The crisis starts where India’s middle class has always anchored its hope: education. Mukherjea points out that India produces over 8 million graduates annually, yet becoming a graduate now actively reduces both earnings and employment prospects. The unemployment rate for graduates stands at 29.1% which is nine times higher than for illiterates.
Even at elite institutions, the floor is collapsing. Minimum salaries at IIT Bombay have been cut from ₹6 lakh per annum to ₹4 lakh, while 8,000 of 21,500 IIT graduates nationwide remain unemployed. Only 43% of India’s graduates are considered employable, Mukherjea writes — with most lacking the problem-solving skills the modern economy demands, a structural failure he traces to decades of rote-learning curricula and the shift from descriptive to multiple-choice questions in entrance exams.
The Triple Squeeze
1. Jobs Are Disappearing
White-collar job creation has collapsed from 11% annual growth before 2020 to just 1% today, according to Breakpoint. India’s IT services sector, the single largest employer of graduates with 8 million workers, is retrenching rapidly as AI replaces coders and call centre agents. India’s leading IT firms laid off over 100,000 professionals across 2024 and 2025.
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The problem isn’t confined to tech, Mukherjea argues. Banks, scarred by the 2015 Asset Quality Review, have grown reluctant to finance new business projects, choking off private sector job creation. Small and medium enterprises, which employ 90% of India’s workforce, are being squeezed by regulatory overload and competition from larger, more capital-intensive firms.
2. Wages Are Stagnating
For employees of Nifty50 companies, real wages (adjusted for inflation) have fallen over the past nine years, from FY2016 to FY2025, the book notes. The average income of India’s middle class was ₹10.23 lakh a decade ago; today it stands at ₹10.69 lakh, a near-flat trajectory against a cost of living that is anything but flat.
The cost of a typical vegetarian thali is rising at 11% annually, Mukherjea writes. Medical costs climb at 14%. The true cost of middle-class living doubles every eight years. Compounding the pressure, he notes, the government has shifted the tax burden from corporations to individuals: personal income tax as a share of GDP has risen from 2.5% to 3.6%.
3. Debt Is Exploding
India’s non-housing household debt as a percentage of income now exceeds that of both the United States and China, according to Breakpoint. Nearly half of Indian families have taken personal loans; 67% of borrowers took their first loan before the age of 30. For those carrying debt, nearly 40% of annual income goes toward servicing it.
Critically, Mukherjea argues, this borrowing is not financing productive assets. It is funding consumption — holidays, smartphones, and increasingly, essential expenses like education and healthcare. Between 5% and 10% of retail borrowers are caught in a debt trap, taking multiple loans to finance day-to-day living.
The Social Media Accelerant
When Reliance Jio launched near-free mobile data in 2016, hundreds of millions of Indians, particularly young men in their twenties, gained unlimited internet access for the first time. The consequences, Mukherjea argues, have been both psychological and financial.
Anxiety and depression medications now grow at twice the rate of other pharmaceutical categories, the book notes. Suicide rates at IITs have doubled since 2015. Young Indians spend hours on platforms saturated with curated displays of wealth they cannot access.
The financial damage has been equally severe, according to the book. Egged on by influencers promising easy money, 10 million Indians have plunged into futures and options trading. Over three years — FY2022 to FY2024 — they collectively lost ₹3 lakh crore ($33 billion) to institutional investors and brokers, a sum exceeding government spending on social welfare. The typical F&O trader, Mukherjea writes, is a 30-to-40-year-old small-town male losing roughly ₹1 lakh annually in a country where per capita income barely clears ₹2 lakh.
AI: The Jobs Killer Hiding in Plain Sight
The same AI tools being glamorized on social media are eliminating the jobs that once defined middle-class ambition. Citing NITI Aayog estimates, Mukherjea notes that by 2031, AI could reduce IT services sector employment from 8 million to 6 million, and customer experience jobs from 2.5 million to 1.8 million — a net loss of 2 million middle-class positions.
CEOs of India’s most profitable companies, he writes, are openly targeting AI to reduce salary bills by up to a third, automating functions from HR and underwriting to call centres. For a country where 8 million graduates enter the workforce each year, the simultaneous disappearance of existing jobs is, as Mukherjea puts it, devastating.
The Consumption Engine Has Stalled
The knock-on effect across the broader economy is already visible, according to Breakpoint. FMCG volume growth has slowed from 11% in FY2011 to 3% in FY2025. Car sales are shrinking. Consumer durables growth has collapsed from 11% to 1-2%.
This matters structurally, Mukherjea argues. Unlike export-driven East Asian economies, India’s post-1991 growth model was built on a virtuous cycle: middle-class consumption creates demand, demand creates jobs, jobs create more consumption. That cycle, he writes, has broken.
The middle class has little recourse through democratic channels, according to the book. With just 40 million income-tax payers among 970 million voters, they are politically marginal. Politicians prioritize the poor for votes and the elite for funding — using middle-class tax revenues to finance subsidies directed at others, while the structural rot deepens.
Mukherjea warns that the crisis of India’s middle class has been decades in the making — the automation of routine cognitive work began hollowing out middle-skill jobs as early as 2000, a generation before AI entered the conversation — and that the window to arrest it is narrowing fast.
(Breakpoint: The Crisis of the Middle Class and the Future of Work is written by Saurabh Mukherjea, along with Nandita Rajhansa and Sapana Bhavsar. The book is published by Juggernaut)