NAME: CHHAVI CHAUDHARY
COURSE: B.A. (POLITICAL SCIENCE)
ROLL NO. : 39
YEAR: 3rd; SEMESTER: 5th
SUBJECT: Development Processes and Social
Movements
TOPIC:
Write an Essay on the emergence of the New Middle Class
in India.
ASSIGNMENT
Write an essay on the emergence of the new middle class in India.
A healthy middle class is necessary to have a healthy political democracy. A society made up
of rich and poor has no mediating group either politically or economically.” — Lester Thurow
INTRODUCTION:
The middle class constitute a critical market for most goods and services. A sizable portion of
any nation’s tax revenue is collected either directly or indirectly from this group, and they also
have an important role in any relative political stability that a country experiences. The middle
classes of all countries have been the key drivers of the global economy in the last century.
During the past several decades, world economic growth has occurred, mostly because of
increased consumption in the middle classes of the United States, Europe, and other advanced
countries. This class has been considered a thriving and vibrant catalyst for economic growth. It
provides a strong base that drives productive investment and is a critical factor in encouraging
other social developments that also stimulate growth and foster expansion of elements that
contribute to a healthy society.
The middle class falls in the middle of the social hierarchy and occupies a socioeconomic
position between the working and upper classes. The measures of what constitutes members of
this class differ significantly among nations because of international cultural and economic
variations. Examples of what constitute the “middle class” in a given nation are dependent upon
purchasing power, educational levels, perceptions of who constitute “the wealthy,” and levels of
social services, as well as other factors. According to most organizations, like the World Bank
and the Organization for the Economic Cooperation and Development (OECD), people living on
less than US $2 a day are considered poor. For those in the middle classes, the earnings typically
lie in the range of US $10 to $100 per day, as expressed in the 2015 purchasing power parities.
INDIAN MIDDLE CLASS: 1947-1990
After independence, started the process of formation of a new lifestyle and image for the middle
class – the existing middle class of before independence; gained more resources for themselves
and moved into the position of the new elites of the new, independent India. With the growth of
public sector jobs in the 50’s and 60’s, came about the growth of a new middle class. The size of
the Indian middle class in India remained relatively small—it consisted of primarily the
approximately five million workers mostly in the national, state, and local divisions of the
government in the 1950s, with an additional six million added in the next two decades, with a
count of 11.2 million in 1971, according to the government statistics.
The 1970s and 1980s saw a move toward a mixed economy, with the private sector adding a
significant number of jobs as well. The “colonial” middle class from the days of British rule
prior to 1947 was slowly transformed into a “new” middle class, who increasingly began being
defined in terms of consumption behavior, with the country moving gradually toward a market-
led capitalist economy. As a development model, India tried democratic socialism for the first
four decades after independence from the British, but this failed to produce robust growth. The
growth occurred later in the 1990s once the country began following free market policies and
opened its economy.
GROWTH OF INDIAN MIDDLE CLASS: 1990 onwards
The 90’s are heralded as the era of the middle class which the marketers chased. Liberalization
opened up new avenues for the middle class. When India opened up in 1991, the big attraction
for marketers – both national and global – was the “big Indian middle class” estimated to be
anywhere between 300 to 400 million and growing. Anuradha Goyal documents the pangs of
transition for the moderate 80’s to the ambitious 90’s for the middle class, “They (middle class)
lived in their own world where they had enough for their basic needs but nothing for their
desires. Then came the famous economic reforms of early 90s and it changed the Indian middle
class forever. The economic reforms started in the early 1990’s have spurred an annual growth
rate exceeding 7%, with especially rapid growth in the middle class. Projecting that growth rate
into the future, India’s income will double every ten years. Within a generation almost 50% of
India’s people could become middle class and poverty could diminish to 15%. In line with this
growth, the Indian middle class is developing an appetite for telephones, cars, televisions,
clothes, refrigerators and other consumer goods.
People in the upper echelons of the society probably always had everything, and for the people in
the lower rung things have still not have changed much except probably a mobile phone in the
hand. But the middle class suddenly had more resources than they were used to. They could now
afford to buy houses at a much younger age, cars almost at the beginning of their work lives,
clothes and shoes without waiting for a wedding to happen in the family. Psychologically, for
people who grew up in 70s and early 80s, the change was tremendous, while their growing up
was in the era of scarcity they landed up in the era of abundance without really making a
proportionate effort. They embraced the change but also had to deal with their roots that lie in
another age. As a class they also became the focus segment for many product and service
offerings. They were not used to and had to learn to deal with this sudden attention”.
