Will the “Great Indian Middle Class” show up, please?

April 9, 2008

By Partho Sarathi Ray, Sanhati. Comments enabled.

Where is the “Great Indian Middle Class”? Where are those conspicuously-consuming, frequently-flying, gizmo-toting, big car-driving, globalized offsprings of our jet-setting “new economy”? Don’t we see them all around us: living in highrises with blue-tiled swimming pools, with people living a few miles away getting water once in three days, shopping in glittering malls built on the land of evicted slums, driving around in Toyotas and Chevrolets on roads choked with traffic? From all accounts, and appearances, we have reached the heady days when the Indian middle class has finally arrived. They are the ones who supposedly constitute one of the biggest markets in the world, for whom multinational corporations are falling over one another to invest in India, for whom our governments’ policies are directed, for whom roads and airports are built, for they ARE the “people” of India. This great middle class is our hope, the engine of growth for our economy.

But is it true? Can we try to find out who, and how many, belong to the middle class in India? The data sets available from the surveys of the National Sample Survey Organization (NSSO) and from the 2007 report of the National Commission for Enterprises in the Unorganised Sector (NCEUS), better known as the Arjun Sengupta Commission, make for sobering, and often startling reading. The last three surveys of the NSSO, possibly the most comprehensive surveys on employment-unemployment and consumption expenditure, were done in 1993-94, 1999-2000 and 2004-05. We will take a look mostly at the 2004-05 data in our search for the Indian middle class.

The NSSO surveys collect data on consumption from each of the selected sample households in a detailed schedule containing a list of every conceivable item of consumption ranging from edibles to fuels to clothing and consumer durables, and also include educational and medical goods and services. Based on these extensive datasets, the NCEUS computed the monthly per capita consumption expenditure (MPCE) and daily per capita consumption expenditure (DPCE) in an effort to evaluate the performance of the economy in terms of the consumption expenditure of our people. Based on these values, each household was classified as one of the following: “extremely poor” when the MPCE is less than or equal to 0.75 times the poverty line (PL), “poor” when the MPCE is greater than 0.75 PL but less than or equal to 1.0 PL, “marginal” when MPCE is greater than 1.0 PL but less than or equal to 1.25 PL, “vulnerable” when MPCE is greater than 1.25 PL but less than or equal to 2.0 PL, “middle income” when MPCE is greater than 2.0 PL but less than or equal to 4.0 PL and “high income” when MPCE is greater than 4 PL.

Before we go into the details of what percentage of our population belongs to each group, it would be instructive to know what the poverty line is. There is considerable criticism about the determination of the poverty line in India, which systematically underestimates poverty and deprivation. The authors of the report determine the poverty line from the data of the employment-unemployment survey (EUS) and the results are not very different from the official poverty line estimates. For example, the official poverty line for 2004-05 is Rs 356.3 for rural areas and Rs 538.6 for urban areas whereas the poverty line as computed by the commission is Rs 346.2 for rural areas and Rs 514.0 for urban areas. It is also important to know that for international comparison purposes, people below purchasing power parity (PPP) of $1 are considered extremely poor and those below PPP of $2 are considered poor. $2 at PPP therefore signifies a sort of international poverty line.

Now, coming back to the data from the NCEUS, we find that the extremely poor have an average DPCE of just Rs 9 (PPP $1), the poor has DPCE of Rs 12 (PPP $1.3), the marginal, Rs 15 (PPP $1.6), and the vulnerable, Rs 20 (PPP $2.2). The middle income group has an average DPCE of Rs 37 (PPP $4) and the high income group has an average DPCE, the highest in India, of Rs 93 (PPP $10.2). These estimates are nationwide averages including rural and urban areas. These data by themselves are startling. The extremely poor, the poor, the marginal and vulnerable on an average subsist on less than Rs 20 per day and on less than Rs 600 per month (remember that the average to and fro train fare for an overnight journey in the lowest reserved class is around Rs 600; therefore, not withstanding Lalu Prasad’s “populist” rail budgets, a train journey in a reserved compartment is out of bounds for all these people). The middle income group in India has an average daily consumption of the princely sum of Rs 37 and an average monthly consumption of Rs 1,098 which is just double the international poverty line (the airfare for a single journey in one of the low-cost air lines is around Rs 3000, which means that the airports and the proliferating airlines are not for these people). This leaves the high income group, and even the presence of the Tatas and the Ambanis, and the 53 dollar billionaires of India who contribute 31% of the GDP, and the thousands of conspicuously-consuming software professionals, does not pull the average DPCE of this group above Rs 93. This means that for an overwhelming number of people in this group, the DPCE would be much below Rs 93, and would be actually closer to the average DPCE of the middle income group.

