The Great Indian Salary Crisis

India Today

14 hours ago

Each month begins with hope and ends with compromise. In Noida, a software engineer watches EMIs pile up while stress-related ailments creep in, until she finally quits her job. In Delhi, a public relations executive juggles rent and groceries, praying her landlord doesn't raise the rent again. In Chennai and Ahmedabad, a techie and a young professional wrestle with ballooning costs after what once felt like promising salary hikes. In Nashik, a 26-year-old anxiously waits for his next job opportunity, even as savings dwindle and replies don't come. And in Pune, rising rents chip away at an IT engineer's paycheck, month after month.
These are the everyday struggles of white-collar employees in India. Professionals are caught in a salary spiral where costs keep climbing, pay moves slowly, and financial stability slips further away.
On paper, the economy is booming. India is the world's fastest-growing major economy, with steady GDP growth, soaring corporate profits, and a bullish stock market. But the paycheques of working middle-class Indians tell a very different story–one of financial strain, dwindling savings, and rising dependence on debt.
For many professionals, salary hikes arrive too late or fall too short to make a difference.
Kratika Sharma, a software engineer in Noida in her 30s, knows the feeling all too well. 'My last hike came in August 2024, almost a year late. By the time my salary is credited, I'm already using it to clear dues from the previous month,' she says.
Her relocation brought better job prospects but also steeper costs. 'Earlier, I was living at home. Now, between rent, food, and other expenses, I'm barely able to save anything.'
Education loans and credit card EMIs are a constant squeeze. 'It's depressing,' she adds. 'I've had stress-related health issues like cervical pain and hormonal imbalances.'
Eventually, she quit her job without another offer in hand. 'There was no financial growth. And professionally, the company couldn't retain seniors I could learn from.' Even leaving wasn't easy. 'Companies want candidates who can join in 15 days or less. That makes switching even harder.'
Susmita Pakrasi, 34, who works in communications in Delhi, left journalism for better pay, but stability remains elusive. 'I earn more on paper now,' she says, 'but between rent, groceries, my EMI, and healthcare, I feel poorer than I did five years ago.'
The stress is as emotional as it is financial. 'Earlier, financial security meant being able to save and occasionally splurge. Now, it means being able to manage basic expenses, pay EMIs, and still have a cushion for emergencies,' she says. 'It's hard to stay motivated when financial anxiety builds in the background."
India Inc. continues to reward its shareholders generously, and its top brass are riding a wave of soaring pay. But for employees lower down the ladder, even a modest increment feels increasingly out of reach.
Aon's 2024–25 Salary Increase and Turnover Survey, covering over 1,400 companies, projects an average salary hike of 9.2% this year. That's a slight dip from 9.3% in 2024 and well below the post-pandemic high of 10.6% in 2022. The modest rise comes despite healthy profit margins and top-line growth.
While attrition has declined from 21.4% in 2022 to 17.7% now, it isn't necessarily a sign of happy workers. If anything, it points to a workforce stuck in place — professionals who want to move up or move out but feel like they can't.
That sense of being undervalued runs deep. A survey by job portal foundit (formerly Monster APAC & ME) found that nearly half of over 5,000 salaried professionals across different sectors, experience levels, and functions believe they are underpaid. Only 28% say they've seen meaningful salary growth in the last three years. For the rest, any gains were eaten away by inflation.
And that erosion goes deeper than official numbers suggest. 'Over the last two decades, inflation has been a weak determinant of pay growth,' says Anandorup Ghose, Partner at Deloitte India. 'Economic performance, organizational profitability, and competitiveness within an industry have been far stronger drivers.'
He adds that India faces a persistent mismatch between measured and perceived inflation. 'Felt inflation is usually significantly higher than the officially quoted CPI figures. Companies try to stay ahead of headline inflation, but rarely match the inflation employees actually experience.'
Data backs up this stagnation. 'The Economic Survey showed the decline in real wages since 2017–18 for salaried employees,' says Anandorup Ghose, Partner at Deloitte India. 'International Labour Organisation (ILO) data places India in the bottom quartile among 130 countries in terms of real wage growth.'
