10 facts you should know about Indian middle

class
Source: CLSA

Indian middle class is growing fast, real fast. It is not the same what it was just a decade
back. They were then branded as a conservative and thrifty people.

Not anymore, India’s middle class is now dynamic, educated, liberal and form the pillars
of this vibrant Indian economy (due to their spending nature).

Here are the 10 fatcs that you may not know about Indian middle class.

1. An average family of 4.3 people lives typically in a 900sf apartment; 71% own
properties, but only 9% have a mortgage
2. 19% own cars, 100% of households have TVs, 91% have mobile phones
and 20% have credit cards
3. Household savings are low at 13% of annual income; mainly to meet emergency
needs, healthcare and education costs.
4. Risk aversion is high: 84% have not taken loans, only 11% have invested in
equities (this is changing fast)Â
5. Land and properties account for 51% of wealth, with 30% in cash and deposits
6. Half of households have seen their income rise in the past 12 months, of which
onethird saw income rise more than 20%
7. 63% of respondents expect their income to increase in the next 12 months
8. Slightly more than half say governance has worsened in the past 10 years;
improving the economy and reducing corruption are seen as top priorities for the
government.
9. Children’s future and education a key concern and priority; other major
concerns are rising prices and medical costs

Very high aspirations for children with 43% wanting their kids to get a master’s
degree and 29% a doctorate The middle class are any class
in the middle of a societal hierarchy. In Weberian socio-economic terms, the middle class
is the broad group of people in contemporary society who fall socio-economically
between the working class and upper class. In Marxist terms, middle class commonly
refers to either the bourgeoisie before or during capitalism[citation needed], or some emergent
new class within capitalism. In common parlance, middle class refers to a set of culturally
distinct contemporary Western cultures that emphasize consumerism and property
ownership within capitalism. Middle class citizens traditionally hold conservative politic
views, often becoming registered conservative voters.
Contents
[hide]

• 1 History and evolution of the term

• 2 Geographic terms
o 2.1 Middle America
o 2.2 Middle England
• 3 Marxism and the middle class
• 4 Recent growth of the global middle class
• 5 Professional-managerial class
• 6 Confusion surrounding the term
• 7 See also
• 8 References
o 8.1 Notes
o 8.2 Bibliography

o 8.3 External links

[edit] History and evolution of the term

The term "middle class" has a long history [citation needed]and has had several, sometimes
contradictory, meanings. It was once defined by exception as an intermediate social class
between the nobility and the peasantry of Europe.[by whom?] While the nobility owned the
countryside, and the peasantry worked the countryside, a new bourgeoisie (literally
"town-dwellers") arose around mercantile functions in the city. Another definition
equated the middle class to the original meaning of capitalist: someone with so much
capital that they could rival nobles. In France, the middle classes helped drive the French
Revolution. [1]

The modern sociological usage of the term "middle class," however, dates to the 1911
UK Registrar-General's report, in which the statistician T.H.C. Stevenson identified the
middle class as that falling between the upper class and the working class. Included as
belonging to the middle class are professionals, managers, and senior civil servants. The
chief defining characteristic of membership middle class is possession of significant
human capital.

Within capitalism, middle class initially referred to the bourgeoisie and petit bourgeoisie.
However, with the immiserisation and proletarianisation of much of the petit bourgeois
world, and the growth of finance capitalism, middle class came to refer to the
combination of labour aristocracy, professionals and white collar workers.

The size of the middle class depends on how it is defined, whether by education, wealth,
environment of upbringing, social network, manners or values, etc. These are all related,
though far from deterministically dependent. The following factors are often ascribed in
modern usage to a "middle class":[by whom?]
 • Achievement of tertiary education.
• Holding professional qualifications, including academics, lawyers, engineers,
politicians and doctors regardless of their leisure or wealth.
• Belief in bourgeois values, such as high rates of house ownership and jobs which
are perceived to be "secure."
• Lifestyle. In the United Kingdom, social status has historically been linked less
directly to wealth than in the United States[citation needed], and has also been judged by
pointers such as accent, manners, place of education, occupation and the class of a
person's family, circle of friends and acquaintances.[citation needed]
• Cultural identification. Often in the United States, the middle class are the most
eager participants in pop culture whereas the reverse is true in Britain [2].

