'Middle India' critical to India's economic take off: Survey report
According to the report, what is commonly referred to as the "middle class" in India has nothing to do with Middle India, the households located in the middle 60 per cent of the income spectrum.
- Oct 7, 2016,
- Updated Oct 7, 2016 6:53 PM IST
A recent survey report by People Research on India's Consumer Economy (PRICE), in partnership with Mastercard Center for Inclusive Growth, throws new light on the income-based classification and India's middle class.
According to the report, what is commonly referred to as the "middle class" in India has nothing to do with Middle India, the households located in the middle 60 per cent of the income spectrum. Rather, they are actually the top 20 per cent of households by income. The consumer class, which is actually upper class households by income, consists of some 62 million households and is sharply differentiated from the rest of the population, 208 million households and close to a billion people, according to the report.
"At 20 per cent of total households, the consumer class accounts for 55.5 per cent of total household income and has an average per capita GDP of $3,982. In contrast, the remaining 80 per cent of Indian households are left with only a 44.5 per cent share of total household income. Their per capita GDP is estimated at just under $700.12," says the report.
Marketing Consultant Rama Bijapurkar, who has also co-authored the report, says that there is call for policy to look beyond the so-called 'middle class' and start looking at productivity of Middle India.
"The top 20 per cent is the focus of the government policy because they are connected to the market economy and we are a consumption driven economy. The bottom 20 per cent get benefits of subsidies and welfare programmes but there is a need to look at the middle 60 per cent, as they are stuck in a low labour productivity situation," she adds.
The report argues that middle India or middle-income India has been neglected in the last two decades since India's first wave of economic reforms in the 1990s. If it continues to be left behind, then domestic demand is unlikely to be strong enough to help drive India's growth acceleration, it says.
However, according to the report, transforming Middle India into the nation's genuine middle class would fundamentally support the government's ambitious efforts to increase GDP growth rates to the 8-10 per cent range.
"Transforming Middle India into India's genuine middle class would fundamentally support the government's efforts in growth acceleration. With faster growth in household income in Middle India, domestic demand would become stronger, faster. This in turn would open up new opportunities for more productive business investment targeting the domestic market, including opportunities for small businesses and start-ups," the report adds.
A recent survey report by People Research on India's Consumer Economy (PRICE), in partnership with Mastercard Center for Inclusive Growth, throws new light on the income-based classification and India's middle class.
According to the report, what is commonly referred to as the "middle class" in India has nothing to do with Middle India, the households located in the middle 60 per cent of the income spectrum. Rather, they are actually the top 20 per cent of households by income. The consumer class, which is actually upper class households by income, consists of some 62 million households and is sharply differentiated from the rest of the population, 208 million households and close to a billion people, according to the report.
"At 20 per cent of total households, the consumer class accounts for 55.5 per cent of total household income and has an average per capita GDP of $3,982. In contrast, the remaining 80 per cent of Indian households are left with only a 44.5 per cent share of total household income. Their per capita GDP is estimated at just under $700.12," says the report.
Marketing Consultant Rama Bijapurkar, who has also co-authored the report, says that there is call for policy to look beyond the so-called 'middle class' and start looking at productivity of Middle India.
"The top 20 per cent is the focus of the government policy because they are connected to the market economy and we are a consumption driven economy. The bottom 20 per cent get benefits of subsidies and welfare programmes but there is a need to look at the middle 60 per cent, as they are stuck in a low labour productivity situation," she adds.
The report argues that middle India or middle-income India has been neglected in the last two decades since India's first wave of economic reforms in the 1990s. If it continues to be left behind, then domestic demand is unlikely to be strong enough to help drive India's growth acceleration, it says.
However, according to the report, transforming Middle India into the nation's genuine middle class would fundamentally support the government's ambitious efforts to increase GDP growth rates to the 8-10 per cent range.
"Transforming Middle India into India's genuine middle class would fundamentally support the government's efforts in growth acceleration. With faster growth in household income in Middle India, domestic demand would become stronger, faster. This in turn would open up new opportunities for more productive business investment targeting the domestic market, including opportunities for small businesses and start-ups," the report adds.