Sarthak Ahuja, Investment Banking M&A expert, CFO, Author, and ISB Gold Medalist, explains why Rs 70 lakhs per annum has become the new middle class in today's urban India.
According to him, a gross annual pay of Rs 70 lakhs translates into Rs 50 lakhs in disposable income after Rs 20 lakhs in taxes, yielding roughly Rs 4.1 lakhs per month.
While some call it upper middle class, the income levels in different tiers above this figure in India make Rs 70 lakhs merely middle class by metro city standards.
A home loan EMI of Rs 1.7 lakhs (for a Rs 2 crore loan) and a car loan EMI of Rs 0.65 lakhs (for a Rs 20 lakhs car) comprise the bulk of monthly outgo. Add Rs 0.5 lakhs for children's international school fees and Rs 0.15 lakhs for domestic help, and one is left with roughly Rs 1 lakhs for all other expenses.
This highlights how rising living costs have redefined the concept of middle-class status in today's economic landscape, making Rs 70 lakhs the new baseline for a comfortable urban lifestyle.
