India’s middle class is running out of money, says Saurabh Mukherjea in stark warning

India’s corporate profits are faltering and the middle class may be at the heart of the crisis.

In a blog, Marcellus Investment Managers’ Saurabh Mukherjea warns that collapsing white-collar job creation, shrinking real wages, and the rise of AI are gutting the middle-class engine that has long powered India’s growth story.

Mukherjea notes that since Diwali 2023, earnings growth in Indian companies has slowed sharply, driven by a consumption slump. The cause: middle-class Indians are running out of money. RBI data shows household savings as a share of GDP fell in FY24 to a 50-year low, levels last seen in 1977. “By Holi 2024, the middle class had run out of firepower,” he writes.

The slowdown is visible everywhere. Consumption, which accounts for 60% of GDP, has cooled since the end of the “revenge spending” spree of 2021–23. SUVs, housing, and travel once surged; now demand is softening. Corporate earnings followed the same trajectory — with Nifty companies reporting one of the sharpest decelerations in FY25.

Jobs tell the darker story. For a decade before 2020, white-collar jobs doubled every six years. Since FY20, that growth has collapsed to just 3% annually — meaning it will now take 24 years for jobs to double. IT, software, and retail, the backbone of middle-class employment, have stagnated.

Automation is accelerating the decline. Mukherjea highlights how Indian IT giants are openly slashing staff. TCS CEO K. Krithivasan said in July 2025 the company is cutting 2% of its workforce (~12,000 jobs) as AI scales up. HCL Tech’s C. Vijayakumar went further, saying the goal is “double the revenue with half the labour force.”

The squeeze on incomes is equally alarming. Marcellus’ analysis of Nifty 50 firms shows that over the past eight years, average employee salaries have failed to keep up with inflation. Unlike the pre-2016 era, when pay at least matched rising costs, today’s white-collar workers are poorer in real terms.

For India’s 40 million white-collar earners — who support another ~200 million jobs through their spending — this is a red alert. Mukherjea warns that unless wages and job creation revive, India risks a prolonged middle-class squeeze that could cap its economic momentum.