India’s Two-Speed Consumption Story: Why the Lower Middle Class Must Be the Focus of the Next Growth Wave

Across India’s business headlines in recent weeks, a clear pattern has emerged — and it’s not just economic, but sociological in nature. From real estate and automobiles to consumer durables and FMCG, there’s a surge in demand for premium and luxury products, while mass-market segments are either stagnating or in decline.

This uneven pattern of consumption is not just a blip. It reveals a structural truth about the nature of India’s post-pandemic recovery: we are growing — but we are not growing equally. The biggest casualty of this divergence is not the very poor, as one might expect, but rather the lower middle class — a large and aspirational segment that is now economically squeezed, politically voiceless, and often policy-invisible.


A K-Shaped Recovery in Plain Sight

From multiple sectors, the signs are loud and consistent:

-Luxury housing in metros is booming; affordable housing is seeing few new launches.

-SUVs and premium cars are selling briskly; entry-level cars and two-wheelers are lagging.

-High-end electronics and durables are thriving; mass-market sales are flat.

-In FMCG, premium categories grow even as rural and low-income volume growth remains weak.


This is the textbook definition of a K-shaped recovery, where the well-off race ahead, while the rest either stay flat or fall behind.


But the Poorest Are Not Always the Worst Off

Paradoxically, India’s very poor — both rural and urban — are often better shielded from distress than the lower middle class, thanks to an extensive web of government welfare schemes. These include:-

-Free rations under NFSA/PMGKAY

-Direct cash transfers like PM-KISAN

- Free housing, under PMAY

-Health cover, under Ayushman Bharat yojana 

-Non-farm employment, through MGNREGA

-And other facilities/services such as subsidised gas, pensions, scholarships, and more


This welfare architecture, targeted through income, caste, and asset criteria, offers a relatively stable (if modest) safety net to the bottom quintile. The lower middle class, however, often finds itself excluded from these benefits due to being “just above” the eligibility thresholds, while not rich enough to afford private services or withstand price shocks.


The Squeezed Core of Indian Society

This “missing middle” — earning roughly ₹10,000 to ₹25,000 a month, working in informal urban sectors, semi-formal jobs, or running micro-enterprises — is under pressure on multiple fronts:-

-They bear the full brunt of inflation in food, transport, healthcare, and education.

-They often aspire upward, spending disproportionately on private schooling or coaching.

-They are ineligible for most DBTs and subsidised services.

-Their jobs tend to be informal, insecure, and low on social protections.

-Their consumer confidence is weak, and they often defer discretionary purchases.


This is the consumption base of Bharat, and without revitalising this segment, India’s domestic growth engine cannot fire sustainably.


Manufacturing Jobs: A Path to Relief

What could rescue this fragile segment? One promising answer lies in the massive manufacturing investments flowing into India today — from both Indian conglomerates and foreign giants.

Whether it’s electronics, EVs, semiconductors, apparel, batteries, pharma, or even logistics — India is attempting to recast itself as a China-plus-one hub, and this is the sector where the lower middle class is naturally employable.

Factory jobs offer:-

-Better and more consistent wages than casual labour or gig work

-On-site benefits like canteens, housing, and medical support

-Some level of formalisation (PF, ESI, etc.)

-A path for women’s employment in assembly lines and packaging

-Geographic spread beyond metros — into Tier 2/3 cities and semi-urban areas



But Results Will Take Time

This transition won’t be instant. Factory setups involve a 2–3 year gestation period — from land acquisition to approvals, buildouts, hiring, and training. So while capex is peaking now, the jobs will emerge gradually, likely between 2026 and 2028.

Moreover, there are policy choices that will determine whether these factories will be job creators or automation islands. Labour flexibility, skilling initiatives, and urban planning must converge to ensure that this investment boom translates into broad-based employment.


What India Needs Now: A Middle-Class Welfare Compact

While waiting for the job tide to rise, India must also ask a harder question: how do we protect the lower middle class today, without diluting welfare for the poor?

Some solutions include:-

-Universal basic services — in health, education, and public transport

-Graduated benefits, not binary eligibility (e.g. LPG subsidies for ₹3–5 lakh annual income group)

-Urban employment guarantee for informal workers

-Credit and insurance schemes tailored for near-poor and semi-formal earners

-Most importantly, the narrative of growth must shift — from celebrating only premium consumption to prioritising income security and job depth across all segments.


Conclusion: Growth Must Be Inclusive to Be Durable

India’s economic engine is roaring in boardrooms and equity markets. But a two-speed society is not just unjust — it is unsustainable. The lower middle class is the backbone of India’s aspirational economy — the ones who buy the entry-level car, send their children to low-tier private schools and coaching centres, pay EMIs on 1BHK homes, and queue for low-salary private jobs.

We must ensure they don’t fall through the cracks. Because in the end, no growth story is complete if it leaves out the very people who are meant to power it.

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