to this group.

So naturally, with higher incomes, the middle class exploded. The number of Indian households with substantial disposable incomes rose sharply. The size of the middle class in India had grown to over 30 crore people, according to Deutsche Bank Research.

So yeah, far more people could afford consumer goods. Shopping malls, branded stores and smartphones – all once seen only in Hollywood films, began appearing in Indian cities. In 1991, even owning a car was a luxury; but by 2010, affordable models like the Maruti 800 and Tata Nano made four-wheelers common in urban life.

Rural India also felt the change. Better roads, TV satellite dishes and mobile phones started appearing in villages for the first time.

The liberalisation era meant that the middle class grew not just in numbers but also in confidence. Credit cards, bank loans and easy consumer finance emerged, further fuelling spending. And by this time, India was on its way to becoming a middle-income economy.

Today’s Indian middle class is nothing like it was in 1947. Back then, it was a small city-based crowd. Now, it’s spread across big metros and small towns, covering everyone from shopkeepers to software engineers, teachers to traders.

And there’s one thing that really binds them together — cheap internet and a smartphone. A recent survey says 85% of households have one, and even in rural India, three out of four mobile users own a smartphone. Banking, shopping, paying bills, streaming cricket, even attending classes, all from a device that can cost less than ₹10,000.

This is the “aspirational India” you hear about — the one that became a lower-middle-income economy in 2018 and doesn’t intend to stay that way forever.

The government has also sweetened the deal over the years. Tax slabs are a little kinder now. A decade ago, the middle class was shelling out anywhere between 10% and 20% in income tax. Now, that’s dropped to 5%–15%. And from this financial year (FY26), anyone earning below ₹12 lakh won’t have to pay a rupee in tax. That leaves the middle class with more money in hand. And when you’ve got 43 crore people — that’s about a third of the country — with cash to spend, you can see why they’re so important to the economy.

Some even call them “affluent Indians”. The kind who’d happily take a vacation, book flights instead of trains, binge on OTT shows and swipe credit cards without thinking twice. This lifestyle has grown, thanks to cheaper data, better financial awareness, rising incomes and a taste for premium products.

But here’s the thing. There’s still an ongoing debate whether India’s middle class is actually growing, or shrinking.

Sure, the number of poor has gone down. But the average income of the middle class hasn’t moved much. In fact, their spending power might have taken a hit. To put things in perspective, back in 2012, Indian households saved eight times more than they owed in debt. Now, that’s halved to just four times.

And increasingly, middle-class lifestyles are being bankrolled by credit instead of actual earnings. A recent Indian Express report paints a worrying picture. Credit card defaults overdue by 91–360 days have jumped 44% in a single year, hitting nearly ₹34,000 crores. That’s a lot of unpaid bills. Which means that some middle-class families might be living their dream life on borrowed money, quite literally.

And it’s not hard to see why. Essentials and luxuries alike have gotten pricier. Food prices bite, even if inflation data suggests that they’re cooling. And buying a home affordably is a thing of the past. In Delhi, for example, ₹1 crore gets you a basic 1,000 sq. ft. apartment. That’s more than 12 years of the average salary — assuming you earn at least ₹8 lakhs a year and without even factoring in the interest cost of loan.

So yeah, the middle class is still spending, but it’s not always clear if it’s from deep pockets or deep debt.

The truth is probably somewhere in between the “booming” and “struggling” extremes. Since the middle class is already huge, even a small percentage increase in size looks modest. Plus, the pandemic may have briefly reversed some of the gains.

But one thing is clear. The middle class is a big deal. They form a huge market for companies and a broad tax base for the government. And as they grow, they’ll expect better education, healthcare and jobs.

In the coming years, whether their numbers double or just change in composition, is something we’ll have to wait and see. But there’s no doubt that the middle class will keep influencing what people in India buy and how the economy runs, in ways that were unimaginable back in 1947.

If this Finshots special struck a chord because you’re part of India’s middle class or affluent India, whatever you prefer calling it, share it with your friends, family or even strangers on WhatsApp, LinkedIn and X and let them know how far India’s middle class has come since independence. Jai Hind!

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