And while headline figures may suggest decent average hikes, the distribution tells another story.
'Not everyone receives the same level of salary increase anymore,' says Sonica Aron, founder of HR consultancy Marching Sheep. 'Individuals in tech or analytics roles get better raises, but others don't.'
Recruiters see this firsthand. 'Companies are being more selective. Many now offer performance-linked hikes or skill-based incentives,' says Priyanka Bisht, partner at Tejomaya Ventures LLP. 'But for many roles, especially at the entry and mid-levels, base pay just hasn't grown much.'
On top of flat salary bands and mounting expenses, many professionals also feel short-changed by the tax system. 'Even a small change in tax slabs or standard deductions can give middle-income earners real breathing space,' says Bisht. 'From what I've seen in my experience, the middle class is often caught in a tough spot. They are educated, employed, and hardworking, but their income doesn't always match the rising cost of living.'
Siddharth Jain, a financial advisor and co-founder of MinEMI, agrees. 'There should be tax relief beyond Rs 7 lakh,' he says, suggesting CPI-linked PF and gratuity adjustments, along with subsidies for housing, childcare, and transport. 'Wage-linked ESOPs or inflation-indexed bonuses could also help sustain purchasing power.'
Even those who received pandemic-era salary bumps are now feeling the pinch. Chennai-based tech professional Shafeeque Suhail says, 'After rent, EMIs, and food, I'm barely left with Rs 10,000. Every year, I earn more but save less.'
The How India Spends report by Perfios and PwC India finds that salaried Indians now allocate over a third of their income to EMIs. Another 39% goes to essentials, leaving just 29% for everything else.
'A mid-level employee earning Rs 90,000 in 2015 might now earn Rs 1.5 lakh. But essentials like rent, school fees, and insurance have seen 40% plus inflation,' says Jain.
That squeeze is showing up in national trends, too. A recent CareEdge Ratings report noted that household savings fell to 18.1% of GDP in FY24, the lowest since FY2017. Gross domestic savings also declined to 30.7% of GDP, down from 32.2% in FY15.
Meanwhile, household financial liabilities surged to 6.2%, nearly doubling over the past decade — a clear sign that more Indians are relying on credit to fund basic consumption.
For Ahmedabad-based Priyanka Deb Sarkar, rising costs have steadily outpaced her income. 'In five years, my expenses have doubled. I bought a car, shifted to a more expensive rental, and took on a home loan. Marriage also changed the equation. While my income has grown, I've barely been able to save in recent months,' she says.
Her credit card dues have risen sharply. 'Paying them back has become difficult. I haven't had to cut back drastically, but the savings have shrunk.'
India's economy grew 6.5% in FY25 and is set to retain its position as the fastest-growing major economy in FY26. But the average salaried employee isn't feeling it. Hiring is still happening, but only in niche areas like AI, analytics, and cybersecurity. For everyone else, the job market feels fragmented and unforgiving.
'India's salaried professionals have experienced low single-digit or even stagnant real wage growth over the past decade,' says Dr Vidya Mahambare, Professor of Economics at Great Lakes Institute of Management. 'AI is replacing many skill sets. During high-growth years, skill scarcity created wage premiums. That's no longer the case.'
Several sectors are now dominated by a few large firms, marking a shift toward oligopolistic structures. 'And when such firms wield monopsony-type power in the job market, they get an upper hand in salary negotiations,' Mahambare explains.
Even though wage growth may appear to outpace inflation on paper, experts warn against drawing comfort from averages. 'The structural wage crisis is evident as voluntary attrition has been hovering in the range of 15–20%,' says Dr Kirti Sharma, Associate Professor – Accounting and Finance at Great Lakes Institute of Management. 'Employees feel their compensation doesn't match their contribution value.'
She notes that while some recent budget measures, like raising the basic exemption limit, are welcome, deeper relief is needed. 'More meaningful deductions for healthcare, education, and housing costs are urgently required. The new tax regime, too, can incorporate these.'
