India is witnessing the largest middle-class expansion in modern history, second only to China, according to the Draft Red Herring Prospectus (DRHP) filed by the National Stock Exchange (NSE). The rising incomes are creating a larger middle-class and affluent population, driving demand for financial products, investments, and premium consumption.
Households earning beyond ₹0.80 million are projected to rise from 34.38% of the population in FY26 to 42.74% by FY31. Upper-income and ultra-high-income segments (above ₹2.50 million annual income) are expanding the fastest, creating a broader market for premium goods and financial services.
How NSE Classifies Indian Households by Income
The NSE IPO DRHP categorises households into four income groups based on annual income:
| Income Group | Annual Household Income |
|---|---|
| Low Income | Less than ₹3 lakh |
| Lower Middle Class | ₹3 lakh – ₹8 lakh |
| Upper Middle Class | ₹8 lakh – ₹10 lakh |
| High Income | Above ₹10 lakh |
Based on this classification, households earning between ₹3 lakh and ₹10 lakh annually fall within the broad middle-class category, while those earning above ₹10 lakh are considered high-income households.
India’s Middle Class Is Growing Rapidly
The NSE DRHP data shows that India had approximately 31.4 million households in FY21, which is expected to increase to 379 million households by FY31.
The most significant shift is happening in the middle and upper-income segments.
FY21 Income Distribution
– Low-income households (< ₹3 lakh): 135 million (42.99%)
– Lower middle class ( ₹3-8 lakh): 96 million (30.57%)
– Upper middle class ( ₹8-10 lakh): 53 million (16.88%)
– High income (> ₹10 lakh): 30 million (9.55%)
FY26 Income Distribution
– Low-income households: 119 million (34.10%)
– Lower middle class: 110 million (31.52%)
– Upper middle class: 74 million (21.20%)
– High income: 46 million (13.18%)
FY31 Projection
– Low-income households: 98 million (25.86%)
– Lower middle class: 119 million (31.40%)
– Upper middle class: 98 million (25.86%)
– High income: 64 million (16.89%)
The data suggests that a growing number of Indian households are moving out of the low-income category into middle-income and affluent brackets.
Earning ₹8 Lakh or More?
One of the most notable findings from the NSE DRHP is the rapid growth of households earning more than ₹8 lakh annually.
In FY26, households earning above ₹8 lakh accounted for 34.38% of all households. This share is projected to rise to 42.74% by FY31. This means that nearly four out of every ten Indian households could be earning more than ₹8 lakh annually within the next five years, NSE DRHP showed.
The fastest growth is expected in upper-income and high-income categories, reflecting increasing purchasing power and rising aspirations among Indian consumers.
Why Are Incomes Rising?
India’s economic growth has played a crucial role.
According to the IMF’s World Economic Outlook (WEO), India’s nominal GDP has grown from $2.61 trillion in FY21 to $3.92 trillion in FY26. India recorded real GDP growth rate of 7.60% in FY26, which was the highest among the G20 economies.
Meanwhile, data from the Ministry of Statistics and Programme Implementation (MoSPI) shows that Gross National Income (GNI) per capita increased ₹1,44,512 in FY21 to ₹2,40,147 in FY26, expanding the middle and upper-middle-income brackets.
The rise in household income is also translating into higher financial savings. According to MoSPI, gross savings of households and Non-Profit Institutions Serving Households (NPISHs) reached 21.7% of GDP in FY25.
Increasingly, these savings are finding their way into market-linked investments such as mutual funds.
Data from the Association of Mutual Funds in India (AMFI) shows that assets under management (AUM) from B30 cities — locations beyond the top 30 mutual fund markets — nearly tripled from ₹5.36 trillion in March 2021 to ₹13.89 trillion in March 2026. This indicates growing financial participation beyond India’s major metropolitan centres.
While income growth is broadening the middle class, wealth remains unevenly distributed. The NSE DRHP noted that the top 10% of adults, roughly 146 million people, controlled around 65% of total wealth in 2025.
However, rising incomes, increasing digital penetration, greater financial literacy, and easier access to investment products are gradually expanding asset ownership across a wider section of the population.
