Why India’s middle class is breaking - Saurabh Mukherjea explains

Summary

In a conversation about his book Breakpoint, Saurabh Mukherjea argues that India’s middle class is not simply shrinking but undergoing a difficult reinvention. He says the model that powered it from the 1990s to around 2021—IT-services exports supporting consumption and corporate careers—is losing momentum as automation, AI, and other economic changes reshape work.

Mukherjea describes a “triple squeeze”: fewer white-collar opportunities, weak or falling real wage growth, and rising household debt. He cites graduate unemployment and slowing white-collar job growth as evidence that the traditional path of earning a degree, joining a large company, and advancing through a career ladder is no longer reliable. In his account, graduates are increasingly competing for limited jobs while technology reduces demand for their skills.

He defines the middle class as people earning between ₹5 lakh and ₹1 crore a year, arguing that this group is central to the economy despite its relatively small size. He says it accounts for a large share of income-tax and GST payments and supports many more people working in regular employment and services. A squeeze on this group, he argues, therefore affects a much wider part of the population.

Mukherjea also warns that social media amplifies aspirations and encourages consumption financed by personal loans. He links the spread of online financial influencers and options trading to substantial losses among retail investors, citing figures of roughly ₹4 lakh crore in losses over four years. He argues that these trends contribute to household financial stress, alongside rising non-mortgage debt.

His proposed response is a shift away from reliance on salaried corporate jobs and toward self-employment, entrepreneurship, and global gig work. Mukherjea believes internet access can help skilled Indians sell services internationally, while small firms could create opportunities in fields such as AI training and data work. He sees AI as both a threat—potentially displacing jobs in IT and customer support—and a possible source of new work, though he says the transition may be difficult and the timing uncertain.

He also calls for policy changes that make it easier for small businesses to operate. He argues that lighter regulation, less red tape, lower land costs, and improved access to working capital could support job creation. In his view, policy should place more emphasis on small firms and self-employment rather than relying mainly on incentives for large manufacturers.

Mukherjea’s broader advice is that people should not assume an employer, government, or social network can provide long-term security. He urges individuals to manage spending, build savings and financial buffers, and prepare for a less predictable working life. The discussion presents his argument as a warning about the old career model, but also as an opportunity for people and policymakers to adapt.

Presenters and Contributors

• Bidisha Bhattacharya — ThePrint consulting editor for economics and interviewer
• Saurabh Mukherjea — Founder and CIO of Marcellus Investment Managers; guest
• Nandita and Sapna Bhawsar — Co-authors of Breakpoint, referenced in the interview