Current Rise of Indian Middle Class and Its Impact

8/8/2019 Current Rise of Indian Middle Class and Its Impact

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Rise of IndianMiddle Class and

Its Impact


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Indian Middle ClassIndian Middle Class The socioeconomic class between the working class and the upperThe socioeconomic class between the working class and the upper

class, usually including professionals, highly skilled labourers, andclass, usually including professionals, highly skilled labourers, andlower and middle management.lower and middle management.

Indian middle class is defined as those who can spend between $2Indian middle class is defined as those who can spend between $2and $20 per day, according to Asian Development Bank.and $20 per day, according to Asian Development Bank.

A recent study by CNNA recent study by CNN--IBN and the Hindustan Times suggested aIBN and the Hindustan Times suggested asimple consumersimple consumer--based criterion for membership of the middlebased criterion for membership of the middleclass: ownership of a telephone, a two or fourclass: ownership of a telephone, a two or four--wheel (motorized)wheel (motorized)

vehicle, and a color television. Under this definition, the middle classvehicle, and a color television. Under this definition, the middle classmakes up nearly 20 per cent of the populationmakes up nearly 20 per cent of the population200m people.200m people.


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Factors leading to the Rise ofFactors leading to the Rise of

Indian Middle ClassIndian Middle Class

Rapid growth of Indian Economy in the past fewRapid growth of Indian Economy in the past fewyears, which has led to rise in income levels ofyears, which has led to rise in income levels of

the peoplethe people

Opening up of market post globalizationOpening up of market post globalization

Exposure to outside world and modernExposure to outside world and modern

education, which has shaped their thinkingeducation, which has shaped their thinkingAll the above factors are closely interAll the above factors are closely inter--relatedrelated > one of them generally has led> one of them generally has ledto another.to another.


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Changing viewpoint ofChanging viewpoint of

EDUCATIONEDUCATIONWhen we talk higher education, in a sense, we are talkingWhen we talk higher education, in a sense, we are talking

about the very creation and growth of a modern middleabout the very creation and growth of a modern middleclass in postclass in post--Independent India. In the past two or threeIndependent India. In the past two or threedecades, the neodecades, the neo--middle class, with its higher earnings,middle class, with its higher earnings,

zooming aspirations and growing confidence helpedzooming aspirations and growing confidence helpedelevate the socioelevate the socio--economic status of entire segments ofeconomic status of entire segments of

our population.our population.

-- Outlook IndiaOutlook India


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Affordability for higher educationAffordability for higher education

Emergence of premier institutions like the IndianEmergence of premier institutions like the Indian

Institutes of Technology (IITs) has exposedInstitutes of Technology (IITs) has exposedthem to worldthem to world--class educational standardsclass educational standards

Greater exodus to foreign universities forGreater exodus to foreign universities forpursuing PG and postpursuing PG and post--doctoral researchdoctoral research

Very high aspirations for children with 43%Very high aspirations for children with 43%wanting their kids to get a masters degree andwanting their kids to get a masters degree and29% a doctorate29% a doctorate


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Emergence of NUCLEAR familiesEmergence of NUCLEAR families

The nuclear family consists of aThe nuclear family consists of a

married couple and their children.married couple and their children.

Average middle class family size ofAverage middle class family size of

4.3 people4.3 people Has led to somewhat decrease in theHas led to somewhat decrease in the

performance of rites and ritualsperformance of rites and ritualsmarking various eventsmarking various events some ofsome ofthem are no longer followed, othersthem are no longer followed, othershave become less rigidhave become less rigid


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Decrease in household size has also led toDecrease in household size has also led toa decrease in the population growth ratea decrease in the population growth rate

Reasons for decrease in this householdReasons for decrease in this householdsize are both the disintegration of jointsize are both the disintegration of jointfamilies as well as various economicfamilies as well as various economic

reasons.reasons.


