The Soaring Growth of India's Middle Class

31 October 2023
|In Blogs
|By Amit Saxena

According to findings from the Pew Research Center, there is a notable surge in the size of India’s middle class. Projections indicate that by 2030, the number of individuals falling into the middle-class category in India will double, reaching an impressive 800 million people. The middle class, as defined by the PRICE report, consists of households with an annual income ranging from Rs 5-30 lakh.

Year Population (millions)
1990 115
2000 200
2010 300
2020 540
2023 565
2030 800
Year Growth Rate (% per year)
2000-2010 6%
2010-2020 8%
2020-2030 7%

Source: PRICE Report

Region Middle class population (millions)
North India 181
South India 125
East India 105
West India 129

Source: 2020-2021 PRICE Report

State Middle class population (millions)
Maharashtra 74
Tamil Nadu 59
Uttar Pradesh 55
Karnataka 45
Gujarat 43

Source: 2020-2021 PRICE Report

The Significant Contribution of India’s Middle Class:

India is presently in the midst of a profound demographic shift, with a considerable segment of the population ascending to the middle class. This remarkable transformation is a rare event and holds substantial implications for India’s economic strength. Morgan Stanley, a renowned global financial services company, has underscored that the upcoming decade is poised for India’s ascent, recognizing the nation’s potential for unprecedented growth and prosperity.

In the year 2030, India’s economy is poised to undergo a significant transition, shifting from its predominant reliance on the bottom of the socio-economic pyramid to being primarily fueled by its rapidly growing middle class. This transformation will establish India as one of the world’s youngest nations, with expectations of hosting an astonishing population of over one billion internet users. Consequently, the emerging Indian consumer will have increased wealth and demonstrate a greater inclination to spend on a variety of products and services.

The Indian middle class is a powerful economic entity, accounting for roughly 50% of the total income earned, 48% of overall expenditures, and an impressive 56% of savings. This dynamic demographic constitutes about 31% of India’s total population, firmly establishing it as one of the most robust middle classes on the global stage.

Distribution of the middle class in India:

Region Number of Middle Class Households (‘000)
Urban 47,978 (~4.7% Growth rate b/w 2015-16 to 2020-21
Rural 42,949 (~6.6% Growth rate b/w 2015-16 to 2020-21)

The existing middle-class population stands at 432 million and is projected to reach nearly 800 million by 2030. Consequently, the present rural middle-class accounts for 288 million individuals, while the urban middle class comprises the remaining 144 million. Notably, Tier 2 and Tier 3 towns in India are witnessing a remarkable increase in the number of middle-income households, thereby reshaping the nation’s economic landscape.

Spending patterns of the middle class in India:

Category Share of spending (% of total)
Education 20%
Healthcare 15%
Consumer Goods 55%
Others 10%

Source: Understanding the Burgeoning Indian Middle Class through its Expenditure and Asset-Ownership Patterns by Meghnad Desai Academy of Economics, 2020

National Council of Applied Economic Research (NCAER) Household Consumer Expenditure Survey, 2011-12

Expenditure on health, as a component of private final consumption expenditure, demonstrated a compound annual growth rate of 16.4%, whereas spending on education expanded at a rate of 16%.

Education: According to the report, the proportion of education expenditure increased from 3.6% in 2011-12 to 4.5% in 2018-19.

(Source: Business Standard)

Others Sources:

  1. People Research on India’s Consumer Economy (PRICE) report
  2. The Pew Research Center report “A Global Middle Class Is More Promise than Reality”.
  3. The World Economic Forum report “6 surprising facts about India’s exploding middle class”.
  4. The Indian government’s Ministry of Statistics and Programme Implementation website

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Amit Saxena

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Amit Saxena, a highly accomplished professional, currently holds the position of Executive Director at Nuvama Private. With a long-standing association with the firm since 2013, Amit has played a pivotal role in establishing and scaling up the Private Wealth business.

With over 20+ years of experience, Amit is a seasoned veteran in the Wealth Management industry. Prior to joining our team, he held key positions at esteemed institutions including Bank Sarasin, DSP Merrill Lynch, and Standard Chartered Bank, where he made significant contributions to their Wealth Management divisions.

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Amit holds a commerce degree and is a qualified Cost Accountant from ACWA. He further enriched his qualifications by earning a Master’s degree in Business Administration from Symbiosis, Pune. These educational achievements reflect his commitment to continuous learning and professional development. His contributions and leadership at Nuvama Private have been instrumental in the firm’s growth and success.

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Alok Saigal, the President and Head of Nuvama Private, has been an integral part of the firm since 2014. With his visionary leadership, Alok has played a pivotal role in the transformation and expansion of the wealth business. He founded the Family office practice, introducing Wealth Structuring and Estate Planning services tailored for Ultra High Net Worth Individuals (UHNIs). His innovative approach and expertise have greatly benefited the firm’s discerning clientele.

In addition to his accomplishments in the wealth management space, Alok also oversaw the Products and Investment Advisory functions for a commendable four-year period. His strategic insights and deep understanding of the market have contributed to the firm’s success in providing exceptional investment guidance and tailored product offerings.

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Alok has over 25 years of work experience and holds a Master’s degree in Economics from the Delhi School of Economics, Delhi University. Prior to joining us, Alok was associated with Darashaw. He set up and anchored the company’s business in Singapore with focus on Wealth Management & Strategic Initiatives. Post this global exposure, he spearheaded the Investment Management and Private Client platform at Darashaw in Mumbai. He has also been associated with HDFC Bank where he looked after Funding & Banking Solutions for Large Indian Corporates & MNCs as part of the corporate banking group.