The second generation of new immigrants will often enthusiastically forsake their
traditional folk culture as a sign of having arrived in the middle class.[citation needed]

In the United States by the end of the twentieth century, more people identified
themselves as middle class than as lower or "working" class (with insignificant numbers
identifying themselves as upper class).[citation needed] In contrast, in the United Kingdom, in
recent surveys up to two-thirds of Britons identify themselves as working class.[citation needed]
The British Labour Party, which grew out of the organized labour movement and
originally drew almost all of its support from the working class, reinvented itself under
Tony Blair in the 1990s as "New Labour," a party competing with the Conservative Party
for the votes of the middle class as well as the working class.

Geographic terms such as "Heartland America", "Middle America" and "Middle

England" are used to refer to a concept of the middle class of a country being located in
the centre of that country.
Middle America

Middle America suggests a small town or suburb in the United States where people are
predominantly middle class. The economy of Middle America is traditionally considered
agricultural, though most Middle Americans now live in suburban locales, and a person
may hold Middle American values while not living geographically in the Midwestern
United States, and vice versa. [3] [4] The phrase Middle American values refers to more
traditional or conservative politics like family values. There are many people who object
to the notion that one group or subgroup of Americans defines its values or defines
proper family values.

Middle England

Though Middle England more commonly denotes the middle class of non-urban England,
it also has connotations of "Deep England". The BBC described the Kentish town of
Tunbridge Wells as the "spiritual home" of Middle England; [5] correspondents on a rather
insular outdated idea of England are often parodied by signing letters Disgusted of
Tunbridge Wells.
Marxism and the middle class In Marxism, which defines social classes according
to their relationship with the means of production, the middle class is generally
synonymous with the remaining vestiges of the petit bourgeoisie, primarily composed of
small business owners and the self-employed, as well as individuals occupying
managerial and supervisory positions entailing the assumption of discretionary authority
over the hiring and firing of subordinate labor. Historically, under feudalism, the
bourgeoisie was represented by the urban merchant and professional class who stood
between the aristocracy and the laboring classes, and thus, for a time, constituted a
"middle class" as positioned in relation to the ruling and producing classes of the era.
Later having, itself, matured to the position of ruling class throughout the developed
nations of the modern world, the bourgeoisie's inherently continuous need to generate
greater levels of market expansion and productivity, has and must invariably lead the
system's trajectory to become further characterized by the steadily increasing
concentration of capital, thereby correspondingly squelching the market share of small
and independent proprietors, and displacing them into the evermore preponderant ranks
of the working class. Consequently, Marx generally identified the modern middle class as
an antiquated and dwindling social relic of the era preceding mass production, while
characterizing all the endeavors aimed at preserving its own separate class position,
relative to those of the modern working and ruling classes, as being predicated upon an
inherently reactionary and historically obsoleted aspiration.

Marxists vigorously debate the exact composition of the middle class under capitalism.
Some describe a "co-ordinating class" which implements capitalism on behalf of the
capitalists, composed of the petit bourgeoisie, professionals and managers.[citation needed]
Others dispute this, freely using the term "middle class" to refer to affluent white-collar
workers as described above (even though, in Marxist terms, they are part of the
proletariat—the working class).[citation needed] Still others (for example, council communists
and advocates of participatory economics) allege that there is a class comprising
intellectuals, technocrats and managers that seeks power in its own right.[citation needed] This
last group allege that such technocratic middle classes seized power and government for
themselves in Soviet-style societies (See co-ordinatorism).[citation needed]

Recent growth of the global middle class

In February 2009, the Economist magazine announced that over half the world's
population now belongs to the middle class, as a result of rapid growth in emerging
countries. It characterized the middle class as having a reasonable amount of
discretionary income, so that they do not live from hand to mouth as the poor do, and
defined it as beginning at the point where people have roughly a third of their income left
for discretionary spending after paying for basic food and shelter. This allows people to
buy consumer goods, improve their health care, and provide for their children’s
education. Most of the emerging middle class consists of people who are middle-class by
the standards of the developing world but not the rich one, since their money incomes do
not match developed country levels, but the percentage of it which is discretionary does.
By this definition, the number of middle class people in Asia exceeded that in the West
sometime around 2007 or 2008.[6]
The Economist article pointed out that in many emerging countries the middle class has
not grown incrementally, but explosively. The rapid growth results from the fact that the
majority of the people fall into the middle of a right-skewed bell-shaped curve, and when
the peak of the population curve crosses the threshold into the middle class, the number
of people in the middle class grows enormously. In addition, when the curve crosses the
threshold, economic forces cause the bulge to become taller as incomes at that level grow
faster than incomes in other ranges. The point at which the poor start entering the middle
class by the millions is the time when poor countries get the maximum benefit from
cheap labour through international trade, before they price themselves out of world
markets for cheap goods. It is also a period of rapid urbanization, when subsistence
farmers abandon marginal farms to work in factories, resulting in a several-fold increase
in their economic productivity before their wages catch up to international levels. That
stage was reached in China some time between 1990 and 2005, when the middle class
grew from 15% to 62% of the population, and is just being reached in India now.