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Gradual shift to towns and urban centers from theirGradual shift to towns and urban centers from theirnative villagesnative villages one of the main reasons attributed toone of the main reasons attributed to

UrbanizationUrbanization Participation in communityParticipation in community--based activities rather thanbased activities rather than

their own religious or native cultural activitiestheir own religious or native cultural activities interintercultural exchange is facilitatedcultural exchange is facilitated

More autonomy to women membersMore autonomy to women members increase inincrease inwomen workforcewomen workforce


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Consumerism on the riseConsumerism on the rise

By product of increasing income levels of middle classBy product of increasing income levels of middle class

Bulk buyingBulk buying

Stylish LifestylesStylish Lifestyles More flexible and experimental in their approachesMore flexible and experimental in their approaches

Positive attitude towards western trendsPositive attitude towards western trends

Exponential growth of western trend reaching the IndianExponential growth of western trend reaching the Indian

consumer by way of the media and Indians workingconsumer by way of the media and Indians workingabroadabroad


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Indian consumers

0 20 40 60 80 100

Very rich

Consuming class

Climbers

Aspirants

Destitutes

million households

2006-07

2001-02

1995-96


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1. Food and Grocery

2. Clothing

3. Footwear

4. Consumer durable / appliances

5. Home linen

6. Movies and theatre

7. Eating out

1991 1. Food and Grocery2. Clothing

3. Footwear

4. Consumer durable / appliances

5. Expenditure on DVDs and VCDs

6. Home linen

7. Home accessories

8. Accessories

9. Gifts

10. Take-away/ Pre cooked / RTE meals

11. Movies and theatre

12. Eating out

13. Entertainment parks

14. Mobile phones and service

15. Household help

16. Travel packages

17. Club membership

18. Computer Peripheral & Internet Usage

2003


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For the same amount ofFor the same amount ofgrocery shoppinggrocery shopping

consumers areconsumers arespending 20 % lessspending 20 % lesstimetime

Consumers areConsumers arespending about 50 %spending about 50 %more money in eatingmore money in eating

outout

Id rather have more

time than money - 47%

I shop closest to

my home/office - 59 %

Saving time is more

important than saving

a few Rupees - 51%

I like to shop, butdo not have time - 47%


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Protests and Welfare ActivitiesProtests and Welfare Activities

Coming up of NGOsComing up of NGOs

Greater say in protests and public demonstrationsGreater say in protests and public demonstrations

NationNation--wide movements (eg Narmada Bachao Andolan)wide movements (eg Narmada Bachao Andolan)

These have led to the government to account for itsThese have led to the government to account for itscitizenry .citizenry .


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Middle classMiddle class Not an UrbanNot an Urban

Phenomenon alonePhenomenon aloneThe rural middle class has come into prominence with the emergence ofThe rural middle class has come into prominence with the emergence ofagroagro--mercantile class in rural pockets .mercantile class in rural pockets .

More number of people engaging into the manufacturing sectorMore number of people engaging into the manufacturing sector

Investments in the urban economy besides stakes in agricultureInvestments in the urban economy besides stakes in agriculture

The rural retail market estimated to be Rs 1.25 trillion , and itsThe rural retail market estimated to be Rs 1.25 trillion , and itsgrowth is in double digits (whereas, its in single digits in majorgrowth is in double digits (whereas, its in single digits in major

cities)cities)

Increased participation in villageIncreased participation in village--level institutions like Gram Sabhalevel institutions like Gram Sabha participating in decisionparticipating in decision--making processesmaking processes


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Criticisms of the emerging middleCriticisms of the emerging middle

classclass Urban middle class not interested in mainstream politicalUrban middle class not interested in mainstream political

mattersmatters Some pitfalls owing to increased consumerismSome pitfalls owing to increased consumerism risingrising

pollution levels, increase in waste generation, etc.pollution levels, increase in waste generation, etc. Dont care attitudeDont care attitude fledgling education system blamedfledgling education system blamed

on the mass exodus of trained professionals to foreignon the mass exodus of trained professionals to foreignlands thereby depriving India of their valuable servicelands thereby depriving India of their valuable service

Generally considered antiGenerally considered anti--poor , blaming the lowerpoor , blaming the lower

classes for their current stateclasses for their current stateCommon statement: the poor and hungry, they are used toCommon statement: the poor and hungry, they are used toit.it.

SelfSelf--centric ideology on the risecentric ideology on the rise


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What is in store for Future ?What is in store for Future ?

