India’s middle class is growing. And how.
The new middle class—persons spending anywhere between $2 and $10 per capita per day—has doubled in size to 600 million people between 2004 and 2012, a study by two Mumbai university economists has found. That’s nearly half of India’s 1.2-billion population.
This segment is typically split into two: the lower middle class and the upper middle class. The first spends between $4 and $6 per capita per day and the second between $6 and $10.
The doubling in its size is mostly due to new entrants in the lower middle class category across rural and urban areas, Mumbai University’s Neeraj Hatekar and Sandhya Krishnan wrote in a recent working paper.
These newcomers include the likes of carpenters, street vendors, wall painters, and drivers, according to a separate study of 789 Mumbai households, conducted by Hatekar and Kishore More, also from Mumbai University.
“Those who are moving out of poverty are most likely to find their first opportunities in the unorganized sector, characterized by relatively few barriers to entry,” Hatekar and More write in the book The Local Impact of Globalization in South and Southeast Asia.
These findings are somewhat at odds with the typical notion of a middle class, which mostly takes into account workers from the organised sector. Also, due to the variations in the methods of classifications, there’s a bigger confusion over who exactly constitutes it. Some experts argue that it is difficult—if not impossible—to accurately measure its size.
Nonetheless, the middle class is a critical (pdf) segment of India’s demography. From formulating economic policies and marketing smartphones to selling burgers, a range of decisions—in the government and the private sector—depend on the analysis of its spending patterns. Good thing then that India’s middle class just keeps growing and growing.