The muddled class: The middle class is becoming too large and too diverse to offer a clear view of the consumer

For years, the size of India's middle class has been treated as a proxy for the country's consumer potential. A larger middle class meant a larger market for homes, cars, appliances, financial products, travel and discretionary consumption. That proposition remains true. But something is changing: the middle class is becoming too large and too diverse to tell us enough about the Indian consumer.

Evidence from The Many Urban Indias, a study of India's top 100 cities by People Research on India's Consumer Economy (PRICE) and Tata Sons, illustrates the shift. Middle-income households, defined as those earning ₹6-36 lakh annually at 2025-26 prices, accounted for 29% of households a decade ago. Their share has now reached 53% and is projected to rise to around 60% by 2030-31. For the first time, these households are not simply an expanding segment in these cities, they form the majority. That is a significant socioeconomic transition. Yet, it creates an analytical problem: when more than half of households fall within one income category, the category begins to conceal almost as much as it reveals.

A household earning ₹7 lakh and another earning ₹30 lakh are both classified as middle-income, but little about their economic lives is comparable. The former may be trying to build precautionary savings while upgrading basic household amenities. The latter may already own most major durables and be considering a second car or a larger portfolio of financial investments. Their aspirations, vulnerabilities and next purchases are unlikely to be the same. The emerging Indian consumer story, therefore, lies increasingly within the middle class rather than between the middle class and everyone else.

Household data provide clues to how this transition occurs. Ownership of basic consumer durables such as TVs, refrigerators and mobile phones is widespread across the top 100 cities. However, cars, ACs, washing machines and computers remain much less evenly distributed. Middle-income households account for roughly 50-57% of ownership across these major durable categories. As more households move upwards within the income distribution, the centre of gravity of these markets will shift further toward them.

More interestingly, household consumption does not move mechanically with income. Some purchases become much more likely after households reach a particular level of income and economic comfort. In our data, car ownership rises noticeably as annual household income moves toward roughly ₹12-14 lakh. Washing machine ownership accelerates around and beyond the ₹14 lakh level.

These should not be interpreted as precise affordability cutoffs. A ₹12 lakh household in Mumbai faces a different cost structure from one in Raipur. Climate matters for ACs, public transport for cars, family size for housing and appliances, and credit availability for almost every large purchase. But the broader behaviour is unmistakable: as households move through the middle of the income distribution, their consumption basket can change discontinuously rather than incrementally.

That has an important implication for how businesses read India's cities. Today's largest market need not be tomorrow's fastest-growing opportunity. A relatively affluent city where ownership of a product is already high may offer less room for first-time adoption than a smaller city where incomes are rising rapidly but ownership remains low. What matters is not only how prosperous a city is today, but how many of its households are approaching the point where a previously discretionary purchase becomes feasible.

This produces some unexpected possibilities in the 100-city data. Asansol and Bhubaneswar appear well-positioned for increased purchases of cars, washing machines and ACs. Raipur and Mysuru have household income and ownership profiles that suggest headroom for cars. Washing-machine demand could strengthen in Raipur, while Mysuru, Kollam and Kottayam have significant scope for greater AC ownership.

These are interesting markets precisely because they would not necessarily emerge at the top of a conventional ranking of India's richest cities. They represent something more dynamic: concentrations of households whose economic circumstances are changing faster than their stock of consumer assets.

This distinction could also have implications beyond consumer durables. As households move through different stages of economic maturity, their demand for financial services, insurance, travel, hospitality and retail is also likely to evolve. Some may begin allocating more toward financial assets or housing, while others increasingly spend on convenience, experiences, and better-quality products and services. Understanding these shifts can offer a more nuanced picture of how rising incomes translate into changing household priorities.

The emergence of a middle-income majority is unquestionably one of the important transformations underway in urban India. But, paradoxically, its success makes the familiar label less informative. For businesses and policymakers alike, the question is no longer simply how many Indians have entered the middle class. It is where households are moving within it, what becomes possible as they move, and what they choose to do next.

India spent the past two decades asking how large its middle class would become. The next decade will be about understanding what this increasingly diverse middle class does next.