The Simple Business Man

Understanding how salaries have evolved in India requires examining both nominal wage growth and the real value of that income over time, especially in relation to inflation. From 2006 to 2024, India’s economy has undergone major shifts — from high-growth years to pandemic-led slowdowns — all influencing earnings and cost of living. But has the average salary truly kept up with inflation?

Average Salary Growth: A Mixed Picture

In 2006, the average annual salary for a working professional in India hovered around ₹1.5–₹2 lakh. By 2024, this figure has risen to approximately ₹4.5–₹5 lakh per annum, based on estimates from government and private employment reports. In urban centers and the tech sector, this average is significantly higher — around ₹7–₹9 lakh — but rural and informal sector wages remain lower.

Over 18 years, this reflects an approximate 3x increase in average income. On paper, this appears promising, but real income must be assessed after accounting for inflation.

Inflation in India: The Silent Eroder

India’s average annual inflation rate between 2006 and 2024 has been roughly 6–7%. Certain years like 2009, 2012–13, and 2022 saw spikes due to global financial crises, food inflation, and supply chain disruptions. Using the RBI’s Consumer Price Index (CPI), prices of essential goods and services have more than tripled over this period.

For example, the price of 1 litre of milk in 2006 was around ₹20; today it costs ₹55–₹60. Rental, fuel, education, and healthcare expenses have also seen steep increases — often outpacing income growth.

Real Wage Growth: Falling Short?

Adjusting for inflation, the real growth in wages has been modest. While salaries have increased, they haven’t always translated into greater purchasing power. A key reason is job polarization — skilled workers in IT, finance, and tech have seen solid income gains, while wages in agriculture and manufacturing have remained stagnant or even declined in real terms.

Moreover, India’s growing gig economy, contract work, and underemployment issues mean that while more people are working, not all are earning sustainable incomes that beat inflation.

The Road Ahead

To ensure future salary growth keeps pace with or exceeds inflation, several things are vital: sustained GDP growth, higher productivity, better education and skill development, and labor reforms. Government schemes like PMKVY and initiatives under Digital India and Make in India are steps in the right direction but need stronger implementation.

Conclusion

Between 2006 and 2024, the average salary in India has risen steadily — but when adjusted for inflation, the growth in real income has been uneven and often insufficient for many Indians. Bridging this gap will require inclusive economic policies that benefit all segments of society.