Rapid Ascent of Middle-Class Incomes: India’s Average Income Triples According To SBI Report
New Delhi, 18th August 2023: India’s average income within the middle-class segment has surged significantly, marking a threefold rise from Rs 4.4 lakh to Rs 13 lakh between the financial years 2012-13 and 2021-22, according to a report by SBI Research. This upswing can be attributed to the migration of individuals from lower-income categories to higher ones, as well as an increase in the number of tax filers who were previously not reporting their income.
The SBI Research report highlights that in the assessment year 2023 (AY23), 13.6 per cent of the population has transitioned from the lower income bracket to higher strata compared to the AY12 figures.
Projections from the same report indicate that India’s per-capita income is poised to climb from Rs 2 lakh in FY23 to Rs 14.9 lakh in FY47. In terms of the US dollar, this increase is expected to translate from $2500 in FY23 to $12400 in FY47.
In the fiscal year 2011-12 (FY11), 16 million individuals filed income tax returns (ITR), with the majority (84 per cent) belonging to the income group of up to Rs 5 lakh. The report titled ‘Deciphering Emerging Trends in ITR Filing: The Ascent of the New Middle Class in Circular Migration’ states that in AY23, a total of 68.5 million people filed ITR, but the concentration in the income group of up to Rs 5 lakh decreased to 64 per cent.
SBI Research’s analysis predicts that by FY47, a quarter of ITR filers will move out of the lowest income stratum, with around 17.5 per cent transitioning to the income group of Rs 5 lakh to Rs 10 lakh, 5 per cent to Rs 10 lakh to Rs 20 lakh, and 3 per cent to Rs 20 lakh to Rs 50 lakh.
The report notes that 8.1 per cent of the population has shifted to the income group of Rs 5 lakh to Rs 10 lakh, 3.8 per cent to Rs 10 lakh to Rs 20 lakh, and 1.5 per cent to Rs 20 lakh to Rs 50 lakh. Additionally, 0.2 per cent of the population has ascended to the income group of Rs 50 lakh to Rs 1 crore, while nearly 0.02 per cent has entered the income group above Rs 1 crore.
Looking ahead, an estimated 0.5 per cent of filers are projected to transition to the income group of Rs 50 lakh to Rs 1 crore, and 0.075 per cent to the income group above Rs 1 crore by FY47.
Furthermore, India’s population is anticipated to grow to 1610 million by FY47, up from 1400 million in FY23. Correspondingly, the country’s workforce is predicted to increase to 725 million by FY47, from 530 million in FY23, causing the workforce share in the population to rise from 37.9 per cent in FY23 to 45 per cent in FY47.
