By Prof. S. S. SOMRA
New inequality data reveals a growing concentration of wealth in India. Experts warn that a weakening middle class could undermine demand, investment, and long-term economic growth.
Jaipur, June 20, 2026 — India’s development journey since the 1991 economic liberalization is considered one of the world’s most remarkable economic stories. Emerging from a balance of payments crisis, India is poised to become one of the leading powers in the global economy. Poverty reduction, digital financial inclusion, infrastructure expansion, and targeted welfare schemes have improved the living standards of millions. But behind these achievements, a challenge is emerging that, if ignored, could prove fatal to India’s long-term economic stability.
The recent World Inequality Report, Distributional National Accounts (DINA), India, 1989–2024, database shows that income inequality in India is continuously increasing. The top 10% of people own approximately 58% of total income and 65% of total wealth, up from 36% and 30% in 1989, respectively. The bottom 50% receive only 15% of total income.
Significantly, the top 1% group holds approximately 40% of the country’s total wealth, demonstrating even greater discrimination. The Database highlights that the concentration of income and wealth has skyrocketed—even higher than during the British colonial period.
These gains reflect a redistribution away from the country’s middle class. India’s income Gini coefficient has increased from approximately 0.46 in 1990 to 0.62 in 2024, while its wealth Gini has increased from 0.65 to 0.74. These scores reflect a rapid structural increase in inequality, particularly wealth concentration.
According to the report, in 1989, the top 30-70% of India’s middle-class earners held approximately 19.7% of total wealth and 28.9% of total income. By 2024, these shares have fallen to 13.6% and 18.8%, respectively. This significant decline is not a sudden result, but a fundamental redistributive shift.
This difference is rooted in India’s growth structure, which is often described as “jobless.” Economic growth in the post-liberalization period has been driven largely by capital- and skill-intensive sectors, where asset owners receive higher returns.
The middle class, which relies primarily on salary and labour income, has seen its share shrink significantly. A similar pattern is emerging in India, which is a matter of concern.
On the other hand, the top 10 percent of the population now controls the majority of national income and wealth. This means that the benefits of economic growth have become more concentrated among the upper echelons of society, while the middle class has been relatively left behind.
The root of this imbalance lies in India’s development model. Economic expansion after liberalization has been primarily driven by capital- and skill-intensive sectors, which have benefited those who already possessed capital, businesses, or high skills.
In contrast, income growth for the wage-dependent middle class has been limited. Income generated from assets continues to grow over time, while growth in salary- and labour-based income has been relatively slow and limited. As a result, economic inequality continues to deepen.
The structure of the labour market also complicates this problem. A large portion of the country’s population remains trapped in low-productivity agriculture and informal employment. The manufacturing sector, which typically forms the basis for the expansion of the middle-income group, has not been able to create jobs at the expected pace. In contrast, the service sector has created opportunities for highly skilled individuals, but has failed to create stable and respectable middle-class jobs on a large scale. This is why India’s economic growth is often referred to as “jobless growth.”
This challenge may be exacerbated by the increasing influence of artificial intelligence and automation. Many low- and medium-skilled jobs are at risk of being eliminated due to technological change.
If new skills and employment opportunities are not developed in a timely manner, inequality may worsen. The education system has also not kept pace with this change.
Lack of equal access to quality education and skills training limits social mobility. Research suggests that a significant portion of India’s wage inequality stems from educational inequality. On the other hand, while government welfare schemes have provided relief to the poor, the middle class remains relatively vulnerable amid rising health, education, and housing costs.
They are neither the primary beneficiaries of welfare schemes nor able to benefit from property income. History bears witness that in countries that have achieved sustainable and inclusive growth, a strong and expanding middle class has played a crucial role.
East Asian economies, through export-oriented industrialization and job creation, have created a broad middle class, which has stoked domestic demand and economic expansion. India’s development model has also long been based on middle-class consumption.
However, if middle-class income and purchasing power weaken, demand will decline, investment will suffer, and growth will automatically slowdown, which is precisely what is currently happening in India.
Therefore, the need today is not only to maintain high growth rates but also to transform the nature of growth. It is essential to promote labor-intensive manufacturing, invest in quality education and skills development, create productive jobs, control the cost of health and housing, and enact policies that encourage the expansion of the middle class.
The true foundation of India’s economic strength lies not in the growing prosperity of a few million affluent individuals, but in a strong, confident, and prosperous middle class comprising millions of families.Even high growth rates cannot be sustainable if the benefits of development do not reach a broad segment of society. Therefore, India’s next economic agenda is clear—not just growth, but growth that creates jobs, expands opportunities, and re-establishes the middle class as the strongest pillar of the national economy.
(This is an opinion piece. Views expressed are the author’s own.)
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