Households are still consuming, but that
consumption is being funded more by credit than income.Bengaluru CEO Calls Out Middle-Class Salary Crisis: The Silent Scam in India.
The Biggest Scam No One Talks About: Bengaluru CEO Slams India's Middle-Class Salary Crisis.
In a hard-hitting LinkedIn post that went viral on May 20, 2025, Bengaluru-based CEO Ashish Singhal called out what he termed “the biggest scam no one talks about”: the stagnant salaries of India’s middle class.
With incomes growing at a mere 0.4% compound annual growth rate (CAGR) over the past decade, while food prices have surged nearly 80% and inflation has eroded purchasing power, Singhal’s post struck a chord with millions. India’s middle class, often hailed as the backbone of the nation’s economy, is caught in a silent financial crisis—trapped between rising costs and flat wages, with no safety net to cushion the blow. This article delves into the data, the lived realities, and the systemic issues behind this “well-dressed decline,” as Singhal aptly described it.
The Middle-Class Squeeze: A Decade of Stagnation
India’s middle class, defined as those earning between ₹5 lakh and ₹1 crore annually, forms a critical segment of the population. In 2021, it accounted for 31% of India’s 1.4 billion people, roughly 430 million individuals, according to a 2021 Pew Research Center report. Projections estimate this group will grow to 38% by 2031 and 60% by 2047, driving consumption, tax revenue, and economic growth. Yet, as Singhal highlighted, this vital demographic is grappling with a harsh economic reality: their salaries have barely budged.
Over the last 10 years, middle-class incomes have grown at a paltry 0.4% CAGR, according to data cited by Singhal, likely drawn from government and private economic surveys. In contrast, inflation, as measured by the Consumer Price Index (CPI), has averaged 5-6% annually, with food inflation peaking at 7.8% in 2024, per the Reserve Bank of India (RBI). Food prices, a significant component of household budgets, have skyrocketed by nearly 80% since 2015. For instance, the price of staples like rice rose from ₹30 per kg in 2015 to ₹50 per kg in 2025, while vegetables like onions and tomatoes have seen periodic spikes, with onions hitting ₹100 per kg in late 2024.
This disparity has eroded real wages, leaving middle-class households with less purchasing power despite nominal salary increases. “It’s not a collapse—it’s a well-dressed decline,” Singhal wrote, capturing the insidious nature of the crisis. Middle-class families continue to maintain aspirational lifestyles—annual vacations, new smartphones, and EMIs for cars or homes—but these are increasingly funded by credit rather than income. Credit card debt has surged, with outstanding credit card loans rising 25% year-on-year to ₹2.7 lakh crore in March 2025, per RBI data. Personal loans, including EMIs, grew by 18% in the same period, signaling a reliance on borrowing to bridge the gap.
The Illusion of Progress: A Lifestyle Under Strain
The middle class’s financial stress is often masked by the trappings of modern life. Families still take domestic flights once a year, upgrade to the latest iPhone, or dine out via Zomato, but these choices come with a hidden cost. “Every Zomato order requires mental math,” Singhal noted, highlighting the constant calculations middle-class households make to balance desires with dwindling savings. A 2024 survey by the National Sample Survey Office (NSSO) found that 42% of urban middle-class families skipped discretionary spending, such as dining out or entertainment, at least once a month due to financial constraints.
Healthcare, a non-negotiable expense, is another pressure point. With private healthcare costs rising 10-12% annually, middle-class families are delaying doctor visits or opting for cheaper, substandard care. A 2023 report by the Public Health Foundation of India estimated that 55% of middle-class households faced “catastrophic health expenditure,” pushing some into debt or poverty. Education costs have also soared, with private school fees in urban areas rising 8-10% annually, outpacing salary growth. For example, annual fees for a mid-tier private school in Bengaluru jumped from ₹1.2 lakh in 2015 to ₹2.5 lakh in 2025, per local education boards.
Fuel prices, another major expense, have compounded the strain. Petrol prices in Delhi hovered at ₹94.72 per liter in May 2025, down slightly from ₹96.72 in 2024 but still 40% higher than a decade ago. For a middle-class family with a single car, monthly fuel costs now exceed ₹5,000, squeezing budgets further. These rising costs, coupled with stagnant incomes, have forced many to dip into savings or forgo them entirely. The household savings rate dropped to 5.3% of GDP in 2024, the lowest in decades, per RBI data, compared to 7.4% in 2015.
The Middle Class as the Economy’s Engine
Singhal’s post emphasized the middle class’s role as the “engine of the Indian economy.” This group drives 60% of India’s consumption expenditure, according to a 2023 McKinsey report, fueling sectors like retail, real estate, and automotive. They also contribute significantly to tax revenue, with personal income tax collections rising to ₹10.45 lakh crore in FY 2024-25, a 15% increase from the previous year, per the Income Tax Department. Yet, unlike the poor, who benefit from welfare schemes like PM Garib Kalyan Anna Yojana, or the rich, who leverage investments in stocks, real estate, and startups, the middle class lacks a safety net.
