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(Dutch: Koninklijke Luchtvaart Maatschappij, literally Royal Aviation Company
GROWTH OF THE INDIAN MIDDLE CLASS
The upper crust of Indian society consists of about 20 million people living in 3.8 million households with an annul income of over Rs.10 lakhs and over per household. Interestingly this group consists of 36 billionaires whose total income is of $ 191 billion, which is one-fourth of India’s GDP. National Council of Applied Economic Research (NCAER) made a study entitled "The Great Indian Middle Class”, in which it has defined the middle class in terms of annual income ranging between a Rs 2-10 lakhs. Indian middle class has been growing in numbers as a reflection of the process of development in the last five decades. The existence of a huge middle class had a very strong impact on increasing the demand for consumer durables viz., refrigerators, washing machines, coolers, air conditioners, mopeds, scooters, motor cycles, cars etc. This prompted the industrialists to make a systematic study of the size of the middle class.

Size of the Indian Middle class

7 (58) 0.4 million accounting for a total population of 153 million.00.Rs 10.4 (153) 3.195) defined as households earning Rs 2-10 lakhs annually forms increased over 15 per cent per annum.7 0.4 (731) 41. they are expected to grow to 28.9 12. Between 1995-96 and 2001·02.000--Rs 200.3 (405) 28. the total middle class households increased forms 4.0 Publication of ‘The great Indian Middle Class’ has made the following points 1.Source: NCEAR(2006).9 5.4 (618) 75.an increase by 138 per cent.9 21.2 (1.5 million to 10.8 1. The Deprived Aspirers Middle Class Rich Total Below Rs 90. Middle Class.000 .02 2009-lO Distribution of households % The 2001·02 71.8 (4) 188. By 2009-10.00.4 100.3 33.8 (20) 221.000 Rs90.000 Over Rs 10 lakhs 135.9 (1. The great Indian Middle Class Note: Figures in brackets indicate population of households in million Class Income range Share of house holds (millions) 2001.7 million .7 100.014) 114.000 Rs 2.0 2009·10 51. .3 (22) 10.

7 million in 2001-02 to 28. growth of middle class is more or less an urban phenomenon. the size of the middle class will increase from 10. big bungalows. Class Size of Different Income Classes in Rural and Urban Areas Income Share of urban households Share of Rural households Range % 2001-02 18. This class buys high class durable goods . At the bottom of the middle class tier is the category defined as 'seekers' who have just moved into tlle middle class bracket with income Rs 2·5 lalffis.4 households by 2009-10 .2 Deprived Below Rs.4 per cent. .9 per cent. 4. 6.7 million households with an annual income Rs 5·10 lakhs. A large majority of them (50 per cent of such households own better quality cars. Urban households account for nearly two-third of the total households and rural households are a poor one-third. There is the category referred to as 'strivers' numbering 1. but is expected to rise to 3.8 % 2009-10 84.8 million households in 200102. 5. larger apartments and better quality refrigerators. 3. They are growing at the fast rate of 18 per cent annually.2. This group of nearly 9 million households are the prinlary buyers of most 'durable goods and services.8 million by 2009-10.8 2001-02 81.2 2009-10 15.1 per cent per annum and the distribution of income in favour of the middle class and rich households.average growth rate 12. this process is being fuelled Consequently. As a result of economic prosperity resulting from GDP growth of the order of 6. They have a distinct profile as compared with their lesser cousins. washing machines and ACs). the demographic pattern is undergoing a rapid change. This is shown by the following table. colour television and refrigerators. Obviously. indicating an annual increase of 21. These people have grown by a little over 15 % annually between 1995-96 and 2001-02. tl1eir AC penetration is low (13% only). such as entry-level cars.such as luxury cars. However. totally airconditioned residences and offices as well as guzzling soft drinks and costly liquors. Since the economy has grown during 2001·02 and 2005-06 at the rate of over 7 per cent of GDP per annum. Rich class with annual income over Rs 10 lalffis accounted for only 0.

