The usual narrative around income inequality is that the rich keep getting richer while the poor struggle to catch up. But according to fund manager Rahul Jain, there’s a twist in the tale—India’s poor are progressing faster than the middle class, which is now stuck in a worrying state of stagnation.
In a recent LinkedIn post, Jain highlights that over the last 11 years, India’s middle-income group has seen almost no real growth in income. Meanwhile, those in the low-income bracket have shown comparatively stronger gains. For instance, individuals earning under ₹5 lakh annually saw their incomes rise from ₹2.4 lakh to ₹3.6 lakh—a compound annual growth rate (CAGR) of 4.0%. In contrast, the middle-income group—those earning between ₹5 lakh and ₹1 crore—only saw their average income increase from ₹10.2 lakh to ₹10.7 lakh, reflecting a dismal CAGR of just 0.4%.
Even high-income earners haven’t been immune to this slowdown. Their incomes nudged up only slightly, from ₹2.69 crore to ₹2.83 crore, translating to a CAGR of 0.5%. However, it is the middle class that appears to be bearing the brunt of economic stagnation, despite being the backbone of the country’s tax system. According to Jain, this group is responsible for 53% of all income tax filings in India, yet they’ve seen their real earnings barely move over the last decade.
Adding to their woes, inflation has consistently driven up the cost of essentials such as healthcare, education, and EMIs. At the same time, automation and artificial intelligence are reshaping the job landscape, phasing out traditional roles that the middle class once relied on. As Jain puts it, “They’re getting squeezed”—excluded from government welfare programs aimed at the poor, and lacking the economic clout that cushions the ultra-rich.
What’s even more concerning is the phenomenon of “mobility stagnation.” Jain notes that many individuals from the lower-income category are climbing into the middle class, but once they arrive, their incomes plateau. “They’re climbing the ladder, but the rungs above are missing,” he explains, painting a stark picture of a class that’s running out of room to grow.
For Jain, this isn’t just an economic anomaly—it’s a critical policy blindspot. The middle class plays a pivotal role in shaping a nation’s future. They are the key drivers of investment, consumption, and savings. Yet they are increasingly caught in a cycle of high costs, slow income growth, and limited support. Unless policymakers address this growing gap, India risks stalling the very engine that powers its economic ambitions.
