SA L 5 310115 Anirudh Krishna, Devendra Bajpai

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Economic & Political Weekly EPW JANUARY 31, 2015 vol L no 5 69

Anirudh Krishna ([email protected]) teaches Public Policy and Political Science at Duke University, the US, and Devendra Bajpai ([email protected]) teaches at the Birla Institute of Management Technology, Greater Noida, NCR.

Layers in Globalising Society and the New Middle Class in IndiaTrends, Distribution and Prospects

Anirudh Krishna, Devendra Bajpai

The means of personal transportation to which one has

access constitute an important part of ones relationship

with globalisation, limiting or enhancing the scope of

activity and area of influence. We define economic

classes in relation to different transportation assets,

considering as the lower middle class those who have

motorcycles or motor-scooters, and as the upper middle

class, those who own automobiles. Unambiguously

identifying a middle class is difficult; the term is

relational, context-dependent, and inchoate. However,

the lower- and upper-middle classes, defined in this

manner, are robust to alternative definitions: these

groups have substantially higher incomes than groups

below, own disproportionately large shares of other

physical assets, and do much better in terms of

education, health, media exposure, and social capital.

The middle class increased from 11% in 1992 to almost

double this percentage in the early years of the new

millennium. Subsequently, its growth has slowed down,

coming almost to a halt in rural areas. Fragility and

volatility are in evidence; many, formerly in the middle

class, have fallen back. It cannot be blithely assumed that

Indias middle class will grow much larger.

A new middle class has come to prominence since the Indian economy became market-driven and better integrated with the global economy. It has attracted growing attention among academic scholars and market ana-lysts. Identifi ed as its chief benefi ciary, the new Indian middle class is also seen as a main support for greater global integra-tion (Fernandes 2006; Sridharan 2010; Varma 1998). Many are optimistic that the numbers of the new middle class will con-tinue growing rapidly, benefi ting from and further spurring market-led growth (ADB 2010; Kharas 2011; McKinsey Global Institute 2007a, b).

This paper presents a contrary view. We fi nd that the earlier rapid growth in middle class numbers has slowed down and prospects for future growth may be modest.

Before presenting the argument and the data upon which it is based, we briefl y review diverse defi nitions and estimates of the middle class in Section 1. We also defend our particular defi nition, explaining why we have chosen to study economic classes in relation to a particular type of asset.

1 Defining the Middle Class and Estimating Its Size

The term middle class is slippery because it is relational: the middle is relative to what lies above and below. When the top or bottom layers move higher or lower, the bounds of the mid-dle class will also change. This variability makes defi nitions of the middle class both time- and context-dependent. The upper bound of the middle classes in a poor developing country may be lower than the lower bound of the middle class in other countries. There cannot, therefore, be any universal defi nition of the middle class (Hacker 2006; Lahiri 2014). Alternative defi nitions based on occupational categories, education, in-come levels, consumption patterns, and asset holdings are uti-lised, giving rise to diverse estimates of the middle class within the same country.

Divided though it is in terms of defi nitions and measures, the contemporary discussion of the middle class commonly de-parts from the notion of class in the classic Marxian sense. Nei-ther control over means of production nor power relations vis--vis the production process is important in current-day calcu-lations, which rely most often upon income or expenditure measurements. For instance, Ravallion (2009) identifi es the developing worlds middle class as those whose daily consump-tion expenditures fall between $2 and $13, the poverty lines

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JANUARY 31, 2015 vol L no 5 EPW Economic & Political Weekly70

used respectively in middle-income and rich country contexts. Easterly (2001) uses a different criterion, considering as middle class those in the second, third, and fourth quintiles of the per capita expenditure distribution; Birdsall (2010) includes within her notion of middle class all those whose consumption expenditures exceeded $10 per day in 2005 and who fell below the 95th percentile of income distribution in their own countries, while Banerjee and Dufl o (2008) work with a defi ni-tion based on per capita expenditures between $2 and $10. All of these calculations, made in purchasing power parity (PPP) dollars, are open to charges of arbitrariness, as needs must be the case when one is dealing with a relational and context- dependent entity.

These alternative identifi cations have delineated what are, strictly speaking, status groups rather than social classes, in the sense implied by Weber (Deshpande 2003; Weber 1958; Wright 1997). The main difference between these concepts is that while classes relate to the production of goods, status groups are stratifi ed according to the consumption of goods, as represented by particular lifestyles and certain assets (Ferreira et al 2013).