The Economist predicted that surge across the poverty line should continue for a couple
of decades and the global middle class will grow enormously between now and 2030.]
Professional-managerial class

Barbara Ehrenreich and her husband John defined a distinct part of the middle class in
1977 as "salaried mental workers who do not own the means of production and whose
major function in the social division of labor...(is)...the reproduction of capitalist culture
and capitalist class relations"; and they named this group the "professional-managerial
class". [7] This group of middle class professionals are distinguished from the rest of the
class by training and education (typically business qualifications and university degrees),
[8]
with example occupations including academics and teachers, social workers, engineers,
managers, nurses, and middle-level administrators. [9] The Ehrenreichs developed their
definition from studies by André Gorz, Serge Mallet, and others, of a "new working
class", which, despite education and a perception of themselves as being middle class,
were part of the working class because they did not own the means of production, and
were wage earners paid to produce a piece of capital. [10] The professional-managerial
class seeks higher rank status and salary, [11] and tend to have incomes above the average
for their country. [12]

Confusion surrounding the term

A persistent source of confusion surrounding the term "middle class" derives

predominantly from there being no set criteria for such a definition. From an economic
perspective, for example, members of the middle class do not necessarily fall in the
middle of a society's income distribution. Instead, middle class salaries tend to be
determined by middle class occupations, which in turn are attained by means of middle
class values. Thus, individuals who might fall in the middle ground on a societal
hierarchy as defined by sociologists do not necessarily fall into a middle ground on an
economic hierarchy as defined by economists. As a result, intuitive colloquial and
journalistic usage of the term casts a wide net and does not necessarily coincide with an
academic sociological or economic definition.
The middle class squeeze is the situation where increases in
wages fail to keep up with inflation for middle income earners, while at the same time,
the phenomenon fails to have a similar impact on the top wage earners. Persons
belonging to the middle class find that inflation in consumer goods and the housing
market prevent them from maintaining a middle class lifestyle, making downward
mobility a threat to counteract aspirations of upward mobility. In the United States for
example, middle class income is declining while many staple products are increasing in
price, such as energy, education, housing, and insurance.[1]

One group summarizes the middle class squeeze in this way "Being middle class used to
mean having a reliable job with fair pay; access to health care; a safe and stable home;
the opportunity to provide a good education for one’s children, including a college
education; time off work for vacations and major life events; and the security of looking
forward to a dignified retirement. But today this standard of living is increasingly
precarious. The existing middle class is squeezed and many of those striving to attain the
middle-class standard find it persistently out of reach." [2]

Contents
1 Causes of the Middle Class Squeeze

• 2 Other Factors
• 3 Large Scale Economic Facts associated with the Middle Class Squeeze
• 4 Common Beliefs of Middle Class Americans
• 5 See also

• 6 References

Causes of the Middle Class Squeeze

Income Changes
In a study conducted in 2006 by The United States House of Representatives there were
some interesting income findings that show the effects of the middle class squeeze.
According to the study, not only is real income decreasing for the middle class, but also
the gap between the top wage earners and the middle earners is widening. Between 2000
and 2005 real median household incomes in the United States has declined by 2.5%,
falling each of the first four years of the Bush Administration, falling by as much as 2.2%
annually. Overall real median income has declined since 2000, by $1,273, from $47,599
in 2000, to $46,326 in 2005. According to the survey, working class families, those
headed by adults younger than 65, have seen even steeper declines. Although they had
seen an increase in real median household income from 1995 to 2000 of 9%, since 2000
their income has fallen every year and a total of 5.4%. In actual money terms this
correlates to a decrease of $3,000 from $55,284 to $52,287.[1] The other way in which
income has an impact on the middle class, is through increases in income disparity.
Findings on this issue show that the top 1% of wage earners continue to increase the
share of income they bring home,[3] while the middle class wage earner loses purchasing
power as his or her wages fail to keep up with inflation. Between 2002 and 2006, the
average inflation adjusted income of the top 1% of earners increased by 42%, whereas
the bottom 90% only saw an increase of 4.7%.[2]