Now, after we have an idea of “who” might (or might not) belong to the “great middle class” in India, looking at the percentage distribution of the above groups among the population will tell us “how many” of our people really belong to this group. The 2004-05 data on the distribution of population among these various groups classified on the basis of consumption expenditure show that 6.4% of the population is extremely poor, 15.4% is poor, 19.0% is marginal and 36.0% belongs to the vulnerable group. This means that together, a staggering 77% of the population lives on less than Rs 20 per day, which barely reaches up to the poverty line (therefore, a train journey with a reservation is out of question for 77% of our population, unless they go hungry for a month). Among these, 41%, the extremely poor, poor and marginal, live on an average expenditure of Rs 15 a day, which cannot afford more than a miserable existence in today’s India. The vulnerable section, which constitutes 36% of the population, is one mishap away from destitution. So, a death or disease or even a crop failure can drive them to desperation; we now know to which group all the “suicidal” farmers belong. This leaves the so-called middle income group which constitutes 19.3% of the population; but these definitely do not constitute our fabled “middle class” with an average monthly expenditure of Rs 1098, which wouldn’t even afford them a family dinner at any of the fancy restaurants. We finally come to the high income group, and find to our dismay that they just constitute 4% of the population. And remember, even this group has an average daily consumption of Rs 93, which is less than the price of two litres of petrol or a taxi ride in one of the big cities. Therefore, as we observed before, we estimate that an overwhelming majority, maybe 80%, of people in this bracket would actually be nearer to the middle income group than to the software professionals and business people who constitute our “visible” middle class. So, a back of the envelope calculation would show that the middle class, which we have been searching for, can be estimated to be around 0.8% of our population, which comes to around 8-10 million people. There is our “Great Indian Middle Class”.

So, we finally find that our “great” middle class, for whom malls and multiplexes are built, rail fares are reduced, airports are constructed, and “Nanos”, stained with the blood and tears of evicted farmers, roll off assembly lines, is more like the legendary Cheshire cat of Lewis Caroll’s Alice’s Adventures in Wonderland. If you look at it deeply and deconstruct it using statistics, it slowly disappears until what remains of it is its smile, suspended in mid-air as a macabre joke on the Indian people.

This article is based on:

1. Data from the 2004-05 quinquennial consumer expenditure survey undertaken by the NSSO, the “Conditions of Work and Promotion of Livelihoods in the Unorganised Sector” report submitted by the NCEUS in September, 2007

2. The article
India’s Common People: Who Are They, How Many Are They and How Do They Live by Arjun Sengupta, K. P. Kannan & G. Raveendran, EPW, March 15, 2008 [PDF] »


16 Responses to “Will the “Great Indian Middle Class” show up, please?”

  1. Suman Chakraborty Says:
    April 10th, 2008 at 12:59

    Oh…its nice to see all the explanations and conclusions. But, to which class you belong to?
    Me and most of the people I know, belong to your ‘Middle Class’. AND WE ARE HAPPY TO SEE THAT THINGS R CHANGING. We do not care what you hypocrite peoples are saying.

  2. Sankar Ray Says:
    April 10th, 2008 at 21:48

    This is a modest feedback for Mr Suman Chakraborty.
    Which class did F. Engels belong? Did Marx or Lenin come from the working class or peasantry?
    The point is which class one identifies with in striving for transformation of explottative production relations to a non-exploiting one.

  3. pravat kumar sahoo. Says:
    April 11th, 2008 at 22:31


  4. Trina Says:
    April 13th, 2008 at 21:33

    Well, if you have dealt with poverty at a personal level and have just started seeing your close family enjoying some luxery and affording some of the things that you have only seen families of your rich frinds enjoyng, having enough money to be able to finance some critical opration of a close family member which can(at times) be life saving, affording a tutor for your bright cousin-sister/brother(something you wouldnt have thought of before),affording expensive medical treatment for your 80 years old grandfather( it would have been thought as a waste of momney) because economy is (for middle class)changing……and I accepting the fact that not everybody is born to change the world, I dont find an outburst something very unusual.

  5. A K Says:
    April 13th, 2008 at 23:55

    Statiscally right but what is the point the author is trying to make? . Is opening the market bad? Dont see any reasoning that says opening the markets has increased this gulf.

  6. Rajendran Says:
    April 14th, 2008 at 13:18

    I concur with most of the views mentioned in the article. What section is actually getting affected by the so called growth in our country. One cannot overlook some good things that have happened since the economic liberalisation of 1991 but how have the marginalised populace been affected with that? Not even a handful. More importantly, what constitutes middle class today? The definition of middle class in India needs a comprehensive revision and opening of the economy has clearly increased the rift in the Indian class structure. This feel good factor of growth is merely a superficial veil to attract more FDI and thereby increase the gap further.