8 66.5 35. Vadodara.2. LPG and the middle class The LPG policy initiated in mid 1991.000 Over Rs.8 Lakh Total 28. This exercise was important not only for the Indian government.6 61.10.Aspirers Middle Class Rich 90.000 Rs. The figures were ranging from 200 million to 500 million.9 71. the aspirers tend to show a rise from about 6% to 13% during 2001-02 to 2009-10.00. but also for the latter.2 Source: NCAER (2006).a dramatic shift of nearly 20 per cent. similarly.5 64. The distribution of households among various categories shows that the lowest income class (deprived) is expected to fall from 72 % to 52 % . 7.00.2 22. There was a boom of the middle class in B-class cities like Nagpur.2 33. suddenly put the spotlight on the middle class for its ability to consume.2 68. This implies that the pattern of growth developed after the reform process has introduced is biased towards urban areas. the bulk of whom could be .4 22.8 77. 8. always sensitive to newer pastures for the sale of their goods and technologies. nearly a five times jump in a span of six years. Ahmedabad.000Rs. Below them.1 38.000 Rs. 10 41.e.21 million in 2001-02 i. The Great Indian Middle Class The table reveals that the of the rural households among the deprived will increase from about 82 per cent in 2001-02 to 84 percent in 2009-10. Surat and Vijayawada. The logic of economic reform dictated that the middle class be analyzed for its craving for and ability to buy what the developed countries could sell to it. The middle class in Delhi grew from0.8 48. the middle class consists of three segments: the Consuming Class accounting for thirty million households or 150 million people. This process will fiercely promote the middle classes and the rich. As per the National Council of Applied Economic Research (NCAER) estimate the Very Rich comprise about six million people or a million households.4 31. The segment with the largest concentration of purchasing power in India was the middle class. As against it. which wished to advertise the strength of the untapped Indian market to woo the economies of the developed world. Metropolitan towns like Mumbai and Delhi witnessed a fast growth in the Indian middle classes.6 77. 90000Rs200.26 million in 1995-96 to 1. the share of the 'Aspirers' will in rural areas from about 48 per cent in 2001-02 to 61 per cent in 2009-10.

8 per cent own a washing machine. In a country of over 900 million people.000 a year. The survey was intended to 'enable marketers to understand the real priority of their consumers' buying decisions rather than assuming direct correlations between income levels and demand for specific projects. Other indices are equally sobering.2 sets per hundred people. The penetration of other consumer durables is as limited.4 and 14. have an income of over Rs 40. China sells sixty. as against India's 3. the Climbers. and the Aspirants numbering another 275 million. In South Korea there are more than 400 cars per 1000 households.4 million. unfortunately.2 per cent of all households own a video recorder or player. For too long the professed bias of State policy was for the poor of India. are also low. The last two segments would 'need good reasons to. or less than four per cent of the total number of households in the country.500 and Rs 40. A life style replete with expensive cars. households with incomes restricted to between Rs 12. Now it was state policy to 'open' the economy to consumerism of the middle class and a collective exorcism from the nation's psyche of the 'repressive and lifedenying nature of Gandhi's idealism. Only 4. consisting of fifty million households or 275 million people. Even with respect to all TV sets. 1. and only forty-eight per cent of households own a bicycle. or 37 million people. The number of cars in private possession is less than fourteen per 1000 households. The Confederation of Indian Industry (CII). the latest consumer gadgets. and 1. In Mexico the number is 112. but. Thailand and Malaysia have 11. and in Brazil eighty-five. the comparison with South East Asia is instructive.6 million share holders and less twenty-five million graduates. and five-star living became the role model for the middle class by the . Only 1. including black-and-white ones. The great Indian 'liberalized' economic machine was all set to roll with the middle class as its engine. do not number more than 1.5 per cent of the total population owns a colour TV. first.000 per year. and the world average is 150. Only 5. Figures for consumer goods in mass demand. buy the product you make. And the rich. and next. The number of households with a telephone connection is about seven million.8 sets per hundred people respectively. the impact of the policies of economic liberalization was to liberate it from all restrains on its consumerist aspirations. Given the dominant traits of the Indian middle class in its evolution up to 1991. with a middle class estimated in the scores of millions. with an income of over five lakh rupees a year. many of these very surveys revealed that the power of the engine was hardly in conformity with the wishful thinking of the enthusiasts. such as bicycles and wrist watches.1 per cent of the population.. Only eighty-one per cent of middle-income households (sixteen per cent of the population) and fiftynine per cent oflower middle households (thirty-three per cent of the population) own even a fan. According to the NCAER survey. designer clothes and accessories. there are only 1.000. If India sells thirty watches per thousand people. estimated that there are 180 million people in India with an annual income exceeding Rs 120. Only one out of five Indians possesses a wrist watch.3 per cent have a storage or instant geyser.in the market for all kinds of consumer durables. to choose your brand'. account for as many as 331 million people.

