Key Points
A favourite pastime of Indias business analysts and media over the years has been to estimate the size of Indias middle class a critical indicator of the current and future health of Indias household consumption, and hence Indias economy...
Perhaps this is because of lack of clarity on what characteristics the middle class must have in order to qualify for the label, despite all the literature on the subject from scholars around the world..
The result is several groupings of heterogeneous households all labelled middle class, based on other-country benchmarks or subjective judgments with very wide income ranges or yardsticks of consumption of consumer durables and amenities, or a magic number of income where consumption is supposed to take off, based on developed world cost structures (ask Jio and HUL if they believe this)...
The economic concept of middle class, on which abundant literature exists, is that a genuine middle class should provide a certain quantum of consumption that is stable and resilient because of how the income to consume is generated (the nature of occupation); and should have enough surpluses after routine expenditure to help them weather economic downturns and be able to bounce back without having to contract their consumption too much for too long..
In an earlier paper, Indias Future lies in building a genuine middle class, we have pointed out that Middle India, the middle 60% of households in the middle of the income spectrum, should have been the genuine middle class of India and has been neglected, and that Indias future lies in building a genuine middle class several times larger than it is now..