Estimates of the likely size of the middle class in India form part of this trend. They relate to status groups rather than Marxian classes, and they work with different ranges of household income or expenditure. Working with a per capita income range of $8-$40 (in 2005 PPP dollars), the National Council of Applied Economic Research (NCAER) estimated that the share of the middle class in the countrys population grew from 5.7% in 2001-02 to 12.8% in 2009-10 (Shukla 2010). Meyer and Birdsall (2012), working with a different range ($10-$50), come up with a lower fi gure: 5.9% of the population or 70 million in 2010. Ravallion, using yet another range per capita daily expenditures of $2-$13 found 264 million in the middle class in 2009. Estimates vary; the middle class is a slippery notion.

To predict its future one must be especially brave. Rosy pic-tures have been painted by some who portray how a rapidly rising tide will by 2050 (or earlier) lift the majority of Indians into middle- or upper-class status. Kharas (2011), writing for the World Bank projects the Indian middle class growing from 4.9% of the population in 2010 to a stunning 70.9% by 2025. Asian Development Bank (ADB 2010) defi nes the middle class per capita income range between $2 and $20 (PPP), and projects that it will grow to more than 75% of the Indian popu-lation by 2030. To put this particular projection in context, it helps to note that at present close to 70% of the population lives below $2 PPP, the lower bound of ADBs working defi ni-tion. Some truly marvellous processes will have to get going in order to effect a transformation of this size. Growth alone has not been transformative to the same extent.

Other projections are more modest. The NCAER projected the middle class growing to 547 million people by 2025, just under 40% of the national population, up from below 13% in 2010. Using the same data set but employing a slightly differ-ent defi nitional range, McKinsey Global Institute (2007b) set the middle class at 41% of the population in 2025. There is no

doubt in these and other projections that the tide raising the Indian middle class will only grow, never ebbing.

Assets as Identifying Criteria

We take a fresh look at the middle class in India. Using assets, instead of the more usual income or expenditure as our identi-fying criteria we examine trends over time and across differ-ent population groups.

There are a number of reasons why assets serve as a more stable and reliable indication of material status. Incomes and consumption expenditures tend to fl uctuate substantially from month to month and year to year among people, the vast ma-jority in India who do not get regular monthly salaries. Sea-sonality plays a large part in the lives particularly of rural peo-ple, limiting the extent to which consumption expenditures averaged over any fortnight or month can serve as a stable or reliable measure of the usual condition. Assets are less suscep-tible to seasonal and day-to-day fl uctuations, being bought and sold only occasionally and held for longer durations. Scholarly arguments have been raised in responsible forums seeking to replace (or at least, to reinforce) expenditure-based poverty lines with asset-based ones (Carter and Barrett 2006; Krishna 2010; Sherraden 1991).

Another reason for working with an asset-based measure is that peoples own understandings of poverty and status tend to be expressed most often in terms of assets. Because they are both stable and lumpy, assets tend to be intrinsically impor-tant for peoplewhile income is only instrumentally signifi -cant (Kanbur and Squire 1999: 10).

A third reason for preferring assets is especially relevant to the particular context of the new middle class in contempo-rary India. Desirous of visibly advancing social status, individ-uals have pushed to acquire the requisite status symbols, as-sets such as motorcycles, cars, and home computers, acting out a new version of sanskritisation.1 Varma (1998:40) remarks how in an earlier period, just after national independence, material pursuits were subsumed in a larger framework that did not give them the aggressive primacy that they have ac-quired today Even the more well-to-do families felt that to fl aunt their assets was in bad taste, but in the period after lib-eralisation, a rush for consumer goods, such as cars, washing machines, and colour television sets has displaced the older ethos, producing a different image. The new imagery showing the rise of a new middle class culture in the context of liberal-ising India depicts an affl uent consumer who has fi nally achieved the ability to exercise choice through consumption (Fernandes 2000: 88). The new middle class in India is seen thus as the site of commodity consumption, whose lifestyles and buying habits, valorised in TV and print ads, give rise to processes of status emulation that guide the conduct and chan-nel the ambitions of others (Brosius 2010; Fernandes and Heller 2006; Liechty 2003; Rajagopal 1999).

