India’s middle class is caught in a vortex of economic woes and divisive politics

They are facing problems like less savings, more debt, and a lack of good jobs but the ruling party wants to talk about religion.

The BJP is only discussing religion as opposed to the country’s struggling economy. | Photo Credit: K.R. Deepak

India is on track to surpass Japan as the world’s fourth-largest economy in 2025, a year earlier than the International Monetary Fund previously projected. If that is the case, India’s booming economy should be the most important selling point for the country’s incumbent government in the ongoing election. But in the last fortnight, campaigning by the party has travelled the vitriolic arc of “machli” (fish, and dietary choices by individuals), “mangalsutra” (a factually wrong accusation that opposition parties will steal the assets of Hindus ) and Muslims.

However, two voting phases later, the ruling party seems to hardly mention the economy. Instead, there’s been a hard pivot to communal content. From inflammatory speeches at rallies, to animated videos warning that the Congress, if elected, would distribute Hindu wealth and property to Muslims. Why isn’t the ruling party talking about its economic wins but instead steering a large part of its narrative and communication around religion, the Ram temple and a familiar yet toxic anti-Muslim narrative?

The answer to why the BJP shies away from tom-tomming its economic achievements lies in the “M” that is absent from the party’s electoral narrative. A shrinking, struggling middle class.

What has changed for the middle class and the way they live in the past few years? Let’s start with how much they save. The Reserve Bank’s own data shows that household net financial savings, the difference between a household’s assets and its liabilities, fell sharply to 5.1 per cent of GDP in 2022-23 from 11.5 per cent in 2020-21. The 5.1 per cent reading is well below its long-run annual average of 7-7.5 per cent. Placed in its most basic frame, household savings in India have hit a 47-year low. And even as savings have dropped, debt levels for households have risen; by December last year, they were at a record high of 40 per cent of Gross Domestic Product (GDP). Households are saving less, taking more loans—and feeling a spending pinch.

Food inflation has been stubbornly sticky. While inflation numbers themselves have been volatile, the rise in prices of essentials like tomatoes, potatoes, milk, chicken, eggs, and fish has led to an alarming 8 per cent plus tick on food inflation figures. This means that households continue to skimp on other spending. A NielsenIQ report expects the FMCG or consumer goods industry to grow between 4.5 to 6.5 per cent this year. At the bottom end, that’s just half the growth clocked in 2023 and a telling sign of how households are cutting back on spending for non-essential items.

The antidote to much of this is a steady, predictable income. And the road to that is through jobs. A recent survey of 10,000 voters by the Centre for the Study of Developing Societies (CSDS) and Lokniti, a research institute in New Delhi found that inflation and a lack of jobs are the top concerns for Indian voters. 62 per cent of the respondents said that getting a job was harder than it was five years ago. In a Reuters poll, 15 out of a total of 26 economists said the biggest challenge for the government after the national election would be unemployment. The “India Employment Report 2024,” published last month by the International Labour Organisation and the Institute for Human Development found joblessness was particularly high among India’s youth. Young Indians between the ages of 15 and 29 years accounted for a whopping 83 per cent of all unemployed people in India. Worse still, employment is dominated by poor-quality employment in the informal sector even as wages and earnings are stagnant or declining. In short, not enough jobs, low-quality jobs for the ones available and stagnant salaries but rising household costs.

It’s no wonder there has been no mention of unemployment in any of the BJP’s rallies following a decade of near jobless growth for a country India’s size.

The one factor missing here on what could change prospects for the middle class is education. The Annual Status of Education Report looks at foundational learning outcomes for young students aged 14 to 18 years in rural India. About 25 per cent of this age group still cannot read a standard two-level text fluently in their regional language. More than half struggle with division problems, a skill expected in standard four or five. How does the current government approach education? In the most recent Union budget, allocation for education for FY 24-25 was 7 per cent lower than revised estimates for the previous year, with the higher education sector seeing a 16 per cent cut in spending. So while the number of higher learning institutions purportedly increases every year, there is little to no data available on the quality of education, and the “job-readiness” of many of these graduates. Indeed, the same Annual Status of Education Report found that 80 per cent of the youth surveyed could find a specific video on YouTube and nearly 90 per cent of them could share it with a friend. A generation that has many tech skills, but not nearly enough jobs—or adequate abilities for them.

So why does the middle class remain supportive of the status quo politically? On-ground reports have documented middle-class voters pointing out that while their condition has worsened, the country has done well. Some barometers of that success suggest the portrayal of a Hindu state where the Muslim community has been “shown its place” by being consistently demonised and the other is the perception that India is now a strong state vis-à-vis its global peers, a narrative that has asserted itself based on India’s foreign policy approach.

A slew of indices recently concluded that India was undemocratic (rating at 66th position and partly free), unhappy (rating at 126 out of 143 nations ), and unequal (deep inequality not just within economic classes but within regions and states).

Originating from the Greek language, phosphenes is the word that describes the colours or “stars” we see when we rub our eyes, the phenomenon of seeing light without light entering the eye. It is time for India’s middle class to open its eyes.

Mitali Mukherjee is Director of the Journalist Programmes at the Reuters Institute for the Study of Journalism, University of Oxford. She is a political economy journalist with more than two decades of experience in TV, print and digital journalism. Mitali has co-founded two start-ups that focussed on civil society and financial literacy and her key areas of interest are gender and climate change.