“The poor are being supported. The rich are scaling. The middle class is just expected to absorb the shock—in silence,” Singhal wrote. Welfare programs provide free food, healthcare, and subsidies to low-income households, while the wealthy multiply their wealth through booming markets—the BSE Sensex rose 20% in 2024 alone. The middle class, however, faces rising taxes, with GST rates on essentials like packaged foods increasing from 5% to 12% in some cases, and no significant relief in income tax slabs. The 2025 Union Budget retained the ₹7 lakh tax-free threshold under the new regime, unchanged since 2023, offering little respite.
Systemic Issues: Why Salaries Stay Flat
The stagnation in middle-class salaries stems from multiple factors. First, India’s job market has shifted toward low-wage, gig-based roles. A 2024 report by the International Labour Organization (ILO) noted that 30% of urban jobs in India are now in the informal or gig economy, offering minimal wage growth or benefits. Even in formal sectors like IT, salary increments have slowed. For instance, top IT firms like Infosys and TCS offered average raises of 5-7% in 2024, barely matching inflation, compared to 10-12% a decade ago, per industry reports.
Second, corporate cost-cutting has prioritized profits over employee compensation. A 2025 study by IIM Bangalore found that 60% of Indian companies increased executive bonuses while freezing or reducing middle-level salaries. This is evident in sectors like manufacturing, where automation has reduced demand for mid-skill workers, capping wage growth. Meanwhile, the cost of living in urban centers like Bengaluru, Mumbai, and Delhi has soared, with rental indices rising 15% annually, per Knight Frank India.
Third, policy inertia has exacerbated the crisis. While the government has focused on infrastructure and welfare, middle-class-specific reforms, such as tax relief or incentives for skill development, have been limited. The Atmanirbhar Bharat initiative, launched in 2020, boosted manufacturing but created mostly low-skill jobs, leaving white-collar workers underserved. “The system expects the middle class to keep paying taxes and EMIs without complaint,” Singhal argued, pointing to a lack of advocacy for this group.
The Human Cost: Chronic Financial Stress
The financial strain has taken a toll on mental health. A 2024 survey by the Indian Psychiatric Society found that 48% of urban middle-class respondents reported anxiety related to financial insecurity, up from 35% in 2019. The pressure to maintain an aspirational lifestyle—branded clothes, international schools, or OTT subscriptions—has led to a phenomenon dubbed “lifestyle creep.” Families stretch budgets to project success, often at the expense of savings or retirement planning. “It looks like progress, but it’s quiet financial erosion,” Singhal wrote, a sentiment echoed by millions online.
Social media platforms like X have amplified these frustrations. Posts like “Paying ₹20,000 rent, ₹15,000 EMI, and ₹5,000 for groceries on a ₹50,000 salary—how is this sustainable?” garnered thousands of likes, reflecting widespread discontent. Another user wrote, “Middle class in India means working 12 hours a day to afford a life you can’t enjoy.” These voices highlight the disconnect between India’s economic growth—projected at 6.8% for 2025 by the IMF—and the lived reality of its middle class.
Solutions and the Way Forward
Addressing the middle-class salary crisis requires systemic change. First, policymakers could introduce targeted tax relief, such as raising the tax-free income threshold to ₹10 lakh or offering deductions for education and healthcare expenses. Second, companies must prioritize equitable wage growth. Initiatives like mandatory salary benchmarking, as suggested by IIM Bangalore, could ensure increments keep pace with inflation. Third, upskilling programs tailored to middle-class professionals could enhance employability in high-growth sectors like AI and green energy, where salaries are higher.
Singhal’s post also called for greater public discourse. “We need to talk about this scam,” he urged, advocating for the middle class to demand accountability from employers and policymakers. Grassroots movements, like the Middle-Class Taxpayers’ Association formed in Bengaluru in 2024, are gaining traction, pushing for reforms like GST exemptions on essential services.
On the corporate side, progressive firms could lead by example. Some startups, like Zerodha, have introduced profit-sharing models, giving employees a stake in growth. Scaling such practices could align corporate and employee interests. Additionally, financial literacy programs could help middle-class families manage debt and prioritize savings, mitigating the reliance on credit.
The Broader Economic Impact
The middle-class crisis threatens India’s economic stability. A weakened middle class could dampen consumption, which accounts for 60% of GDP, slowing growth in sectors like retail and real estate. A 2025 EY report warned that declining middle-class purchasing power could reduce India’s GDP growth by 0.5-1% annually by 2030. Moreover, chronic financial stress could lead to social unrest, with X posts already hinting at growing frustration: “Middle class is the new working poor.”
Conversely, empowering the middle class could unlock India’s potential. A 2023 McKinsey study estimated that increasing middle-class disposable income by 10% could boost consumption by ₹5 lakh crore annually, driving job creation and tax revenue. Strengthening this segment is not just a moral imperative but an economic necessity.
Ashish Singhal’s viral LinkedIn post has ignited a long-overdue conversation about India’s middle-class salary crisis. With incomes growing at a mere 0.4% CAGR against 80% food price hikes and relentless inflation, the middle class is trapped in a cycle of financial stress, masked by aspirational lifestyles and fueled by credit. As the engine of India’s economy, this group deserves more than silent suffering. Targeted policies, corporate accountability, and public advocacy could reverse this “well-dressed decline,” ensuring the middle class thrives, not just survives. Until then, Singhal’s words ring true: this is the biggest scam no one talks about.
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