Using assets, instead of income or consumption, allows us to tap different streams of advantage, using a more stable meas-ure of value while also following commonly-held perceptions and tracking common behaviours. Section 2 begins the task of

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identifying different status groups in relation to key assets with the help of data drawn from the India Human Development Survey. The distribution of the middle class among different caste, religious groups, occupation types, and locations (urban and rural) is also discussed. That our initial identifi cation of the middle class is robust is provided support by examining alternative data sets in Section 3.

These data show that the former rapid increase of the urban middle class has slowed down. There are worrying indications that the share of the middle class in the rural population has become static. We also fi nd evidence of fl uidity and fl ux: many people who were in the rural middle class in 1993 were no longer in this class by 2005 not moving above but instead falling below, even as the economy was growing. Other indica-tions add to these concerns, making us wonder how the most optimistic projections are likely to come about. Section 4 looks at different features associated by analysts with the Indian middle class: higher education, knowledge of English, media exposure, and social connectedness. These data show that be-low the middle classes there is a sheer precipice. Lower status groups loom far below in each of these respects: education is at a far lower level; knowledge of English is minimal; media ex-posure is very limited; social capital is impoverished; and di-verse health indicators are also much poorer for lower status groups. Their chances of climbing higher and becoming mid-dle class must be assessed against these facts of their current existence. That is the place from where new entrants to the middle class will have to be raised. The means for effecting such a transformation are far from obvious.

2 Lower and Upper Middle Classes

While assets, in general, are useful for assessing households material status, assets of a particular type are especially useful, serving as markers of status groups in an age of globalisation. Transportation assets have this special value, limiting, or as the case may be, enhancing ones ambit of operations. Those who have not even a pair of shoes are usually confi ned to a limited space. Those who have shoes but not yet a bicycle can look for opportunities in a wider area. Those with motorised transport can travel further, benefi ting from still wider opportunity sets. It helps to think of these opportunity sets as a series of concen-tric circles, with the smallest inside circle representing the sta-tus group with no shoes, the next one out representing people with shoes but no bicycle, and so on, with the widest circle rep-resenting the tiny status group with personal airplanes.

Clearly, this way of demarcating economic strata is an ab-straction, a stylised depiction of how things work. But so is every other way of measuring the middle class. No single measure can capture the varied attributes of the middle class including income, wealth, education, English language com-petence and social connectedness.

Our measure is consistent, however, in keeping the classes (or status groups) apart in terms of each of these attributes. Higher status groups in our classifi cation invariably have higher (and in some cases, much higher) education than lower status groups. English competence and social connectedness

are consistently higher. Income levels and broader asset ownership are also both closely aligned with this categorisa-tion of status groups in terms of transportation assets, as shown below.

This sequence of assets serves therefore, as a useful asset ladder. Two-wheelers and cars are simply a representation, a totem if you will, of a status group or class; the class itself has much more than just motorcycles or cars.

Comparisons over time are additionally assisted because ownership rates of two-wheelers and cars have been tracked at different points in time. We can use this information to trace the graph of middle class growth, and we can compare this graph against reported trends and projections. We draw upon multiple nationally-representative data sets assembled bet ween 1992 and 2008, resulting in a very broad empirical examina-tion. A word of caution is in order. We examined fi ve separate data sets (described briefl y in Appendix A, p 77), keeping con-stant our defi ning criteria of the middle class. Since diverse methodologies were adopted in the different data collection efforts in particular, because of variations in the rural and urban shares of the sampled households the numbers deriv-ing from these data sets are not strictly comparable.

Status Groups and Transportation Assets

Table 1 begins the task of identifying status groups in terms of transportation assets. It provides the percentage shares in 2004-05 of households categorised in terms of their best-avail-able means of personal transportation.

Reading from left to right in Table 1, we see how a sizeable group of Indians 4% in all had not even the means to pos-sess a pair of shoes. The next 34.1% had shoes but not a bicycle, while a further 42.7% possessed bicycles but not yet a motor scooter or motorcycle. Together, these three status groups make up more than 80% of the population but it is hard to im-agine how these people could be regarded as middle class. The group with no shoes lives below the poverty line,2 while the next two groups (with shoes and with bicycles) live only marginally above the poverty cut-off. Their consumption habits are not by any means the objects of widespread envy and emulation.

The next higher status group is, however, qualitatively dif-ferent. Notice how a large increase in monthly per capita income (MPCI) separates the bicycle group from the two-wheeler group.

