Rise of Indian

Middle Class and

Its Impact
 Indian Middle Class
 The socioeconomic class between the working class and the upper
class, usually including professionals, highly skilled labourers, and
lower and middle management.

 Indian middle class is defined as those who can spend between $2

and $20 per day, according to Asian Development Bank.

 A recent study by CNN-IBN and the Hindustan Times suggested a

“simple consumer-based criterion” for membership of the middle
class: ownership of a telephone, a two or four-wheel (motorized)
vehicle, and a color television. Under this definition, the middle class
makes up nearly 20 per cent of the population—200m people. 
 Factors leading to the Rise of
Indian Middle Class
 Rapid growth of Indian Economy in the past few
years, which has led to rise in income levels of the
people
 Opening up of market post globalization
 Exposure to outside world and modern education,
which has shaped their thinking
All the above factors are closely inter-related
–> one of them generally has led to another.
 Impacts
 A different approach to education
 Emergence of Nuclear families
 Increasing trends of Consumerism
 Increased participation in welfare activities
Changing viewpoint of
EDUCATION
When we talk higher education, in a sense, we are talking
about the very creation and growth of a modern middle
class in post-Independent India. In the past two or three
decades, the neo-middle class, with its higher earnings,
zooming aspirations and growing confidence helped
elevate the socio-economic status of entire segments of
our population.

- Outlook India
 Affordability for higher education
 Emergence of premier institutions like the Indian
Institutes of Technology (IITs) has exposed
them to world-class educational standards
 Greater exodus to foreign universities for
pursuing PG and post-doctoral research
 Very high aspirations for children with 43%
wanting their kids to get a master’s degree and
29% a doctorate
 Emergence of NUCLEAR families
The nuclear family consists of a
married couple and their children.
 Average middle class family size of
4.3 people
 Has led to somewhat decrease in the
performance of rites and rituals
marking various events – some of
them are no longer followed, others
have become less rigid
 Decrease in household size has also led to
a decrease in the population growth rate
 Reasons for decrease in this household
size are both the disintegration of joint
families as well as various economic
reasons.
 Gradual shift to towns and urban centers from their
native villages – one of the main reasons attributed to
Urbanization
 Participation in community-based activities rather than
their own religious or native cultural activities – inter
cultural exchange is facilitated
 More autonomy to women members – increase in
women workforce
 Consumerism on the rise
 By product of increasing income levels of middle class
 Bulk buying
 Stylish Lifestyles
 More flexible and experimental in their approaches
 Positive attitude towards western trends
 Exponential growth of western trend reaching the Indian
consumer by way of the media and Indians working
abroad
 Indian consumers

Destitutes

Aspirants

Climbers
2006-07
Consuming class
2001-02
Very rich
1995-96
0 20 40 60 80 100
million households
 1991 1. Food and Grocery
2003
2003
1.
2.
Food and Grocery
Clothing
1991 2. Clothing
3. Footwear 3. Footwear
4. Consumer durable / appliances 4. Consumer durable / appliances
5. Home linen 5. Expenditure on DVDs and VCDs
6. Movies and theatre 6. Home linen
7. Eating out 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
 I’d rather have more
Saving time is more
 For
For the
the same
same amount
amount of
of time than money - 47%
important than saving grocery
grocery shopping…
shopping…
a few Rupees - 51% consumers
consumers are
are
spending
spending 20
20 %
% less
less
time
time

 Consumers
Consumers are
are
spending
spending about
about 50
50 %
%
more money in eating
more money in eating
I like to shop, but out
out
do not have time - 47% I shop closest to
my home/office - 59 %
 Protests and Welfare Activities
 Coming up of NGOs
 Greater say in protests and public demonstrations
 Nation-wide movements (eg Narmada Bachao Andolan)

These have led to the government to account for its

citizenry .
 Middle class – Not an Urban
Phenomenon alone
The rural middle class has come into prominence with the emergence of agro-
mercantile class in rural pockets .

 More number of people engaging into the manufacturing sector

 Investments in the urban economy besides stakes in agriculture

 The rural retail market estimated to be Rs 1.25 trillion , and its growth is
in double digits (whereas, its in single digits in major cities)

 Increased participation in village-level institutions like Gram Sabha –

participating in decision-making processes
 Criticisms of the emerging middle
class
 Urban middle class not interested in mainstream political
matters
 Some pitfalls owing to increased consumerism – rising
pollution levels, increase in waste generation, etc.
 Don’t care attitude – fledgling education system blamed
on the mass exodus of trained professionals to foreign
lands thereby depriving India of their valuable service
 Generally considered anti-poor , blaming the lower
classes for their current state
Common statement: ’the poor and hungry, they are used to
it.’
 Self-centric ideology on the rise
 What is in store for Future ?
 Consumerism set to grow further , main areas being
Banking, Electricity, Telecommunication sector and
Beauty Industries Sector
 Health and Education will be key spending areas ; may
even take precedence over consumerism
 Increasing Purchasing Power Parity (PPP) will drive
India’s GDP , eventually contributing to nation’s
economic growth
 Participation in policy-making and issues concerning the
nation remains to be seen
 Over the next two decades, India’s
middle class will grow to more than
40 per cent and create the world’s 5th
largest consumer market.

- McKinsey Quarterly 2007


References
India’s New Middle Class : Democratic Politics in an Era of Economic Reform by Leela
Fernandes
 Ablett, Jonathan, Baijal, Aadarsh et al. "The Bird of Gold: The Rise of India.s Consumer
Market." McKinsey Global Institute Report, May 2007, (available at:
http://www.mckinsey.com/mgi/publications/india_consumer_market/index.asp)
 Bardhan, Pranab. "The Political Economy of Development in India." Black-well Publishing,
1984
 Das, Gurcharan. "India.s Growing Middle Class." The Globalist, November 5, 2001
 Deaton, Angus and Kozel, Valerie. "Data and Dogma: The Great Indian
 Poverty Debate." RPDS Working Paper, Princeton University, January 2005
 Dempster, A. P., Laird, N. M. and Rubin, D. B. "Maximum Likelihood from
 Incomplete Data via the EM Algorithm." Journal of the Royal Statisticial Society. Series B
(Methodological), 39(1), 1977, pp. 1-38
 Hastie, Trevor, Tibshirani, Robert and Friedman, Jerome. "Elements of Statistical Learning:
Data Mining, Inference and Prediction." Springer Series in Statistics, 2001
 India Brand Equity Foundation (IBEF). "Economic Indicators: India’s Middle Class Dream
Takes Shape." 2005 (available at:
http://www.ibef.org/artdisplay.aspx?cat_id=391&art_id=5788)
 Indiastat (available at: http://www.indiastat.com)
 NCAER Report. "The Great Indian Market." 2005 (Preview slides available at:
http://www.ncaer.org/downloads/PPT/TheGreatIndianMarket.pdf )
 Sridharan, E. "The Growth and Sectoral Composition of India.sMiddle Class:
Its Impact on the Politics of Economic Liberalization." India Review, 3(4), pp. 405-428, 2004
Yours sincerely

Sai Charan
MBA (I.B.)
Thank You !!

Any Questions ??