by 1995 it was estimated that more than eighteen million homes were wired to cable or satellite. the top ten of these spent close to a whopping 600 crores in 1995 to better target the consumer. Burgeoning aspirations wrapped themselves with commendable felicity around the most expensive goodies: a Mercedes Benz at twenty-two lakh rupees. Italian suiting. grew in 1995 by as much as seventy per cent as against a growth in sales of less than thirty per cent. In 1995 Master Card grew by 106 per cent in India. Enterprising firms opened up to offer exclusive services for helping with the right loan for the right product from the right source. They have become far more international in their outlook and aspirations. Visa grew by an unprecedented ninety-four percent. the justification of an ideology. The launch of lot of financial products to facilitate hire purchase invigorated the consumerist exuberance. and each of these channels was essentially supported by advertising. The 'revolution' of satellite television commenced in 1991. More than a million Indians gave up generations of financial conservatism. The advertisement expenditure of certain sectors such as consumer electronics. long resigned to the monopoly of Doordarshan. more sophisticated and liberal in lifestyle and attitudes. thirty-two-and even forty-six-inch television sets and state of the art refrigerators at over one lakh a piece. From among this new generation of TV children. The impact of the new lifestyle had marked impact upon consumable durables. of special interest to the middle class. was the conclusion of researchers. 'imported' brand-name shirts and Mont Blanc pens at Rs 10. the highest growth in the Asia-Pacific region. grew by twenty-two per cent in just one year. The advertisement budget of India's biggest spender on advertising. was always there. 'The vision of the good life being drilled into viewers' minds is better internalized by children than the older generation' . for their options for recreation were more. The urge to move up the consumption ladder. Suddenly. those from the upper-most class watched the least. according to a survey.000 each. But now this urge had the stamp of 'official' acceptance. and certainly more adventurous and demanding in terms of holiday and leisure activities. The economic liberalization that has been sweeping across the country for the last few years has altered the lives of a large section of India's burgeoning middle class. seventy-five per cent said that they wanted to own the products advertised on television. . or an Opel Astra at over six lakhs. Almost every consumer durable could now be had on installments. Hindustan Lever. to become credit card holders. Consumer giants spent crores on advertising. had more than fifty channels to choose from. It was also established that children from middle-class homes watched TV the most. The Fifth National Readership Survey revealed that three-fifths of all urban homes had a TV set and that the reach of the medium has shot up from nine per cent in 1990 to seventy-four per cent in 1995. to somehow put an unbridgeable gap between the squalor of the poor and the plush material insularities of the rich.liberalization process. and American Express notched up a 102 per cent growth in 1994-95 and an even higher 135 per cent the next year. Children absorbed the general mood of consumerist buoyancy far more easily. a great many middle-class people. The credit card industry mushroomed into a 1600-crore business.

• • Ref: 1. The Great Indian Middle Class. Penguine. . Pavan K Varma. Info from different Web sites. 1998 2.

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