A decade of CPI-IW inflation alongside salaried wages from FY 2014-15 to FY 2024-25 with markers for demonetisation in November 2016 and the COVID lockdown in March 2020, demonstrating that real wages for the salaried class fell below price growth around demonetisation, hit bottom during the pandemic, and have not recovered.
The salaried Indian got poorer
A decade of the working-class price index alongside the salaried wage. Prices rose 64%. Wages did not keep up. The crossover happened around demonetisation.
Between FY 2014-15 and FY 2024-25, the cost of living for the working class — measured by CPI-IW, the index the government itself uses to compute Dearness Allowance for crores of public-sector employees — rose 64%. Urban salaried wages, in nominal terms, rose only 41%. The difference is the real wage decline. The chart shows when it happened: the crossover between price and wage growth landed during the demonetisation and GST years; the bottom was during COVID; the recovery since has not closed the gap. By way of context, prices had already doubled in the decade before this chart begins. So the salaried class has been losing ground for longer than the data here directly shows.
CPI-IW vs salaried wages, FY 2014-15 to FY 2024-25
All indexed to 100 in FY15. Vertical markers show demonetisation (Nov 2016) and the COVID lockdown (Mar 2020). Hover any point for values.
The story of the decade. Three things happened in sequence. One: the crossover. Wages and prices were tracking together in FY15. By the time the new salaried-wage survey resumed measuring in FY 2017-18, urban wages were already 12 points behind CPI on the indexed scale. Between those two points sat demonetisation (Nov 2016) and the GST rollout (Jul 2017). No comparable salaried-wage data exists for those years, but by the time PLFS could measure again, the gap had opened. Two: COVID widened the gap. Real urban wages fell from −10% in FY18 to −20% by FY 2021-22. Three: partial recovery, no closure. By FY 2023-24, real wages had clawed back to −11% — better than the pandemic bottom, but still well below where they had started a decade earlier.
"Working class" here is a statistical category — industrial workers and the salaried broadly. CPI-IW is the index used to revise Dearness Allowance twice a year for crores of central and state government employees, defence personnel, PSU staff, and pensioners. If the index is honest, the conclusion is unavoidable. If it understates inflation (see further down), the picture is worse.
₹100 from past years, valued in today's rupees
For each year on the x-axis, what ₹100 you held then would buy today. The curve shows how much purchasing power has eroded between then and now. Hover for exact values.
About the methodology break. CPI-IW is plotted annually because that data exists annually. Wage data is from two different surveys: there is no comparable salaried-wage series for FY13 through FY17. The FY15 wage placement on the chart is anchored to where the CPI line is at FY15, on the assumption that wages and prices had been tracking together in the immediately preceding period. FY 2017-18 onwards uses Q4 (April–June) average earnings for regular wage / salaried workers from the seven annual PLFS reports. The shaded band marks the FY15–FY17 measurement gap. The dashed connector from FY15 to FY18 is for visual reference only.
The case that CPI is rigged is not paranoid. It rests on documented features of how the index is built. None of these are conspiracy theories — they come from findings by economists working with government data, and in several cases from the government's own technical committees.
- The basket lags by a decade or more. Until January 2026, CPI-Combined weights were derived from the Household Consumption Expenditure Survey of 2011-12 — twelve-year-old spending patterns used to price 2024 inflation.
- The HCES 2017-18 round was suppressed. The government shelved the survey citing data quality. Leaked summary findings suggested it would have shown falling rural consumption and rising poverty — exactly the kind of finding that ought to update the inflation basket.
- Housing is under-represented for the urban middle class. CPI-IW housing reflects rents in selected industrial-worker localities; CPI-Combined gives housing 10.1% weight and only for urban. Actual middle-class rent and EMI burden has compounded substantially faster.
- Healthcare weight is 5.9% in CPI-Combined. For an urban salaried household with one chronic condition or one hospitalisation a year, actual healthcare share is closer to 10–15%. Medical inflation has run 12–14% annually for a decade.
- Education weight is 4.5%. For a family with school-age children, the actual share of household budget going to private schools and undergraduate education is several multiples of this, and private fee inflation has compounded above 10% for years.
- Fixed baskets cannot capture forced substitution. When rent rises 15% and the basket fixes the rent share at 10%, the index understates the household's real hit — there is no cheaper substitute for shelter.
- The 2024 base revision dropped food weight from 46% to 40% exactly when food inflation was running hot. The COICOP-2018 reclassification justification is real; the timing optics are also real.
The honest reading: the −11% real wage decline shown above is computed using the most generous available deflator. Using a basket more representative of urban middle-class spending — heavier on rent, education, healthcare — the decline is likely larger. The wage stagnation is real either way. The measurement question is whether it is bad or very bad.
This is not a story about one demographic slice losing out while another gains. The salaried class straddles the entire middle of the income distribution. It includes government employees from Group D to Group A, defence personnel, school and college teachers, hospital staff, banking and insurance workers, IT services employees, manufacturing technicians, and most of the private formal workforce. About 22% of urban workers and 14% of rural workers fell into this category in PLFS 2023-24 — roughly 100 million workers, supporting perhaps 400 million household members.
When this group's real wages stall or fall for a decade, the consumption story the macro accounts depend on cannot hold up. Private final consumption growth slows. Two-wheeler sales, entry SUV sales, mass-market FMCG growth, real estate in tier-2 cities — every consumer-facing indicator that watches this segment has been weak for years, and the wage data explains why. Premiumisation at the top can mask aggregate consumption for a while; eventually it cannot.
The political point is straightforward. A government can take credit for headline GDP and for record stock indices. It cannot also claim that the salaried class has prospered, because by the government's own price and wage data, that class has lost ground over the period it has been in office. Both claims may be politically convenient; they are not jointly compatible with arithmetic.
This analysis covers regular wage / salaried workers — about 22% of urban and 14% of rural workers in PLFS 2023-24. The remainder is self-employed (~58%) or in casual labour (~20%). Self-employed real earnings have done worse over the same window: the Economic Survey 2024-25 notes that for both self-employed and salaried workers, real earnings in FY 2023-24 had not yet recovered to FY 2017-18 levels. Casual rural wages have done modestly better, helped by MGNREGA indexation, though they remain far below subsistence in absolute terms.
The CPI-IW values from FY15 to FY21 are on Labour Bureau base 2001=100; FY22 onwards use base 2016=100, linked via the documented factor 2.88. The wage anchor at FY15 is back-extrapolated from the EUS 68th round (FY12) using CPI-IW growth; FY18 to FY24 are PLFS Q4 (April–June) all-salaried averages from the annual reports. Extending the chart further back than FY15 is possible — prices doubled in the decade before this window begins — but the political story this decade tells is sharper, the wage measurements are more comparable, and the policy shocks that drove the divergence all sit within these ten years.