Continuous K Shaped, Jobless, Economic Growth And Sustained Degradation Of Service Class Will Be Perilous For The Nation
Rajiv Upadhyay
The last ten years have been a very testing times for the country’s middle class and specially the service class . Earlier it felt proud in being a professional scientist , doctor , engineer or army man and the nation including even the then prime minister Pandit Nehru, by calling ‘ Dams and large PSUs like BHEL or Steel Pants as ‘ Temples of Modern India ‘ , recognised their contribution and made them bear the hardships of their jobs with satisfaction .
Another underlying but equally important reason for the unquestioned loyalty and devotion of the highly educated service class was that its primary needs like housing , education of children and medical facilities were affordable and well provided . The old age was secured by pension. So the service class also gave its best voluntarily . Even when Lal Bahadur Shastri gave ‘Jai Jawan Jai Kisan ‘ slogan, the scientific community responded by making green revolution possible .
The present salary/middle class greatly acknowledges the progress of the country in last ten years in Defence , Kashmir , Ayodhya and other areas of self reliance etc.
But the last ten years. it must be sadly admitted, have shattered not only the self respect of the service class but the basic security of its primary needs being met by the emoluments has been violated. The constant denial of reasonable salary increases that meet the security and social needs, keeping in mind the inflation in education, housing and health sector, has made this class much poorer than it was fifteen years back.
The consumer price index is a good general method of quantifying inflation but the inflation in middle class big expenditure centres like health , education, coaching and housing sector has been far higher . Consequently not only the life style of service class has been lowered but also the satisfied mind of assured old age needs of housing and medical treatment , well educated children has been replaced by an anxious and insecure mind. The savings and discretionary expenditure has taken the maximum hit .
Extolling the virtues of pakoda sellers in 2018 by the home minister and even the prime minister has added to the disenchantment . An assured lively hood is a basic human need and PM was right in emphasising about the dignity in selling pakoda. But the service class, especially those in government service, have been the best students of their times . They studied hard , often took expensive coaching and qualified in UPSC/ SSC etc in a very difficult competition. As a rule they got more marks than other children who became brokers/traders or went to even private sector .
Government sector is ruled by public interest and accountability to elected representatives . It places a severe restriction on their working. But today the government actions are seemingly dominated by businessmen/traders as apart from the freebies to very poor , they are the main beneficiaries of the government actions. Their newly earned huge wealth is only matched by their ignorance about national governance . They apparently perceive governments servants as at best a disposable corrupt employees not realising that they themselves are the Gangotri of corruption. No body grudges wealth of industrialists or entrepreneurs . Their contribution is well recognised but they are so few amongst the Neveau rich .
If a retired Secretary to GOI has to take a post retirement house beyond greater NOIDA and the so called pakodewala will have posh house in central NOIDA , then it hurts . There is no comparison in worth of charge or contribution to society of an ISRO Scientist or a Chief Engineer of some dam and pakodewala . If the once best student sees pakodewala children going ahead in life because of his money, it will lead to very un pleasant developments . Those who are familiar with our just freed neighbour in seventies or big economies of largely populated countries beyond Malacca Strait , will know how very deep corruption destroyed those nations .
Denial of COVID period dearness allowance is one such example . It is really a theft of government employees money . At best it could have been deposited in the provident fund to avoid fiscal pressures . Same is true of meagre increase granted in Pay commission , extra ordinary delay of ten years after Arun Jaitley’s promise , in granting even nominal income tax relief .These are all examples of trader / capitalist lobby misguiding the government . Their huge loans are possibly being written off by taxing service class . Pension is another victim of propaganda. An army major who lost his leg in war , living on pension, is hurt when he is portrayed as a liability . The big purchases of middle class are now are by credit card and EMI thus reducing the savings for old age and children’s education .
Share market has put pressure on well placed profitable companies in denying the salary rise to employees . In recent times employees are being fired by good companies just to increase the profit margin and to increase the share price . It is perverse and must be stopped . Entry level salary remained almost frozen for ten years.
It is time the government restores the dignity and economic well being of the middle especially the service class .
The tables below give the details of the sustained K Shaped recovery .
Individual taxpayers by tax payable
| Tax-payable category | 2014-15: taxpayers | 2023-24: taxpayers | Increase | 2014-15 share of individual tax | 2023-24 share |
| ₹1–2 lakh | 89.8 lakh | 117.2 lakh | +30.5% | 15.0% | 10.4% |
| ₹2–5 lakh | 9.75 lakh | 35.98 lakh | +269% | 16.0% | 16.7% |
| ₹5–10 lakh | 3.34 lakh | 15.39 lakh | +361% | 12.0% | 15.8% |
| ₹10 lakh and above | 2.19 lakh | 10.59 lakh | +383% | 45.5% | 50.3% |
| Total with tax payable >₹1 lakh* | 105.1 lakh | 179.2 lakh | +70.5% | 88.5% | 93.3% |
*The >₹1 lakh total involves an estimate because CBDT’s first published band is ₹0–1.5 lakh; I estimated the ₹1–1.5 lakh portion proportionately. The other bands are directly derived from CBDT’s published ranges.
What the figures show
The most striking change is at the higher end:
- ₹5 lakh+ tax-paying individuals: about 5.53 lakh → 25.98 lakh, almost 4.7 times.