Table 2 (p 72) shows further why motorcycles and cars serve usefully as totem or marker assets: ownership percentages

Table 1: Status Groups and the Middle Class India (2004-05) Status Groups

No Shoes Shoes Bicycle Two-Wheeler Car Car and AC but No (Motorcycle/ Upper Bicycle Scooter) Middle Class Lower Middle Class

Share in national population (%) 4.0 34.1 42.7 17.1 1.7 0.4

Monthly per capita income (Rs) 293 561 602 1,454 2,532 4,455

Source: IHDS 2004-05.

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increase consistently for every other type of asset when one moves up step by step from the lowest (no shoes) to the next higher status group. Every higher status group not only has a superior transportation asset, it also has more assets of every other kind compared to the group below.

A particularly sharp increase in broad asset ownership oc-curs when one transitions from the next lower status group (bicycles) into the lower middle class. The percentage for cooking gas ownership nearly triples, rising from 25% among the bicycle group to 73% in the two-wheeler group. Telephones rise more than six times (9% to 57%) and refrigerators increase eightfold (6% to 48%). It is a steep precipice into the lower middle class in India, a range of assets to acquire and not just a single motorcycle.

A second precipice, another jump in the bundle of assets particularly the subgroup depicted in Table 2 as upper-class assets marks the climb to the next higher status group. The percentage of households owning washing machines rises sharply from 11% in the two-wheeler group to 52% in the car group (and to a further 89% among the upper class). Owner-ship of computers goes up from 2% to 19% to 62%.

For these reasons, we defi ne for this analysis as lower mid-dle class households who possess motor scooters or motor-cycles. This status group was composed in 2004-05 by an esti-mated 17.1% of the population. The upper middle class, consti-tuted by households in possession of motor cars, made up 1.7% of the population in the same year. Since only a handful of Indians possess personal airplanes, we leave out this category, instead considering a fringe group constituted by the richest people who had both air conditioners and cars. In 2005, this richest group was constituted by 0.4% of all Indians, the upper class.3

One other aspect of Table 2 is worth noting. The Indian mid-dle classes, upper and lower, are not as well endowed with what are often regarded in the west as typically middle-class assets. Washing machines were owned in 2004-05 by only 3% in India, credit cards by 1.2% and computers by less than 1%. A 2009-10 survey by the National Sample Survey Offi ce (NSSO) found sim-ilarly that only 2.1% of all households had internet connections at home. Those who think that computers and credit cards and washing machines are widespread in India and those who be-lieve that computers and internet connections are more appro-priate markers of middle-class status suffer, as Gupta (2009: 79) alleges, from an optical illusion of prosperity [which] a small, but highly visible, number of the richhave created.

Middle class defi nitions are invariably context specifi c. In the Indian context, it is not credit cards or Facebook accounts that constitute appropriate markers of middle class status. Motorcycles and cars are better suited for this purpose, vali-dated by popular aspirations as much as statistical variation. Few in India who do not own at least a motorcycle or scooter would be considered by others to be part of the middle class and few would count themselves among the middle class if they did not possess at least a motor scooter.4

Defi ned in this manner, the middle class in India was consti-tuted in 2004-05 by an estimated 18.8% of the national popu-lation, or a total of 205 million people. Higher than Kharas (2011) fi gure of 4.9%, it is lower than Ravallions (2009) esti-mate of 264 million people and much lower than ADBs (2010) estimate of 38%.

Caste and Religious Distribution: Table 3 shows how the new Indian middle, defi ned in our asset-based terms, is dis-tributed across caste and religious groups.

The fi rst data column in this table presents the lowest status group (no shoes). Relatively few upper caste Hindus (only 0.9%) but as many as 6.3% of all scheduled castes (SCs) and 12.9% of all scheduled tribes (STs) belong to this group. STs are three times more likely (and STs are 50% more likely) than the typical Indian to belong to the lowest status group.