A 2025 IIM-Ahmedabad survey found that six in ten executives believe AI will significantly displace white-collar roles within five years. That shift is already underway. The ILO estimates that nearly 70% of existing jobs in India are at high risk of disruption due to automation and AI.
Meanwhile, a Bank of Baroda research suggests that 20 to 25 million jobs could be displaced by 2030, especially in IT services, customer support, retail, and finance.
Globally, tech giants like Google and Microsoft have already begun cutting jobs as they pivot toward AI-led efficiencies. In India, major IT and tech firms are following suit, laying off employees as part of wider cost-cutting efforts.
A CareEdge report shows labour cost growth for large IT companies fell sharply, from 26% in Q3FY23 to just 4% in Q3FY25. The message is clear: companies are streamlining in preparation for an AI-heavy future.
Suhail feels it firsthand. 'I have the skills. I work hard. But between AI anxiety and rising costs, it's like the ceiling is getting lower every year.'
'While the cost of living affects every household, most companies don't offer salary hikes that beat inflation,' Aron adds. Dr Sharma notes, 'India had 6.1% inflation but 10.2% hikes. But even here, only some employers factored inflation into compensation decisions.'
For workers earning Rs 50,000 to Rs 1,00,000 a month, life isn't about aspirations anymore, especially if they are based in tier-1 cities. It's about staying afloat. And this isn't lifestyle inflation. It's survival inflation.
'Five years ago, a 1-BHK near IT parks in Pune cost Rs 12,000 to Rs 15,000. Today, it goes for Rs 20,000,' says Shital Karnani, an IT engineer in Pune. 'I expected more growth after working this hard.'
The Home Credit India Wallet Study from 2024 pegs the average income of India's lower-middle class at Rs 33,000. In metros, it hovers near Rs 35,000. In Hyderabad, it touches Rs 44,000, but even that barely covers rent and groceries.
Promotions often offer no escape. 'My expenses are three to four times higher than they were five years ago,' says Nandita Talukdar, a former corporate worker turned entrepreneur. 'There was no significant change in savings or liquid cash.
Living in Delhi with her partner, even a modest lifestyle feels out of reach. 'Buying a house feels nearly impossible now,' she says. 'Same with cars. You can buy one, but maintenance is super expensive.'
She's now debt-averse. 'I once used a credit card, but it became a headache.'
Minimal hikes eroded motivation. 'It's one of the biggest reasons attrition is so high,' she says. 'I've recently taken a conscious call to take a break from my job and begin my entrepreneurial journey.'
'Because loans, EMIs, and buy-now-pay-later options are available, many people are managing their expenses,' says Bisht. 'But this hides the real issue that incomes are not growing fast enough.' She believes government and corporate policies must go beyond headline GDP growth and address realities by rewarding skill upgrades, ensuring portable social security, and creating quality jobs outside the metros. 'That feeling of protection improves both morale and spending capacity,' she says.
And for some, the ongoing crisis has meant complete stasis.
Saurabh Pingalkar, 26, worked with the government's Tele MANAS mental health project at NIMHANS. Since early 2024, he's been jobless. 'You send in your resume, you're asked to wait, and then everything fades into silence,' he says. 'I've had to dip into savings, cancel personal plans.'
His biggest fear? 'Reaching a point where I stop believing in myself. The uncertainty is hard, but the fear of being unseen is worse.'
'We are real people, often skilled, motivated, and eager to contribute. If you can't offer a job, at least offer clarity,' he says.
Salary stagnation is quietly becoming one of the biggest threats to India's economic momentum.
For all the talk of GDP highs and stock market rallies, wage growth for working Indians has barely kept up with inflation. This mismatch isn't sustainable. When salaries stall, so does spending. And when spending slows, the entire consumption engine that drives India's economy starts to sputter.
Credit card defaults are rising. Savings are at historic lows. And the psychological toll of working harder without moving forward is quietly reshaping the workforce.
If real incomes continue to stagnate, India's much-celebrated demographic dividend could weigh down India's economic ambitions. A salary crisis left unaddressed doesn't just dim household futures and dreams. It puts the brakes on national growth.