The vulnerability of India’s new middle class

The neo-middle class reflects the country’s contradictions – aspirational yet insecure, empowered yet weary.

The Indian middle class has long been treated as the moral and economic centre of the Republic – the great stabiliser between wealth and want, modernity and tradition, democracy and aspiration. For decades, it was imagined through Nehruvian lenses: salaried, educated, thrifty, professionally ambitious, politically moderate, and socially respectable. But that middle class – the one that carried briefcases, read English newspapers, and believed in steady progress – no longer exists. The middle class of 2025 is a different creature altogether: digitally dependent, aspirationally global, but financially fragile. They shop online but borrow offline; they work in start-ups but live in rented homes; they send their children to international schools but can’t afford a medical emergency. This “neo-middle” class – perhaps 200 to 300 million strong, depending on how you count – is not just changing consumption patterns but also reshaping India’s social psychology and political temperament.

Let’s begin with a paradox: the mirage of comfort. By income data, India’s middle class appears to be expanding. According to CMIE, nearly one in three households now reports monthly incomes between Rs 25,000 and Rs 1 lakh – a range roughly corresponding to the middle 40% of India’s income pyramid. Yet the sense of security that defined the middle class in the 1980s and 1990s has evaporated. Household savings have fallen to a five-decade low of under 6% of GDP, and household debt has surged. EPFO data show that formal employment growth is slowing, while contract and gig-based work is rising – a phenomenon invisible in headline GDP figures. The middle class is consuming more but saving less, owning more gadgets but fewer assets. Their balance sheets are stretched thin by EMIs, school fees, and healthcare costs that rise faster than income.

The illusion of comfort masks an underlying vulnerability. One job loss, one illness, or one loan default can push many urban families from middle class to marginal. This is not the ‘security class’ that shaped post-
liberalisation India; it is an ‘anxious class’ living month to month, buffered only by optimism and mobile apps.

We are beginning to see digital dependency and the new consumer.
The smartphone has become the neo-middle class’s passport to aspiration. They buy groceries, insurance, and financial advice online; they date, argue, and protest online; they discover new identities through YouTube, Instagram, and regional-language influencers. But digital access has not meant digital empowerment.

India’s digital economy is structured to monetise attention rather than expand agency. Algorithms nudge people to spend, not to save; to aspire, not to question. The middle class is caught in a consumption feedback loop, always comparing, always dissatisfied, and always buying the next upgrade. CMIE’s data show a curious trend: while real wages have stagnated, discretionary consumption – on smartphones, travel, and dining – continues to rise. The middle class is spending its way to status, even when it can’t afford it. This behaviour, sociologically, is less about luxury and more about belonging. Consumption has become the new citizenship.

Consider the education illusion. Education was once the surest passport into the middle class. Today, it is its costliest burden. The private-school economy – worth over Rs 2.5 lakh crore – now consumes a fifth or more of many urban middle-class households’ income. The dream of global education drives families to borrow heavily for foreign degrees, even when returns are uncertain. Yet the employability crisis is deepening. Graduate unemployment remains high, and the wage premium for degrees is shrinking. The neo-middle class is caught in what economists call a ‘credential trap’, investing more in education for diminishing returns. Parents are paying for hope, not for certainty. In this landscape, education has turned into a positional good: a way to signal class identity rather than guarantee mobility. It reinforces insecurity: if everyone else is learning coding or AI, I must too, lest I fall behind. The middle class has turned education from a social ladder into a keeping-up-with-the-Joneses frame.

No longer the moral pivot

The old middle class once prided itself on moderation: politically cautious, economically prudent, and socially conservative. The new, by contrast, is emotionally volatile, politically expressive, and digitally mobilised. Social media has democratised voice but also polarised sentiment. The neo-middle class often views politics less through ideology and more through identity and grievance – whether about reservation, corruption, taxation, or perceived cultural threats. They are demanding from the State both protection from economic precarity and validation of their social worth. This partly explains the appeal of welfare schemes that target ‘lower-middle’
segments. India’s political future may well hinge on how this aspirational, anxious class is courted – not by ideology, but by empathy.

The old middle class was born of the public sector, trained to value stability, education, and civic virtue. It was shaped by scarcity and guided by ideals of respectability. The neo-middle class, in contrast, is born of the private economy and the digital marketplace. It values visibility over virtue, flexibility over permanence, and consumption over thrift. Its cultural icons are not civil servants or scientists, but start-up founders, influencers, and YouTube tutors. This shift is not merely sociological; it redefines what ‘progress’ means in 21st-century India. The middle class once anchored India’s moral universe. Now, it mirrors its contradictions: entrepreneurial yet insecure, connected yet lonely, empowered yet exhausted.

The result is a policy blind spot. The State still imagines society as a binary – rich versus poor – leaving the middle class largely invisible in welfare design. Taxation penalises them, subsidies are minimal, and inflation erodes real incomes. A new social compact is overdue, one that recognises the vulnerabilities of this segment and invests in affordable health, quality education, and pension security. If India’s next growth story is to be sustainable, it must focus less on expanding the middle class in number and more on deepening its security in substance.

(The writer is Director, School of Social Sciences, Ramaiah University of Applied Sciences)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.