    I truly appreciate the author’s stance and his scientific and objective inquiry into the matter.

  7. Trina Says:
    April 14th, 2008 at 18:39

    I appreciate the author’s effort. But I still fail to see the point he is trying to make.
    Does the solution lie in stopping the economic growth of the middle class? Again I completely agree that Middle class requires a proper definition, and it is also neccessary to differentiate between the lower and the upper middle class. Because for a class of people stopping the economic growth would probably mean a cut down in the number of times they visit a mall or stay in an expensive hotel, or fly abroad for spending a good vacation, for some other middle class people it would mean returning again to the situation where you well qualified son is not employed,you do not have enough money to marry off your sister(please have in mind that you are expected to spend a considerable amount of money on the marriage because you are not ‘Poor’), or pay for the treatment of a family member suffering from cancer or not being able to fly abroad and join in the PhD program you have currently received an offer letter from.
    Middle class ( I refer to the lower middle income group)form a part of the population where they fail to attract any sympathy because they are not ‘poor’ and fail to enjoy life of sheer luxery becuse they are not ‘rich’, bowed down under the pressure of lack of money and thousands of social responsibility. I agree that it is a small section of the entire population that I am talking about, but is it fair to neglect their sentiments simply because they form a minority?

  8. Sudhin Says:
    May 1st, 2008 at 23:34

    Silly article by silly communist-socialist brainwashed pseudo intellectuals who weep for the poor.

    Who is Arjun Sengupta? Some wishy washy communist who has cooked up figures so that trade unions can get hefty pensions for doing no work.

    Most of these silly statistical organizations of India are filled with JNU-Presi silly commie intellectuals who cook up statistics sitting in airconditioned offices. They write what the various politburos ask them to do.

  9. Kalyan Says:
    May 4th, 2008 at 22:53

    Sudhin, here’s who Arjun Sengupta is. Ever heard of Harvard?

    Professor Arjun Sengupta has held numerous positions of high office in the Government of India. In the 1980s he was Economic Advisor to the Prime Minister of India. Subsequently, he was an Executive Director of the IMF in Washington DC. Thereafter he was an Indian Ambassador to the European Union. He has also held various prestigious academic positions. Currently, he is Adjunct Professor at Harvard University and also Chair of the Centre for Development and Human Rights in New Dehli.

    Professor Sengupta served as the UN Independent Expert on the Right to Development for six years. Since 2004 he has served as the UN Independent Expert on Human Rights and Extreme Poverty. As such, his UN reports and other publications have shaped the contemporary debate about one of the most controversial human rights topics.

  10. Vineet Says:
    May 8th, 2008 at 01:24

    The problem with author is not that people are poor, but they should never become rich. This is communist agenda because if people prosper, who will take these useless leaders on their ego trip. So, the ideal scenario would be to keep people in slums by not giving them economical environment to progess and move to “apartments with blue tiled swimming pools”. While world opens up, communists would have us go back to agrarian society, a la Pol Pot. No prizes for guess what ideology Pol Pot followed.They would rather have youth become their goons in Nandigram than work in private companies and earn decent living for their famalies.

  11. shambu lal Says:
    May 9th, 2008 at 03:23

    ya you are right – the so total population of middle class in 8-10 lakh for whom the whole process of lpg is going on. it also mean that the party like congress, bjp, cpm ,cpi or other reginal parties represent only these small faction of people.
    so in india there is a capitalist democracy to expose these all political parties the people of india should work for real democracy where the majority of population get representation

  12. dr anonymous Says:
    June 10th, 2008 at 02:13

    Silly article by silly communist-socialist brainwashed pseudo intellectuals who weep for the poor.

    Lol. Has it occurred to you that capitalists are the ones who should be most invested in prventing a social revolution, and keeping tabs on how likely it is is one of the best ways to do it devise appropriate policies for doing so? ;)

  13. sukhpal Says:
    June 17th, 2008 at 02:29

    all i read it is very good for reading but it is practicaly bakvassssssssss

  14. Sribha Says:
    July 5th, 2008 at 05:07

    I clearly understand whr the software professionals n the MBAs n all the hyped-up profiles belong to…most of the corporates target the top 4% of the population whose life is not beyond teir office, those amusement parks, shopping malls or the so-called happening food courts of the top-10 cities…

    wot abt the rest 96%?? nybody thr?

  15. Ramanuj Nanhoriya Says:
    September 8th, 2008 at 14:52

    Bhiya, hamari to kuch b samajh me nahi aaya…….middle class….!!!

  16. Kallal Says:
    November 2nd, 2009 at 22:59

    skewed toward communist thought. Number and statistics is folded and molded according to the author’s thought.

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