Now consider the two status groups that constitute the middle class. Upper caste Hindus are over-represented. On average, 17.1% of all Indians are in the lower middle class and 1.7% is in the upper middle class. Among upper caste Hindus, the corresponding proportions are larger: 28.2% are in the lower middle class, and 3.1% are in the group with cars. All other caste and religious groups are under-

represented. STs have the smallest propor tional representation, fol-lowed by SCs.5

Big City Dominance: Table 4 (p 73) provides the rural-urban break-down of the middle class. Con-sider fi rst only the numbers pro-vided in bold lettering. A total of 27.7% of urban Indians are in the lower middle class and 3.2% are in

the upper middle class a total of nearly 31%. However, the corresponding percentages are much smaller among rural

Table 2: Percentage Share of Each Status Group Possessing Different Assets (2004-05)Status Groups Basic Assets Middle Class Assets Upper Class Assets

Two Pairs Watch Fan TV Pressure Cooking Phone Refrigerator Washing Credit Computer of Clothes Cooker Gas Machine Card

No shoes 67 30 4 2 1 1 0 0 0 0 0

Shoes but no bicycle 98 77 51 36 30 23 8 4 1 0 0

Bicycle 98 88 57 45 31 25 9 6 1 0 0

Two-wheeler (lower middle class) 100 99 95 92 81 73 57 48 11 4 2

Car (upper middle class) 100 99 98 96 95 92 90 83 52 18 19

Car and AC 100 100 100 99 96 95 95 94 89 61 62

Average 96.8 83.4 59.0 48.2 38.0 31.4 16.4 13.3 3.0 1.2 0.9


Table 3: Status Groups across Caste and Religion (2004-05)(Percentage of Each Caste and Religious Group belonging to Each Social Layer) No Shoes Shoes Bicycle Two-Wheeler Car Car Total but No (Lower Middle (Upper Middle and AC Bicycle Class) Class)

Average (%) 4.0 34.1 42.7 17.1 1.7 0.4 100

Upper castes 0.9 31.2 35.4 28.2 3.1 1.1 100

OBCs 3.7 31.9 46.6 16.6 1.0 0.2 100

SCs 6.3 38.4 46.1 8.6 0.5 0.0 100

STs 12.9 36.2 44.5 5.8 0.6 0.1 100

Muslims 3.2 39.1 44.4 11.5 1.5 0.3 100

Others 1.2 32.0 34.5 26.2 5.3 0.7 100Source: IHDS 2004-05.

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households, respectively, 11% and 0.8%, making for a total of a little less than 12%.6

The Indian middle class has a distinctly urban bias: 58% of the lower middle class and 66% of the upper middle class is based in urban locations, even though the urban share of the Indian population is just over 30%. The odds that a randomly picked Indian is middle class are thus more than twice as high if she lives in a city (and not in a village).

Table 4 also shows that a share of the middle class follows a distinct gradient, falling nearly consistently from the largest- to the smallest-sized town and down further until the most

distant village. Where one lives in India has a lot to do with ones chances of being in the middle class, a result observed earlier by Krishna and Bajpai (2011) who call this a pattern of radial dissipation.

Formal Jobs: Occupational categories are not reported in a separate table for want of space. These data show that the chances of being in the middle class are twice as high for sala-ried employees with regular (formal) employment compared to the general population. Being able to count on a regular salary by holding down a formal-sector job reduces the uncertainty, vulnerability, and volatility that so many other Indians experi-ence, making it easier to stably remain in the middle class. The key distinction between the middle class and the poor, as Ban-erjee and Dufl o (2008: 18-19) observe after examining a multi-country sample, is who they are working for, and on what terms Those in the middle class are much more likely to be in relatively secure, salaried jobs. In India, of the total workforce in 2005 of 457 million, 92% had informal jobs, most with little social security or legal protection (NCEUS 2007). The precari-ousness of existence that so many in India experience sets one limit to how many can achieve and sustainably maintain a middle class existence. We will return to a discussion of

labour- market considerations, of risks and reversals of fortune, and movements into and out of the middle class.

3 Broadening the Analysis and Examining Trends

Meanwhile, let us examine how the middle class is refl ected within diverse nationally-representative data sets compiled between 1992 and 2008. We examined fi ve separate data sets (described at Appendix A). Not all of them provide information related to the same set of assets, but fortunately for our pur-poses, each of them identifi es households who possessed, re-spectively, two-wheelers and cars. Employing a consistent defi nition, and mindful of the caveats mentioned above, we can track the evolution of the urban and rural middle classes. Reinforcing our faith in these totem assets, every one of these data sets also showed how the social category we identifi ed as the middle class is substantially different in terms of a variety of attributes.

