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THE EVOLUTION OF INDIA’S MIDDLE CLASS



  May 22, 2024

THE EVOLUTION OF INDIA’S MIDDLE CLASS



India’s middle class first emerged in the early 19th century, driven by British policies that created a small, educated, upper caste, English-speaking Indian elite. However, it became a significant economic force in the 21st century, drawing global attention for its consumption potential. Today, India’s middle class is multifaceted, with economic growth since the 2000s fostering the rise of both an established and an emerging middle class.

Size and Composition

Determining the size of India’s middle class varies depending on the income thresholds used. In 2012, those spending between US$2–10 per day included over 600 million people, about half of India’s population. By 2021, using a higher income band (US$17–100 per day), 432 million Indians were considered middle class, representing 31% of the population, up from 14% in 2005. The middle class includes both lower and upper segments, each with distinct spending patterns. The lower middle class, making US$2–4 daily, primarily spends on private healthcare, education, and basic consumer goods. In contrast, the upper middle class, with higher incomes, spends on luxury items and discretionary goods.

Economic and Social Dynamics

The liberalisation of the Indian economy in the early 1990s brought new high-paying jobs in finance and information technology, altering the middle-class occupational structure. This shift saw many from the established middle class moving away from traditional government jobs to the private sector. Affirmative action policies helped lower castes and the poor seize opportunities in government jobs vacated by the established middle class. Unskilled workers also found employment in the new private sector as food vendors, security guards, domestic staff, and construction workers.

Rural Inclusion

Recent policies, such as the Mahatma Gandhi National Rural Employment Guarantee Act, have boosted rural incomes, enabling rural India to enter the middle class. Some definitions suggest the rural middle class is now larger than its urban counterpart.

Political Engagement

The growth of India’s middle class is synonymous with changing political attitudes. During India’s independence struggle, the English-speaking middle class was actively engaged in politics. However, by the 1950s and 1960s, this interest waned as the size of the middle class was not significant enough to influence voting patterns. Post-liberalisation, the middle class moved into better-paying job opportunities, and by the 2000s, its expanding size made it a significant vote bank.

Economic Vulnerabilities

Economic growth has created a larger, more inclusive, and politically engaged middle class. However, this group remains vulnerable to economic downturns. The Pew Research Centre found that the Indian middle class contracted during the COVID-19 pandemic. The government’s 2022–23 Household Consumption Expenditure survey showed slow growth in household consumption expenditure, highlighting the fragile nature of middle-class economic stability. Ensuring sufficient job opportunities is crucial to prevent social unrest, as evidenced by recent agitations for affirmative action benefits.

Conclusion

India’s diverse and growing middle class is a key component of its domestic market. However, economic stability and job creation are essential to meet the aspirations of this group and prevent potential social crises. The government’s priority must be to manage the country’s evolving social and economic fabric effectively.


SRIRAM’s


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