Economically, the 90’s defined the middle class in terms of its earnings and the subsequent
spending or to say differently, the consumption. Today, India’s middle class is one of the largest
in the world, equal in some estimates to the population of the United States. The initial period
between 1999–2000 and 2004–05, growth of the new middle class was modest. In the latter
period from 2004–05 to 2011–12, the size of the new middle class almost doubled, totaling over
600 million individuals, or half of India’s population. Moreover, this expansion was witnessed
across both rural and urban areas, as well as in a majority of the states of India.
The total number of people in the middle class approximated thirty million in the 1990s, or less
than 1 percent of the population. The percentage of those in the middle class began rising
steadily to about 5 percent of the population in 2004.
Economists from Mumbai University in India defined the middle class as consumers spending
from US $2 to $10 per capita per day. By this definition, approximately half of India’s
population of 1.3 billion is now in the middle class. The fastest growth is in the lower middle
classes, who spend between US $4 and $6 per day. This group now includes carpenters, street
vendors, decorators, and drivers, amongst others. Most of these sectors have minimal barriers to
entry, and many from the lower classes can easily “move up” to this group. The lower middle
classes have approximately a third of their income left for discretionary spending after
accounting for food and shelter. This allows them to buy consumer goods, get health care, and
pay for their children’s education.
REASONS FOR THE GROWTH
The growth of the middle class was the outcome of the economic reforms of the 1990s,
once the policy of liberalization was introduced and reforms were initiated, it proved to
be a boon for the middle class in India in the following manner:
The reforms created room for private players in the economy. Engaging in private
entrepreneurships became more respectable and more jobs were available for the middle
class people in the private sector with better pay packages.
Economic reforms led to expansion of service sector that required a new type of skills
and education. Hence, we see the establishment of a plethora of institutions imparting
these skills as information technology, computing business, human resource management
and travel and hospitality industry. The urban middle class were the biggest beneficiaries
of this.
The reforms also saw the entry of the foreign Municipal Corporations (MNCs) in the
Indian market. It has been mutually beneficial for both the educated middle class and the
MNCs.
Similarly, India became one of the largest markets of consumer goods- both
manufactured indigenously with foreign collaboration and imported as there were
millions of people waiting to purchase and use them. The middle class was buying stocks,
shares and IPOs in companies in a big way contributing to industrial investments and
their own growth. In this way middle class income become a source of conspicuous
consumption of luxury and semi-luxury goods.
Since it was no way longer and restrictive for Indians to freely travel, work and invest
abroad, many scions of the middle class started to work, invest and do business outside
India. The middle class thus has also contributed to the growth of travel and tourism
industries as well as bringing remittances in the country.
The economic reforms of liberalization and privatization of market have brought a variety of
benefits to those who are ‘better than many’ in the sense the new job opportunities thus created
has attracted the upwardly mobile groups to join the upper layers of the middle class.
CONCLUSION:
To encapsulate it can be held that the middle class of any nation constitutes a critical market for
most goods and services and it also plays a vital role in any relative political stability that a
country experiences. This class has been considered a thriving and vibrant catalyst for economic
growth. In India after the independence, there was a huge gap and inequalities in the society. The
size of the Indian middle class in India remained relatively small. The growth started later in the
1990s once the country began following free market policies and opened its economy. The
famous economic reforms of early 90s have changed the Indian middle class forever. The new
middle class today is a big stakeholder in the country’s economic growth, in government’s
policies of liberalization, privatization and job creation and development. According to Abhay
Prasad Singh, “India today is marked by increasing self-confidence, at least among its urban
middle classes. There is a growing sense that country has taken its place at the heart of the Asian
growth machine, and power is shifting away from Europe and North towards what so long called
mainly pejoratively, the orient, including, South Asia and Far East.”
BIBLIOGRAPHY
Christiane Brosius, India’s Middle Class: New Forms of Urban Leisure, Consumption, and
Prosperity (Abingdon, England: Routledge, 2012).
https://www.asianstudies.org/publications/eaa/archives/the-middle-class-in-india-from-1947-to-the-
present-and-beyond/ , accessed on August, 27, 2021.
Leela Fernandes, India’s New Middle Class: Democratic Politics in an Era of Economic
Reform (Minneapolis: University of Minnesota Press, 2006).
Singh, Abhay P,“Development Process and Social Movement in Contemporary India”, Pinnacle
Learning, 2019.
