If you look closely at India’s macroeconomic indicators — such as the growth rate, inflation numbers, etc., — they project a story of robust financial discipline and economic growth. However, the average household budget portrays a far more fragile reality. Over the last 12 years, the vital link between the wealth created by the economy and individual purchasing power — the goods and services one can buy with one’s income — has broken.

Given wages (after inflationary erosion is accounted for) have not grown across livelihoods, households have been forced to meet consumption expenses through borrowings. Families are now increasingly relying on credit card debt, personal loans, and loans raised against gold to fill the gap between growing expenses and stagnant incomes. This underlines a wage-debt squeeze — and borrowings must be repaid from the same, constrained incomes — that is forcing the working class to walk a precarious financial tightrope.

The growing financial strain on the Indian working class cannot be dismissed merely as a temporary external price shock — resulting from, say, the energy supply disruptions because of the war in West Asia. Rather, it is a realignment in how national wealth is generated and distributed. While the economy has seen a sustained phase of growth and stock-market indices have risen alongside, the mechanism through which the national wealth generated is transmitted to households has broken down.

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When such a structural wage gap is sustained over a long period, it inevitably shifts the macroeconomy. This lack of income growth and the consequent pressure on households directly explains the fall in India’s net household........

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