Changes in the price of Staple Consumer Products

•Insurance and Health Care - Insurance and Health care is an important factor regarding
the middle class squeeze because increases in these prices can put an added strain on
middle income families. This situation is exactly what the House of Representatives
survey shows regarding Health care prices. In 2000, workers paid an average of $153 per
month for health insurance coverage for their families, however, by 2005 these numbers
had increased to $226 per month.[1] The effects of the price change in health care can be
seen in many ways regarding the middle class. The number of people who are uninsured
has also increased since 2000, with 45.7 million Americans now without health
insurance, compared to 38.7 million at the start of the millennium. Also, 18% of middle
income Americans, making between 40,000 and 59,999 dollars were without health
insurance during 2007 and more than 40% of the 2.4 Million newly uninsured Americans
were middle class in 2003.[4]
The rise in prices also causes a harm to working middle class Americans because it
makes it more costly for employers to cover their employees, as shown by the fact that in
2007 60% of companies offered their workers health insurance down from 69% in 2000.
Also the number of Americans who reported skipping treatment due to its cost has
increased from 17% to 24% during the same time period.[2]

•Energy Products - Like health care, increases in energy products can put added stress on
middle class families. Energy Prices have been rising since 2000 as well, including
gasoline, home heating, and other forms of energy. Since 2000 the U.S. has seen a 52%
real increase in gasoline prices, a 69% real increase in natural gas prices, a 73% real
increase in heating oil costs, a 59% real increase in propane costs, and a 8% real increase
in electricity cost. Overall, adjusting for inflation, this results in a cost for American
families of $155 more in 2006 then they spent in 2000. Along with these direct cost
increase, Americans also face indirect cost associated with higher energy prices, such as
higher jet fuel prices, higher gas and diesel prices for commercial airliners, and higher
natural gas prices for commercial and industrial users, and assuming these cost are passed
on to consumers of these companies, it will cost the average American household $1,150
per year. Taken together these indirect and direct factors cost American middle class
families $2,360 more in 2008 than in 2000.[1]

•Education - The benefits of higher education is something that clearly correlates to

higher income in later life, with findings showing that the average high school graduate
earns $31,286, while the average college graduate makes $57,181, and education is often
considered the gateway for upward mobility for the middle class. However, because of
increases in college education costs, many middle class Americans are missing out on a
college education because of high prices, or caused them to leave college with massive
amounts of debt, not allowing the middle class to enjoy the full benefits of a college
education. Studies show that the average cost of a four year college or university has
increased by 76% since 2000, adding to this the middle class faces struggles because of
decreasing financial aid. There has been no increase in government Pell grants, while at
the same time interest rates for student loans has increased to a 16 year high. These price
increases don't just affect middle class Americans trying to get into college, but they also
continue to affect those who attain a college education using the high interest rates of
student loans.[1] Two out of three college graduates begin their careers with student loan
debt, amounting to $19,300 for the median borrower. These debts have a long term
impact on middle class Americans, as 25% of Americans who have college debt claim it
caused them to delay a medical or dental procedure and 14% report it caused them to
delay their marriage.[2]

•Home Ownership - Homeownership is often seen as an arrival to the middle class, but
recent trends are making it more difficult to continue to own a home or purchase a home.
1 in 33 American homeowners are projected to lose their homes to foreclosure in the next
few years due to subprime loans, and more than 40.6 million homes are projected to drop
in value. Also homeowners are more frequently having to cash out the equity on their
homes to meet basic living expenses, causing homeowners equity to fall, which means
American homeowners now own less of their homes than they actually did in the 1970s.[2]

Other Factors

•Increases in American Debt - Americans have built up a record $956.9 billion revolving
debt as of 2008, that consist mainly in credit card debt that is more than a 70% increase
from a decade earlier. With the average middle-class American family carrying more
than $2,200 in credit card debt.[4] Also the nations personal savings rate has become
negative in 2005 for the first time since the great depression, with the average household
spending more more than they earned.[2]
•Job Security Changes - More than 92% of the 1.6 million Americans who filed for
bankruptcy in 2003 were middle class.[4] Along with this, manufacturing jobs have
decreased by 22% between 1998 and 2008 largely due to outsourcing of American
businesses.[2]
•Retirement Security Changes - The squeeze on the middle class is also causing
difficulties when it comes to saving money for retirement because of decreased real
incomes and increases in consumer prices. In 2007, 1 in 3 American workers said they
hadn't saved at all for their retirement and of those who have started saving, more than
half claim to have saved less than $25,000. There has also been a shift in employer
retirement plans, with a shift from traditional defined benefit pension plans to 401k plans,
in which there is no individual guarantee about the amount of retirement income that will
be available.[2]