- ₹10 lakh+ tax-paying individuals: 2.19 lakh → 10.59 lakh, about 4.8 times.
- These ₹10 lakh+ taxpayers represented only 1.15% of individual returns with positive tax payable in 2014-15, but 3.76% in 2023-24.
- Yet they contributed about 50.3% of individual tax payable in 2023-24, compared with 45.5% in 2014-15.
Government staff salaries have risen by only 50 % and the increase was often taxable . The whole development train just bye passed the government or service class as a whole . Share market needs capital and this class savings are minimal and cannot take risk.
वो कारवां गुजर गया गुबार देखते रहे
Flat size affordable with the same nominal budget
taking NCR as an example
NCR house prices accelerated enormously. ANAROCK’s data show NCR rising from ₹4,580/sq ft in 2020 to ₹8,300 in Q1 2025 — an 81% increase in only five years.
| Budget | 2013 @ ₹4,200/sq ft | 2018 @ ₹4,546/sq ft | 2025 @ ₹8,300/sq ft | Reduction 2013→2025 |
| ₹50 lakh | 1,190 sq ft | 1,100 sq ft | 602 sq ft | −49% |
| ₹75 lakh | 1,786 sq ft | 1,650 sq ft | 904 sq ft | −49% |
| ₹1 crore | 2,381 sq ft | 2,200 sq ft | 1,205 sq ft | −49% |
NCR flat size purchasable with fixed budget ( different source data )
And this is where the K-shaped effect becomes much more interesting: the NCR market itself has moved toward expensive housing. In 2025, NCR launched about 61,775 units, with more than 55% of new supply above ₹2.5 crore.
- Approximate education-cost comparison: 2014 → 2025
| Education expense | Typical 2014 cost | Typical 2025 cost | Approx. increase |
| Private school – annual | ₹30,000–60,000 | ₹1.0–2.0 lakh | 2.5–3.5× |
| JEE/NEET coaching – 2 years | ₹50,000–1.0 lakh | ₹2–4 lakh | 3–4× |
| Government engineering – 4 years | ₹1–2.5 lakh | ₹3–6 lakh | 2–3× |
| Good private engineering – 4 years | ₹3–6 lakh | ₹8–16 lakh | 2.5–3× |
| Government MBBS – 5½ years | ₹25,000–1 lakh* | ₹1–3 lakh* | ~2–4× |
| Private MBBS – 5½ years | ₹15–30 lakh | ₹50 lakh–₹1 crore+ | 3–4× or more |
| IIM/elite MBA – 2 years | ₹10–14 lakh | ₹20–27 lakh | ~2× |
*Government medical fees vary enormously by state and institution.
These should be treated as representative ranges rather than an official national price index, because India does not have a single consistent 2014–2025 series covering all these categories.
- Coaching is perhaps the biggest new middle-class expense. Rise in Medical education cost is much more dramatic
K 2 recovery rising cost of medical treatment and insurance 2014 to 2025
Yes. If the objective is to quantify the K-shaped recovery effect on the middle class through rising medical-treatment and health-insurance costs, the evidence from 2014–2025 is quite strong.
- Medical treatment became substantially more expensive
The best comparable NSO/NSS evidence shows the following:
| Indicator | 2014 | 2017–18 | 2025 | 2014→2025 |
| Average OOP hospitalisation cost – rural | ₹5,636 | ₹16,676 | ₹31,448 | 5.6× |
| Average OOP hospitalisation cost – urban | ₹7,670 | ₹26,475 | ₹38,688 | 5.0× |
| Increase, rural | — | +196% | +459% | +459% |
| Increase, urban | — | +245% | +404% | +404% |
The 2025 figures are from the latest NSO health survey. The urban OOP hospitalisation cost therefore increased from about ₹7,700 to ₹38,700, roughly ₹31,000 more per hospitalisation.
- The biggest evidence: the middle 40% has lost income share
World Inequality Lab estimates for 2022-23 show:
| Group | Share of national income |
| Bottom 50% | 15.0% |
| Middle 40% | 27.3% |
| Top 10% | 57.7% |
| Top 1% | 22.6% |
The striking comparison is historical:
- In 1990, middle 40% received 44.1% of national income.
- By 2022, it had fallen to 27.3%.
- Top 10% went from 33.5% → 57.7%.
Thus the middle 40%’s share fell by 16.8 percentage points, while the top 10%’s share increased by 24.2 points.
That is probably the clearest quantitative evidence of a long-term K-shaped distribution.
- Wealth inequality is even more severe
The same World Inequality Lab estimates put 2022-23 wealth shares at:
| Group | Wealth share |
| Bottom 50% | 6.4% |
| Middle 40% | 28.6% |
| Top 10% | 65.0% |
| Top 1% | 40.1% |
So the top 10% owned about 2.3 times as much wealth as the entire middle 40% (65% versus 28.6%).
These statistics are collected from various sources including AI and have not been modified to retain authenticity. May have some minor contradictions but are indicative enough.
The government must not chase the GDP alone while the social fabric is being destroyed by the skewed growth . Job creation and even fair distribution of the fruits of development must receive the due attention . The tyranny on middle class must not only end but also reversed .
8 th Pay commission is one such opportunity . PM must have alternate advisors to check degradation in living conditions of middle/ service class .
