The middle class of India slowly loses economic momentum – and not because of a single crisis, but a combination of long -standing structural changes.
Saurabh Mukherjea, founder and director of investments at Marcellus Investment Managers, breaks into three specific concerns: stagnant income, job losses for automation and an imminent cyclic slowdown. Together, he warns, these forces erod the financial security of the middle class and reshape their future disturbingly.
“There are three main ways of which the middle class becomes economically insensitive,” said Mukherjea in a podcast.
The first, he explains, is stagnant income. “According to data on income tax, middle -class profits have stagnated at around 10 and a half per year in the past 10 years.” In real terms, he adds: “The middle class revenues have reduced by half over the past 10 years. Massive problem … you can imagine what it does. People want to live a better life, but in terms adjusted by inflation, it means that the middle class must have taken care of a lot of debts. ”
The second concern is the growing impact of automation. “Whether in factories or offices, machines take control of conventional middle -class jobs,” explains Mukherjea. “The simplest example being a cashier in a bank … The first automation layer was ATM, the second layer will be a bot gradually replacing the storyteller.” He adds that the next wave – led by a generative AI – will be even more disruptive, both in the manufacturing and white -collar sectors.
The third issue, he underlines, is cyclical. “India, two years after picking, has experienced a formidable economic boom. The expenses of revenge die … This leads to a cyclical economic slowdown. And it is practically certain that the middle class will be the greatest victim of this post-comfortable cyclical economic slowdown. ”
Mukherjea says that even if the slowdown can be temporary, the other two problems – debt being made of flat wages and erosion of work due to automation – are structural and “will have a massive influence … harmful to the middle class during the next decade”.
