Indian Middle-Class Struggles: Economic Slowdown, Job Losses, and Shrinking Savings: India’s once-prosperous middle class is now dealing with economic challenges that have led to significant changes in spending. The Marcellus Investment Managers report highlights three key factors for the slowdown: technological turmoil, economic decline, and declining household incomes.
Jobs that are normally considered static, such as clerical and managerial roles, are increasingly being replaced by technology and automation.
PC Mohanan, former acting chairman of the National Board of Accountants, pointed out that cost-cutting measures such as outsourcing and automation had created more work for managers missing. WEO president Rashad Premji warned that AI is accelerating this shift, making white-collar jobs less safe.
India’s post-COVID economic growth slowed, leading to a recession. In the second quarter of the fiscal year, corporate earnings fell the most in 20 years, except for the 2008 financial crisis. This recession has hit the middle class hard, reducing spending.
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FMCG companies that rely on urban consumption are experiencing this effect. Nestlé India MD Suresh Narayanan noted that the shrinking middle class has driven sales growth, which has slowed to 1.5%-2% compared to the previous two-digit growth.
Hindustan Unilever also experienced slower growth, with its FQ2 profit down 3.86% year-on-year. Executive Director Rohit Jawa observed a sharp decline in urban consumption, especially in urban areas.
Rising food prices, rising interest rates, and falling incomes have forced the urban middle class, which accounts for two-thirds of FMCG sales, to cut back on spending. Marcellus believes the recession can have eased, but challenges such as job losses and declining savings remain.
