60% of the country’s population will be middle class by 2047

New Delhi: Growing at an annual rate of 6.3%, the middle class makes up 31% of the total population today and by 2047, 60% of the country’s population will be middle class, according to the RedLab report.

The RedLab report states that if a household’s annual income is between Rs 5 lakh to 30 annually, it belongs to the middle class.

Maninder Singh, Chief of Strategy RedLab, said, “As the middle class expands, it is set to transform India into a global consumption powerhouse, driving demand across industries and reshaping economic priorities for decades to come.”

This growth will reshape India's economy, consumer landscape, and global standing, presenting both opportunities and challenges. If a person’s annual income is more than Rs 25,000 he earns more than 90% of the country’s population.

Seekers earning Rs 5 to 15 lakhs annually focus on spending on food, education, healthcare, and other necessities. They are starting to spend on tech and leisure and have grown by 4.8%. Strikers, who earn Rs 15 to 30 lakh, have grown by 6.4% and spend on real estate, premium goods, and advanced education for their children. 

These figures depict the growing economic power of the Indian middle class, bridging global aspirations with local realities. The growth of middle-class and super-rich households is not limited to urban areas, as rural regions are expected to drive 55% of incremental consumption by 2031. As a result, India’s consumer spending will also rise from $1.9 trillion to $5.2 trillion by 2031.

The two segments are expected to chip in nearly $2.7 trillion in additional spending by 2030. With rapid economic growth, the middle class will spend more on things like clothing, communication, transport, personal care, and entertainment.

With the per-capita income of the middle class rising from $1,400 in 2014 to $2,200 in 2022, people now have greater spending power. Millennials and Gen Z are impacting spending patterns with 72% of Millennials and 66% of Gen Z willing to pay more for better after-sales service and 50% ready to spend extra for quick delivery and easy returns.

The RedLab report states that households earning between Rs 5 lakh and Rs 30 lakh annually at 2020-21 prices form the core of this demographic, generating Rs 84.1 trillion in income, spending Rs 62.2 trillion, and saving Rs 11.7 trillion in 2020-21. Despite the smaller size of the affluent "rich," the Middle Class’s larger population makes it the primary driver of India’s consumer economy.

Although the middle class is evolving, it is also likely to face challenges such as rising debt burden, soaring healthcare and education costs, housing affordability crisis, and job insecurity. This demands targeted policy interventions to address these challenges including job creation, inflation control, affordable healthcare and education, and fair taxation.

Additionally, bridging the digital divide, promoting financial inclusion, supporting rural growth, addressing financial vulnerability, and fostering innovation and entrepreneurship will unlock the full potential of the middle class, the report stated.