India’s income pyramid is undergoing a significant shift, with millions of households moving from low-income brackets to middle- and higher-income brackets.
Data from the NSE’s Red Herring Prospectus (RHP) shows that households earning at least ₹8 lakh per annum accounted for 34.38% of India’s population in FY26 and this share is projected to rise to 42.74% by FY31, indicating a widening pool of households with greater capacity for discretionary spending, saving and investment.
How is household income structure changing in India?
Household income data shows a clear shift away from the lowest income category.
| Annual household income category | FY21: Households (crores) | FY21: Population share (%) | FY26: Households (crores) | FY26: Population share (%) | FY2031: Households (crores) | FY2031: Population share (%) |
| Low income: ₹3 lakhs | 13.5 | 42.99% | 11.9 | 34.10% | 9.8 | 25.86% |
| Lower middle class: ₹3–8 lakhs | 9.6 | 30.57% | 11.0 | 31.52% | 11.9 | 31.40% |
| Upper middle class: ₹8–10 lakhs | 5.3 | 16.88% | 7.4 | 21.20% | 9.8 | 25.86% |
| High income: > ₹10 lakhs | 3.0 | 9.55% | 4.6 | 13.18% | 6.4 | 16.89% |
| Total households | 31.4 | 34.9 | 37.9 |
*Source: NSE IPO RHP; The numbers in crores are the approximate number of households and the percentages are the share of the total population of India represented by each income group.
In FY21, there were approximately 31.4 crore households in India, of which 13.5 crore were in the low income category, earning less than ₹3 million per year. This number dropped to 11.9 crore by FY26 and is projected to decline further to 9.8 crore by FY31.
₹The 3-8 lakh segment is likely to remain broadly stable. The number of households may rise from 11 crore in FY26 to 11.9 crore in FY31. However ₹8-10 million households could grow from 7.4 crore in FY26 to 9.8 crore by FY31, increasing the population share from 21.20% to 25.86%.
High income segment, where annual household income is higher ₹10 lakh is also expected to increase significantly from 4.6 crore households in FY26 to 6.4 crore by FY31. Its share of the population may increase from 13.18% to 16.89%.
Overall, the data indicates a clear shift towards higher income groups. ₹The 8 million-odd segments together grew from 12 crore households in FY26 to 16.2 crore by FY31.
What does this shift mean for household well-being?
This movement is not just about increasing consumption. Income growth can also increase the amount households can save and invest.
RHP, citing MoSPI data, noted that gross savings of households and NPISH (non-profit institutions serving households) reached 21.70% of GDP in FY25.
This financialization is already visible beyond India’s largest cities. Mutual fund AUM in B30 cities nearly tripled from ₹5.36 trillion in March 2021 ₹In March 2026, its share in industry AUM increased from 17.06% to 18.86%.
Is the wealth shift widespread?
Not really. Wealth remains highly concentrated. RHP estimates that the top 10% of adults – about 14.6 crore people – will own about 65% of total wealth in 2025.
However, a combination of rising incomes, digital access and financial literacy is steadily expanding asset ownership. As noted, a larger share of households’ additional financial savings is allocated to market instruments, reflecting a structural shift from physical to financial assets.
Disclaimer: This is for educational/informational purposes only and should not be construed as any investment advice. Always consult a SEBI registered advisor before taking any investment decisions.