62% Indians Say Salary Growth Can't Beat Inflation, 70% Young Adults Worried: Report

Salary hikes may be putting more money in employees' bank accounts, but they are not necessarily making life more affordable. As rent, household expenses and other financial commitments pile up, a majority of working Indians fear their income will not keep pace with future inflation. According to Grant Thornton Bharat's India's Financial Resilience Report 2026, 62 per cent believe their income growth is insufficient to keep pace with future inflation. The proportion rises to 70 per cent among those aged 25-34, the largest age group in the survey. The concern extends beyond the biggest cities. Around 71 per cent of respondents in Tier 2 cities and 70 per cent in Tier 3 cities said their income growth may not be enough to offset inflation. In Tier 1 cities, the corresponding figure was around 61 per cent.Ramkumar Subramanian, Partner, Grant Thornton Bharat, told NDTV that the gap between wage growth and rising living costs was putting pressure on the middle class. "Yes, the divergence between stagnant real wage growth and escalating living costs is triggering a severe middle-class squeeze. While nominal incomes increase on paper, runaway urban expenses-specifically house rents, education, and healthcare-have significantly eroded real purchasing power," he said.Also Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better PaySubramanian added, "Consequently, professionals find themselves trapped in a deficit where their standard of living deteriorates despite nominal pay hikes. When core living expenses consistently outpace regular increments, the middle class is forced to compromise its savings cushion, shifting the economic engine from wealth creation to credit-dependent survival."Most Workers Earn Below Rs 15 LakhThe report, based on 528 valid responses collected between November 2025 and February 2026, found that 58 per cent of respondents earn less than Rs 15 lakh annually. Another 30 per cent earn between Rs 15 lakh and Rs 40 lakh, while only 12 per cent earn more than Rs 40 lakh.Income increases are also relatively modest. Nearly 62 per cent of respondents reported annual income growth of between 4 and 12 per cent. Only around 6 per cent reported increases exceeding 20 per cent. The pressure is especially visible among younger workers. About 77 per cent of respondents below 34 earn less than Rs 15 lakh a year.The report also points to a perceived mismatch between skills and salaries. Around 82 per cent of respondents believe their compensation does not adequately reflect their skill levels. Even among those who rated themselves as experts, 85 per cent felt underpaid.Family Responsibilities Leave Less Room For SavingsThe financial strain is not limited to individual expenses. Nearly three out of four respondents, or 74 per cent, support at least one family member. Around 32 per cent identify themselves as the sole financial provider in their household.The burden varies by gender. About 41 per cent of male respondents said they were the sole earners, compared with 15 per cent of women. The report also found that 76 per cent of men supported between one and five family members.Housing costs add to the pressure, particularly in major cities. Overall, 44 per cent of respondents live in rented accommodation, while 29 per cent live in family-owned homes and 27 per cent own their homes.In Tier 1 cities, 45 per cent of respondents live in rented apartments and 28 per cent in owned homes. In Tier 2 cities, 42 per cent rent and 33 per cent own their homes. In Tier 3 cities, family-owned housing is more common, with around 42 per cent living in such homes.Emergency Funds May Not Last LongThe survey suggests that having an emergency fund does not necessarily mean being prepared for a prolonged financial setback.Around 84 per cent of respondents said they had fully or partially funded emergency savings. Yet nearly 83 per cent said their financial buffer would sustain them for less than a year if their income stopped.However, the bigger concern is retirement. Around 83 per cent of respondents said they were not prepared for retirement. Among those below 34, the proportion rose to 92 per cent. Even among respondents aged 35-54, 77 per cent reported inadequate retirement preparedness.