Consumerism set to grow further , main areas beingConsumerism set to grow further , main areas beingBanking, Electricity, Telecommunication sector andBanking, Electricity, Telecommunication sector andBeauty Industries SectorBeauty Industries Sector

Health and Education will be key spending areas ; mayHealth and Education will be key spending areas ; mayeven take precedence over consumerismeven take precedence over consumerism

Increasing Purchasing Power Parity (PPP) will driveIncreasing Purchasing Power Parity (PPP) will driveIndias GDP , eventually contributing to nationsIndias GDP , eventually contributing to nations

economic growtheconomic growth

Participation in policyParticipation in policy--making and issues concerning themaking and issues concerning thenation remains to be seennation remains to be seen


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Over the next two decades, IndiasOver the next two decades, Indiasmiddle class will grow to more thanmiddle class will grow to more than

40 per cent and create the worlds 540 per cent and create the worlds 5thth

largest consumer market.largest consumer market.

-- McKinsey Quarterly 2007McKinsey Quarterly 2007


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ReferencesReferences Indias New Middle Class : Democratic Politics in an Era of Economic ReformIndias New Middle Class : Democratic Politics in an Era of Economic Reform

by Leela Fernandesby Leela Fernandes Ablett, Jonathan, Baijal, Aadarsh et al. "The Bird of Gold: The Rise of India.sAblett, Jonathan, Baijal, Aadarsh et al. "The Bird of Gold: The Rise of India.s

Consumer Market." McKinsey Global Institute Report, May 2007, (available at:Consumer Market." McKinsey Global Institute Report, May 2007, (available at:http://www.mckinsey.com/mgi/publications/india_consumer_market/index.ashttp://www.mckinsey.com/mgi/publications/india_consumer_market/index.aspp))

Bardhan, Pranab. "The Political Economy of Development in India." BlackBardhan, Pranab. "The Political Economy of Development in India." Black--wellwellPublishing, 1984Publishing, 1984

Das, Gurcharan. "India.s Growing Middle Class." The Globalist, November 5,Das, Gurcharan. "India.s Growing Middle Class." The Globalist, November 5,20012001

Deaton, Angus and Kozel, Valerie. "Data and Dogma: The Great IndianDeaton, Angus and Kozel, Valerie. "Data and Dogma: The Great Indian Poverty Debate." RPDS Working Paper, Princeton University, January 2005Poverty Debate." RPDS Working Paper, Princeton University, January 2005 Dempster, A. P., Laird, N. M. and Rubin, D. B. "Maximum Likelihood fromDempster, A. P., Laird, N. M. and Rubin, D. B. "Maximum Likelihood from Incomplete Data via the EM Algorithm." Journal of the Royal StatisticialIncomplete Data via the EM Algorithm." Journal of the Royal Statisticial

Society. Series B (Methodological), 39(1), 1977, pp. 1Society. Series B (Methodological), 39(1), 1977, pp. 1--3838 Hastie, Trevor, Tibshirani, Robert and Friedman, Jerome. "Elements ofHastie, Trevor, Tibshirani, Robert and Friedman, Jerome. "Elements of

Statistical Learning: Data Mining, Inference and Prediction." Springer Series inStatistical Learning: Data Mining, Inference and Prediction." Springer Series in

Statistics, 2001Statistics, 2001 India Brand Equity Foundation (IBEF). "Economic Indicators: Indias MiddleIndia Brand Equity Foundation (IBEF). "Economic Indicators: Indias Middle

Class Dream Takes Shape." 2005 (available at:Class Dream Takes Shape." 2005 (available at:http://www.ibef.org/artdisplay.aspx?cat_id=391&art_id=5788http://www.ibef.org/artdisplay.aspx?cat_id=391&art_id=5788))

Indiastat (available at:Indiastat (available at: http://www.indiastat.comhttp://www.indiastat.com)) NCAER Report. "The Great Indian Market." 2005 (Preview slides available at:NCAER Report. "The Great Indian Market." 2005 (Preview slides available at:

http://www.ncaer.org/downloads/PPT/TheGreatIndianMarket.pdf )http://www.ncaer.org/downloads/PPT/TheGreatIndianMarket.pdf ) Sridharan, E. "The Growth and Sectoral Composition of India.sMiddle Class:Sridharan, E. "The Growth and Sectoral Composition of India.sMiddle Class:

Its Impact on the Politics of Economic Liberalization." India Review, 3(4), pp.Its Impact on the Politics of Economic Liberalization." India Review, 3(4), pp.--


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Yours sincerely

Sai Charan

MBA (I.B.)


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ThankY

ou !!ThankY

ou !!

Any Questions ??Any Questions ??

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Current Rise of Indian Middle Class and Its Impact