While nations like China, the US, and Singapore forge ahead with ambitious strategies, India risks being left in the dust, Wisdom Hatch founder Akshat Shrivastava warned in a recent post.
“In China, even an average city outpaces Indian metros in infrastructure. In the US, the debate is about getting more meritorious people who can build firms and create jobs. Singapore’s economy has advanced so far that it now rejects multimillionaires from settling there. Thailand and Vietnam are already ahead in tourism, and in 15 years, India won’t even come close,” Shrivastava wrote on X.
Shrivastava points out that no Indian leaders are addressing critical issues such as sensible taxation, rolling back freebies and reservations, or boosting exports. Instead, the focus remains on taxing the middle class to fund subsidies — a short-sighted strategy that risks further economic stagnation.
"Our game-plan seems to be: tax people to death. Use their money to support freeloaders. And, then expect them to stay and build the nation".
Former Infosys CFO TV Mohandas Pai echoes Shrivastava’s concerns, calling for bold reforms in the upcoming Budget 2025-26. Pai has flagged the rising tax burden on India’s middle class, which has seen individual tax collections soar by 114% in just three years—from ₹4.8 lakh crore in FY21 to ₹10.4 lakh crore in FY24.
“Pl give relief to IT-paying honest middle class. Today centre and state spend more than ₹900,000 crore of subsidies for the bottom 60%, but the middle class bears most of the tax burden, getting poorer, ignored, and very, very angry,” Pai posted.
To ease this strain, Pai suggests revamping tax slabs to reduce the burden on honest taxpayers and focusing on clearing tax disputes, with ₹12.5 lakh crore currently locked in litigation. “Pl stop tax terrorism as promised in 2014,” he added.
Shrivastava and Pai’s warnings resonate with findings from Marcellus Investment Managers, which highlight how India’s middle class is being squeezed from all sides. Automation is eliminating jobs, corporate earnings have slumped, and household savings are at a 50-year low. Rising household debt and stagnant incomes have left families with less disposable income, dragging down consumption.
The economic strain on the middle class is reflected in declining consumption, which has historically driven India’s economy. FMCG companies are now flagging slowing growth. Nestlé India MD Suresh Narayanan noted, “The growth in the food and beverages sector, which used to be in double digits, is now down to 1.5% to 2%.”
Similarly, Hindustan Unilever CEO Rohit Jawa reported muted urban demand, particularly in larger cities. Inflation, high interest rates, and shrinking discretionary income are eroding the spending power of a segment that once sustained economic growth.