'Salary growing, wealth shrinking': CA explains ‘India's silent middle-class crisis’, says Rs 1.5 lakh salary is same as 10-yr-old pay

A rise in salaries may look reassuring on paper, but a growing number of urban households are finding that their money simply doesn’t stretch as far as it used to. A recent post by chartered accountant Nitin Kaushik has triggered a wider debate online, highlighting what he calls a “silent crisis” gripping India’s middle class in 2026. At the heart of the concern is what Kaushik describes as the “nominal wage trap”, a situation where incomes rise in absolute terms, but fail to keep pace with the actual cost of living.

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Salary up, spending power flat

The numbers Kaushik lays out paint a worrying picture. Take a typical salaried person, their monthly pay might have jumped from around Rs 90,000 in 2015 to Rs 1.5 lakh today. On the surface, that's a solid 66% hike. But zoom in on daily realities, and the gains vanish. Rent, school fees, and insurance premiums have nearly doubled in many cases, leaving real purchasing power almost unchanged.


As a result, real purchasing power, what income can actually buy, has barely improved for many families. This mismatch is quietly eroding financial stability. What appears to be progress is, in reality, stagnation.

The math of saving no longer works

The math on savings hits even harder. Fixed deposits, a go-to for safety-conscious Indians, are yielding about 7%. Yet the actual inflation hitting middle-class budgets, from housing and education to healthcare, is running closer to 10-12%. "Every year your money sits idle, it loses ground," Kaushik notes.

Traditionally, middle-class households relied on safe instruments like fixed deposits to grow their savings. But that equation is now under strain. This means that even disciplined savers are struggling to preserve wealth, let alone grow it.

Why savings rates are falling

"You’re not saving. You’re watching your capital slowly dissolve," Kaushik said. India’s household savings rate has slipped to around 18% of GDP, its lowest level in years. The decline, experts suggest, is not due to reckless spending, but rising compulsions.

In Tier-1 cities, essential costs, housing, education, insurance, and daily living, can consume up to 40–45% of post-tax income. These are not discretionary expenses; they are unavoidable.

As a result, the room for saving has narrowed significantly.

A growing dependence on credit

The post also points to a broader systemic issue. In several developed economies, middle-class households benefit from some level of support, whether through subsidised healthcare, education, or more stable housing markets.

In India, however, families often pay market-linked prices for most essential services. This creates a dual pressure: income is taxed upfront, and then further eroded by inflation over time.

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This pressure is pushing families toward a risky trend: consumption debt. Credit cards and personal loans aren't just funding occasional luxuries anymore, they're bridging gaps for rising EMIs and basic needs, he said.

As Kaushik puts it, "We are funding today’s survival with tomorrow’s wealth."The thread ends on a clear call to action. The middle class, he argues, is effectively taxed twice, once through official levies and again through inflation quietly eating away at savings. The solution? A mindset shift. Stop parking everything in low-yield safe options. Start building positions in growth assets that can outpace rising costs. Otherwise, hard work today could still lead to a future that feels increasingly out of reach.

Rethinking financial strategy

The takeaway, Kaushik argues, is that traditional financial thinking may no longer be sufficient. Simply saving is not enough in an environment where inflation consistently outpaces returns.

Instead, individuals may need to shift focus towards assets that have the potential to outgrow inflation over the long term.

The message is stark but increasingly relevant: without a conscious shift in how money is managed, many middle-class families risk working harder today, only to find the future becoming less affordable.

As the debate gains traction online, it reflects a deeper anxiety, that for millions, financial progress is becoming harder to achieve, even as incomes rise.

This comes amid recent layoffs and workers protests

This conversation is unfolding at a time when job security itself is becoming uncertain, adding another layer of stress for the middle class. Across sectors like startups, IT services and even traditional industries, layoffs and hiring slowdowns have made income growth less predictable. For many households, the fear is no longer just about rising expenses, but about whether the income stream itself will remain stable in the months ahead.

What makes the situation more fragile is that financial commitments, home loans, car EMIs, school fees, are fixed and non-negotiable. Even a temporary disruption in income can push families into a cycle of debt. This is where the gap between perception and reality widens: while salaries may have risen over the years, the margin for error has actually reduced.

At the same time, there are visible signs of stress at the lower end of the income spectrum as well. Recent protests by low-wage workers in industrial hubs like Noida, Gurugram and Surat over wage hikes reflect a broader dissatisfaction with income levels failing to keep up with basic living costs. While these demonstrations are not directly linked to the salaried middle class, they point to a shared underlying issue, incomes across segments are struggling to match inflation.

The ripple effect is significant. When both lower-income workers and the middle class feel financially stretched, consumption patterns begin to shift. Discretionary spending slows, savings weaken, and dependence on credit increases across the board. This creates a feedback loop where economic anxiety feeds into reduced financial resilience.

Put together, the picture is more complex than a simple salary-versus-expense mismatch. It is a convergence of pressures, rising costs, uncertain job markets, and limited safety nets, that is reshaping how India’s middle class experiences economic growth.