Few stories in the world today rival the extraordinary journey of India’s middle class. Over the last decade, India has not just sustained high growth rates but has also witnessed the rise of an empowered, aspirational middle class. At the heart of this story lies the Modi Government’s policies, tailored to nurture purchasing power, fuel consumption, and lay the foundations of a confident, upwardly mobile society.
Currently, around 31% of India’s population qualifies as middle class, a number projected to rise to 38% by 2031 and to an astonishing 60% by 2047. Back in 2020–21, India had about 43.2 crore middle class citizens (those earning between ₹5 lakh and ₹30 lakh annually). By 2047, this figure is expected to more than double, crossing 102 crore people. In fact, the pace of expansion of India’s middle class over the last decade has outstripped that of traditional developed economies such as the EU and the USA. Clearly, the “India growth story” is being written by its middle class.
Recognising the centrality of this demographic, the Modi Government has introduced reforms that directly ease the tax burden, reduce the cost of living, and improve the quality of life. The Goods and Services Tax (GST), introduced in July 2017, stands as one of the biggest tax reforms in India’s history. It simplified the tax system, unified the market, and drastically cut the effective tax burden for the middle class.
Before GST, most goods attracted a punishing 28% to 31% tax rate. Post-GST, more than 97% of goods fall below the 18% tax slab, offering massive relief to households. Even more telling is the Revenue Neutral Rate (RNR). While the Congress-era tax system implied a 19% RNR, the GST’s introduction pegged it at 15.5% but in practice it has been even lower, standing at 12.2% in 2023. Maintaining a lower RNR shows a conscious decision to keep the middle class’s tax burden low, even if it means taking a short-term hit to government revenues.
Beyond taxation, the Modi Government has focused on improving the “ease of living.” Infrastructure expansion has been nothing short of transformative. Airports have more than doubled, from 74 to 157, opening opportunities for India’s middle tier towns. Highways have grown by 60% in just 10 years, from 91,287 km in 2014 to 1,46,145 km in 2024, making India the world’s second-largest road network. These investments are not abstract figures. They represent smoother travel, faster commerce, and easier access to opportunities—benefits that directly empower the middle class.
The impact of these reforms is already visible in how Indians live, travel, and consume. Car ownership, a classic marker of middle-class mobility, has surged. Between 2012 and 2022, registered motor vehicles in India grew at a CAGR of 8.3%, considerably higher than GDP growth of 5.5%. Middle class car ownership rose 2.2 to 2.8 times, even faster than among the wealthy.
The pandemic slowed global demand, yet India’s middle class rebounded quickly. Passenger vehicle sales jumped by 40% in the two years after the pandemic. Even preferences have shifted, as SUVs now dominate the Indian market, with their share of sales doubling between 2020 and 2024.
Disposable incomes have risen sharply, with per-capita disposable income now standing at over ₹2.14 lakh. The middle class has moved from spending largely on necessities to investing in leisure, lifestyle, and aspirational goods. Even rural India reflects this transformation. For the first time, rural households now spend more on non-food items than food, signalling that prosperity is no longer limited to urban centres. Economic growth is truly percolating downwards, lifting all segments.
The Modi Government has doubled down on its support for the middle class. The income tax exemption limit has been raised to ₹12 lakh, meaning crores of Indians now have over 5% more disposable income. For over 1 crore taxpayers, this reform means they will no longer have to pay income tax at all. And the relief doesn’t stop there. The government is also moving towards simplified GST slabs, with a clear focus: only 5% for essentials and 18% for most other goods. This Diwali, the middle class can look forward to not just festival lights, but lighter bills as well.
India’s middle class is not just expanding; it is thriving, and at a pace unmatched globally. This rise has been enabled by a government that recognises the middle class as the engine of India’s economy. With the Modi Government’s continued emphasis on tax relief, infrastructure, and ease of living, the rise of India’s middle class is not just a headline, but India’s future.
