Defining middle class becomes a varied task on widening income gaps

The idea of who belongs to India’s middle class has been debated for decades, shaped by economic growth, rising aspirations, and widening income gaps.

As urban salaries climb and social media influences lifestyle choices, the definition of middle class is becoming increasingly blurred. What once referred to modest earners with stable jobs and limited luxuries is now being claimed even by those with incomes that place them in the top-earning segment of the country.

This issue came into focus recently which raised the question of whether an annual income of Rs 70 lakh can still be considered middle class. A clear answer is that such an income does not fit the category and instead belongs to the upper class.

The actual income range for that group is much lower - between Rs5 lakh and Rs8 lakh annually. Applying a single income definition to a country of 140-crore people is unrealistic.

About 10 crore Indians earn the equivalent of $12,000–$14,000 annually, while more than 100 crore people live on less than $2,000 per year. By this measure, those earning Rs70 lakh are not average professionals but part of the country’s top earning bracket.

Global household wealth touched new peaks in 2024, but India stood out as one of the fastest-rising markets, according to the Allianz Global Wealth Report 2025.

Covering nearly 60 economies, the report shows that Indian household financial assets expanded by 14.5 per cent last year, the strongest pace in eight years. The findings spotlight how India’s expanding middle class is shaping global wealth dynamics.

While India posted rapid gains, the United States remained the single largest driver of wealth growth worldwide. American households generated half of the global financial asset increase in 2024 alone.

The report also highlights that global wealth inequality has remained unchanged for two decades, with the richest 10 per cent still owning about 60 per cent of all assets.

India’s case is starker: the share of the top 10 per cent rose from 58 per cent in 2004 to 65 per cent in 2024. The average-to-median wealth ratio also worsened, climbing from 2.6 to 3.1.

“You have to work for your money in India,” said Kathrin Stoffel, co-author of the report. “But it’s smarter to let the money work for you, like in the US, where stock market gains drive wealth growth.”

Despite these disparities, India’s wealth creation has been extraordinary. Net financial assets per capita are now 13 times higher than in 2004, even outpacing China’s twelve-fold rise.

Looking ahead, India’s middle class and growing financial literacy will drive further gains. The gradual shift from deposits toward securities and pensions could strengthen long-term wealth creation. Globally, however, the report cautions that uneven participation in financial markets and persistent inequality may limit inclusive growth, even as wealth scales new highs.

As per the Allianz report, securities led the charge with a 28.7 per cent increase, while insurance and pensions – holding a larger portfolio share of 32.5 per cent – grew by 19.7 per cent. Bank deposits, still the dominant asset class at 54 per cent, rose by 8.7 per cent.

In 2004, the richest 10 per cent in India controlled 58 per cent of the country’s wealth. Two decades later, their share has climbed to 65 per cent, the report said. The indicates increasing concentration of wealth in the country. But rising middle class and its wealth is a silver lining.