Large Scale Economic Facts associated with the Middle Class

Squeeze

• One of the major economic changes that is often associated with the middle class
squeeze is the change from a budget surplus to a budget deficit that has occurred in the
2000s. In 2000 there was a surplus of over 200 billion dollars, which became a 300
billion dollar deficit in 2005. This deterioration of the overall economic condition is
believed to have led to many of the situations associated with the current economic
squeeze.[1]
• Increases in the unemployment rate - During the first three years of the new
millennium, the unemployment rate increased by almost 50% and still remains higher
today than it was in January 2001.[1]
•There has also been a slowing of job creation in the U.S. with the economy losing 1.5
million workers during the first four years of the new millennium.[1] While middle
income jobs become fewer, those earning the middle income wage can purchase less with
those dollars now than they once could.[5]
• The inflation rate was also the highest it has been in 15 years in 2005; thus wages
haven't been able to keep up with inflation, causing a squeeze on middle class
consumption.[1]

Common Beliefs of Middle Class Americans

According to a Survey on the Middle Class and Public Policy, just 38% of middle class
Americans say they live comfortably, and 77% believe that the country is headed in the
wrong direction. Another 2008 report entitled "Inside the Middle Class: Bad Times Hit
the Good Life" states that 78% of the middle class say it is more difficult now than it was
five years ago. The Middle class also responded that 72% believe they are economically
less secure than ten years ago and almost twice the number of Americans claimed they
were concerned about their personal economic stability. Showing that, overwhelmingly,
the American people believe the middle class is being squeezed and are in a worse
economic position than they were even 5 years ago.[2]
BusinessWeek
By Diana Farrell and Eric Beinhocker
May 19, 2007

May 28, 2007 issue - Throughout India's history, the vast majority of its
people have lived in desperate poverty. As recently as 1985, more than 90
percent of Indians lived on less than a dollar a day. Yet India is poised to
undergo a remarkable transformation. New research from the McKinsey
Global Institute (MGI) shows that within a generation, the country will
become a nation of upwardly mobile middle-class households, consuming
goods ranging from high-end cars to designer clothing. In two decades the
country will surpass Germany as the world's fifth largest consumer market.

The headlines of India's growth story are well known —after the country
began reforming in the early 1990s, economic growth jumped to about 7
percent. It slowed in the late '90s but since 2002 has proceeded at a
blistering pace, surpassed only by China among the world's large
economies. Less well known is how this growth is reshaping the lifestyle of
Indian families. MGI's research portrays a dramatic transformation that will
touch Indians up and down the income pyramid, from the poorest rural
farmer to the wealthiest IT entrepreneur. Companies that fail to understand
the unique desires and tastes of the new Indian consumer will miss out on a
half-billion-strong market that along with China ranks as one of the most
important growth opportunities of the next two decades.

One of our most striking findings is how dramatically recent growth has
reduced the numbers of the poorest Indians, a group we call the deprived.
They earn less than 90,000 Indian rupees a year ($1,969 per household, or
about a dollar per person per day), and include subsistence farmers and
unskilled laborers who often struggle to find work. They can be found across
India, from its isolated villages to its sprawling urban slums. Many depend on
government-subsidized food to get enough calories each day. Since 1985,
the ranks of the deprived have fallen from 93 percent to 54 percent of the
population, as 103 million people moved out of desperate poverty and many
millions more were born into less grim circumstances. When we factor in
population growth, there are 431 million fewer deprived Indians today than
there would have been had the poverty rate remained stuck at its earlier
level, making India's economic reforms the most effective antipoverty
program in its history. If growth continues at its recent pace, we expect a
further 291 million people to move out of poverty over the next two decades.
Most of these former poor will move into the class we call the aspirers,
households earning between 90,000 and 200,000 rupees ($1,969-$4,376)
per year. Aspirers are typically small shopkeepers, farmers with their own
modest landholdings or semiskilled industrial and service workers. Their lives
are not easy, but aspirers generally have enough food and might own items
such as a small television, a propane stove and an electric rod for heating
water. They spend about half of their income on basic necessities, and many
of their other purchases are bought secondhand or in what Indians call the
"informal economy." Over the next 20 years this group will shrink from 41
percent of the population to 36 percent, as many of them move up into the
middle class.

The next two groups—seekers, earning between 200,000 and 500,000

rupees ($4,376- $10,941), and strivers, with incomes of between 500,000
and 1 million rupees ($10,941-$21,882)—will become India's huge new
middle class. While their incomes would place them below the poverty line in
the United States, things are much cheaper in India. When the local cost of
living is taken into account, the income of the seekers and strivers looks