Over the last decade, India’s middle class has faced mounting financial pressures, making everyday essentials become luxuries for India’s middle class. This article highlights ten key areas where financial challenges have intensified, with real-life examples showcasing the growing challenges to maintaining quality of life.
10. Homeownership Has Become an Elusive Dream
The middle class’s aspiration to own a home has become increasingly elusive. According to independent studies by Magic Bricks and Economic Times, in cities like Mumbai, the house price-to-income ratio stands at 14.3, indicating that property prices are over 14 times the average annual income. The stats show another Grimm situation in Delhi and Gurgaon, where this ratio stands at 10.1 and 7.5, respectively.
This disparity forces many families to continue renting, unable to afford homeownership making everyday essentials like a roof over the head now luxuries for India’s middle-class
9. Quality Healthcare is Becoming Out of Reach
Medical expenses have surged, with medical inflation in India reaching 14% in 2021, the highest among Asian countries. This rate significantly surpasses the general consumer price index (CPI) inflation, which stands at a whopping 5.48% at the time of writing this article. This leads to higher insurance premiums and out-of-pocket costs, making quality healthcare less accessible.
8. Higher Education Has Become a Heavy Financial Burden
The commercialization of education has led to exorbitant fees in private institutions. For instance, annual fees for reputed private schools in metropolitan areas can exceed ₹2 lakh, a substantial portion of a middle-class family’s income, making quality education a financial burden.
7. Healthy Eating is No Longer an Affordable Choice
In India, the cost of fresh produce and organic foods has risen significantly, making healthy diets more expensive. For instance, tomato prices have surged by 161% year-on-year, while onions have seen a 52% increase. Organic foods, often priced higher due to premium farming practices, have become less accessible to the average consumer.
This is driving many families to opt for cheaper, processed foods, which can adversely affect their health and well-being. This shift highlights the financial challenges faced by households striving to maintain nutritious diets amid escalating food prices.
6. Leisure Activities Now Come at a High Cost
In India, the cost of leisure activities has escalated, making them less accessible for many families. For instance, at multiplex cinemas like PVR, a tub of cheese popcorn was previously priced at ₹450, while a 600-ml soft drink cost around ₹360. These prices have been reduced in some instances, but they still represent a significant portion of a family’s entertainment budget.
Beyond cinema outings, other leisure activities have also become more expensive. Recreational travel, once considered affordable, now requires careful planning and budgeting.
These rising costs have led many families to reconsider their participation in such activities, opting for more budget-friendly alternatives or reducing the frequency of leisure outings.
5. Retirement Savings Have Become a Distant Dream
According to a recent study by the Reserve Bank of India (RBI), the average annual inflation rate in India has consistently exceeded wage growth rates over the past decade. This disparity has eroded the purchasing power of individuals, making it challenging to save and invest for the future. Additionally, a survey conducted by the National Council of Applied Economic Research (NCAER) revealed that a substantial number of middle-class households in India have inadequate retirement savings to maintain their current standard of living post-retirement.
With rising living expenses and stagnant wages, setting aside funds for retirement has become challenging. Many middle-class individuals find themselves inadequately prepared for retirement, leading to financial insecurity in their later years.
4. Regular Vacations Have Become a Thing of the Past
Travel costs, including transportation and accommodation, have increased, making vacations less affordable. For example, a 5-day family tour package to Kerala can cost approximately ₹14,800 per adult, totaling ₹74,000 for a family of five. A significant expense for middle-class households, resulting in fewer family vacations.
3. Childcare and Daycare Costs Have Become Exorbitant
In India, the escalating costs of childcare services are becoming a significant concern for young couples contemplating parenthood. Urban areas, in particular, exhibit higher daycare fees due to increased living expenses and demand. For example, in Mumbai, monthly daycare fees for infants can reach ₹9,300, while in Hyderabad, they are approximately ₹7,100. These expenses can strain family budgets, leading many to delay starting a family. A study indicates that young couples often postpone parenthood to achieve financial stability and career goals. This trend reflects a broader societal shift where economic considerations significantly influence family planning decisions.
2. New Cars Are Now More About Luxury Than Just Mobility
The inclusion of premium features such as sunroofs and subscription-based services like AdrenoX in new vehicles has significantly increased their costs, making them less affordable for the middle class. In India, the average selling price (ASP) of passenger vehicles has risen by over 50% in the past five years, from ₹7.65 lakh in 2018-19 to ₹11.5 lakh in 2023-24.
This upward trend in vehicle prices, driven by the addition of premium features, has made new cars increasingly less accessible for many middle-class families.
1. Job Security in the Gig Economy is a Thing of the Past
The gig economy refers to a labor market characterized by short-term contracts or freelance work, as opposed to permanent, full-time positions. In this system, individuals—often termed “gig workers”—engage in temporary jobs or tasks, typically facilitated through digital platforms that connect them with clients or employers.
The rise of the gig economy and automation has led to less stable employment opportunities. According to the NITI Aayog report on India’s booming gig and platform economy, the gig workforce is expected to expand to 2.35 crore (23.5 million) workers by 2029-30. The gig workers are expected to form 6.7 percent of the non-agricultural workforce or 4.1 percent of the total livelihood in India by 2029-30.
Many middle-class workers face income unpredictability and lack of benefits, contributing to financial stress. These examples highlight the growing financial pressures on India’s middle class, making it increasingly difficult to maintain a standard of living that was attainable a decade ago.
Conclusion
The financial challenges faced by India’s middle class highlight the widening gap between income growth and rising living costs. From the dream of owning a home to affording quality education, healthcare, and even basic nutrition, the middle class is grappling with mounting economic pressures. These shifts reflect a broader reality where everyday essentials are now luxuries for India’s middle class, and financial stability feels increasingly elusive.
Thank you for reading! If you identify as part of the middle class, we hope this article sparks reflection on the growing challenges you may already be navigating daily.
Frequently Asked Questions (FAQs)
1. Why has homeownership become challenging for the middle class?
Rising property prices, especially in urban areas, have made it difficult for middle-class families to afford homes. The demand from wealthier individuals has further driven up prices.
2. How has medical inflation affected middle-class families?
Medical inflation rates have significantly surpassed general inflation, leading to higher healthcare costs and insurance premiums, making quality healthcare less accessible.
3. What impact does the commercialization of education have on middle-class families?
The rise in private school fees has made quality education a financial burden, consuming a substantial portion of household income.
4. Why is healthy eating becoming more expensive?
The cost of fresh, nutritious food has risen, making it more challenging for families to maintain a healthy diet within their budget.
5. How does job insecurity affect middle-class financial stability?
Unstable employment leads to unpredictable income and a lack of benefits, making financial planning and maintaining a standard of living more difficult.
