India’s vast population of over 1.4 billion (143 crore) creates the perception of an enormous consumer market, but a deeper analysis reveals a more segmented and uneven economic reality. A report by venture capital firm Blume Ventures highlights that only around 130-140 million (13-14 crore) Indians belong to the country’s “consuming class,” meaning they have sufficient disposable income to spend on products and services beyond basic necessities. Given that India’s GDP is heavily dependent on consumer spending, this group essentially forms the backbone of the market for most startups, premium brands, and companies targeting discretionary consumption.
Beyond this core consuming class, another 300 million (30 crore) Indians fall into the category of “emerging” or “aspirant” consumers. These individuals are increasingly engaging with the digital economy, thanks to the widespread adoption of UPI and AutoPay, which have facilitated small-ticket transactions. However, they remain cautious spenders, described in the report as “heavy consumers and reluctant payers.” While they actively use digital services such as OTT platforms, gaming apps, edtech solutions, and micro-lending options, they are less inclined to make significant high-value purchases. Businesses catering to this segment have found success in offering subscription-based models and pay-as-you-go services, capitalizing on the convenience of digital payments while accommodating the financial hesitations of this consumer group.
A crucial insight from the report is that India’s consumer market is not expanding in a broad, inclusive manner. Instead, it is “deepening,” meaning that while the number of wealthy individuals is not growing dramatically, those who are already affluent are accumulating more wealth and increasing their spending power. This economic polarization has led to the growing trend of “premiumisation,” where businesses shift their focus toward high-income consumers by offering premium and luxury products rather than catering to the broader mass market.
This shift is particularly evident in industries such as real estate, automobiles, and consumer electronics. In the real estate sector, for instance, affordable housing—which accounted for 40% of the market five years ago—has now declined to just 18%. Meanwhile, luxury housing sales have surged, driven by high-net-worth individuals who continue to invest in premium properties. A similar trend is observable in the smartphone industry, where premium devices have experienced robust growth, even as budget-friendly models have seen declining demand. The automobile industry has also followed this pattern, with increased sales of high-end cars while entry-level vehicle sales stagnate.
These trends reinforce what economists describe as a “K-shaped” recovery following the COVID-19 pandemic. The top 10% of earners now control 57.7% of India’s total national income, up significantly from 34% in 1990. Meanwhile, the bottom 50% of the population has seen its share of national income shrink from 22.2% to just 15%. This widening income inequality has serious implications for economic stability, particularly as financial distress grows among lower- and middle-income households.
One of the biggest concerns outlined in the report is the financial stress faced by India’s middle class, which has historically been a key driver of economic growth. A separate study by Marcellus Investment Managers highlights that the middle 50% of India’s tax-paying population has seen little to no wage growth over the past decade. When adjusted for inflation, their real income has effectively halved, significantly eroding their purchasing power.
This stagnation in income has led to a sharp decline in household savings. According to data from the Reserve Bank of India (RBI), net financial savings of Indian households have plummeted to their lowest levels in nearly 50 years. With shrinking disposable income and diminishing savings, middle-class consumers are becoming more reluctant to spend, which in turn affects businesses that rely on their purchasing power. Sectors such as fast-moving consumer goods (FMCG), mid-range automobiles, and affordable home appliances are experiencing sluggish growth as a result.
The situation has been further exacerbated by the RBI’s recent tightening of lending regulations. In an effort to curb rising household debt, the central bank has imposed stricter rules on unsecured lending, which had previously fueled post-pandemic consumer spending. Many individuals in the “emerging” consumer group had relied on credit to finance their purchases, and with these new restrictions, their ability to spend is expected to decline. The ripple effect of reduced credit access could lead to a slowdown in demand across multiple industries, from consumer electronics to hospitality and retail.
In addition to these financial challenges, India’s job market is undergoing significant structural changes. The Marcellus report warns that white-collar jobs—once considered a stable and aspirational career path for middle-class Indians—are becoming increasingly scarce due to automation and artificial intelligence (AI). AI-driven systems are rapidly replacing clerical, secretarial, and even supervisory roles, particularly in the manufacturing and services sectors. As a result, many professionals who once enjoyed stable incomes and career growth are now facing job insecurity and stagnant wages.
These concerns were echoed in the Economic Survey 2025, highlighting the potential risks of AI adoption in India’s labor-intensive economy. While AI has the potential to boost productivity and efficiency, an unregulated or overly rapid transition could lead to widespread job losses, particularly in traditional employment sectors. The survey cautioned that if AI-driven disruption accelerates without adequate policy safeguards, India could face growing unemployment and social unrest.
In response to these challenges, some economists have suggested that policymakers may need to consider interventions such as taxation on AI-driven profits or stricter labor protections. However, the International Monetary Fund (IMF) has warned that such measures could have unintended consequences, potentially slowing economic growth and discouraging technological innovation.
The report ultimately calls for a balanced and strategic approach to navigating these economic shifts. It urges greater collaboration between the government, private sector, and academia to ensure that technological advancements lead to inclusive economic growth rather than exacerbating inequalities. The findings emphasize that while AI’s long-term impact on jobs remains uncertain, complacency in addressing these changes could prove costly for India’s future.
Overall, the insights from these reports paint a complex and somewhat concerning picture of India’s economic trajectory. While the upper-income segment continues to thrive, the vast majority of the population is grappling with stagnant wages, rising living costs, and financial insecurity. As businesses increasingly pivot toward premium consumers, the middle class is feeling the squeeze—a trend that, if left unchecked, could have far-reaching consequences for India’s economic stability and growth.