Table 5 shows how the relative size of the middle class has changed between 1992 and 2008, the most recent period for which such data were publicly available at the time of writing. Instead of parsing out a razor-thin upper class only 0.4% of the population, as noted above we merged it with the upper middle class (the car category). Adding the numbers for the two-wheelers and car categories, we defi ne a new category, which we term middle class-plus.

Look fi rst at the shaded columns in Table 5, giving the com-bined fi gures for urban and rural India. They show how the

share in the Indian population of the middle class (or strictly speak-ing, the middle class-plus) in-creased from 11% in 1992-93, to 13% in 1998-99, to 19% in 2004-05, and further to 22% in 2005-06.

DLHS data for 2007-08 show a sharp drop in this share (to 17%), but these numbers are not comparable. The difference arises in large part from the relative weights given to the rural and the urban parts of the sample. Compared to any other data sets, DLHS gives a higher weight to the rural part, and since the rural middle class is the weaker and smaller part, giving it higher weight reduces the average national fi gure.

Considering separately the rural and urban parts of each sample makes the resulting comparisons more meaningful. In urban India the share of the middle class increased from 23% in 1992-93 to 32% in 2004-05. Thereafter it increased more slowly to 34% by 2007-08.

In rural India the share of the middle class increased from 5% in 1992-93 to 12% in 2004-05, before stabilising, and then it fell by 1% between 2005-06 and 2007-08. Not too much faith can be reposed in such a small difference in numbers between data that were collected using separate methodologies. The broader indication is worth noting, however: even as growth in the urban middle class has slowed down, the rural middle class, small to begin with may no longer be growing.

In order to examine movements into and out of the new middle class, we looked next at results from the only large-scale panel data set publicly available at the time of writing.

Table 4: Status Groups in Towns and Villages of Different Kinds (2004-05)(Share of the population in each category of settlement belonging to each social layer) No Shoes Shoes Bicycle Two-Wheeler Car Car Total but No (Lower Middle (Upper Middle and AC Bicycle Class) Class)

Average (%) 4.0 34.1 42.7 17.1 1.7 0.4 100

Urban 1.4 30.0 36.5 27.7 3.2 1.1 100

> 1 million population 0.4 33.2 30.0 31.9 3.0 1.5 100

5,00,000 -1 million 0.5 26.7 33.4 33.4 5.1 0.8 100

2,00,000-5,00,000 1.0 23.6 38.5 31.3 3.5 2.2 100

50,000-2,00,000 1.9 27.5 42.3 24.6 2.8 0.9 100

< 50,000 population 2.4 33.8 37.0 23.5 2.8 0.5 100

Rural 5.4 35.7 47.1 11.0 0.8 0.1 100

Within 5 km of nearest town 4.3 33.5 49.9 11.2 0.9 0.1 100

5-10 km 4.5 32.7 49.5 12.3 1.0 0.1 100

More than 10 km 6.2 38.3 44.7 10.1 0.6 0.0 100


Table 5: Distribution of the Middle Class across Time and SpaceStatus Groups 1992-93 NFHS 1998-99 NFHS 2004-05 IHDS-NCAER 2005-06 NFHS 2007-08 DLHS (N=88,559) (N=92,486) (N=41,554) (N=109,041) (N=720,320)

Rural Urban All India Rural Urban All India Rural Urban All India Rural Urban All India Rural Urban All India

Two-Wheeler 4 18 9 6 21 11 11 28 17 11 25 17 11 27 14

Car-plus 1 5 2 1 6 2 1 4 2 2 8 5 1 7 3

Total: Middle class+ 5 23 11 7 26 13 12 32 19 13 33 22 12 34 17

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This panel of 13,459 rural households was interviewed in 1993-94 after being randomly selected in 16 states (which to-gether constitute more than 90% of the population). The same households were re-interviewed to the extent possible in 2004-05.

Table 6 is a transition matrix that shows how members of a particular status group in 1993-94 had spread among different

status groups in 2004-05. The no assets group represented here combines the two lowest groups (no shoes and shoes but no bicycle). The bicycle group, the largest one in rural India has been split into three parts only bicycle, bicycle and fan, and bicycle and TV enabling the examination of some fi ner distinctions. Finally, the two-wheeler and car groups, small in size in rural India have been combined along with the richest status group to yield a larger status group, termed as middle class-plus.

Consider the fi rst (and lowest) status group (no asset), which accounted for 36.3% of the rural population in 1993-94. Among these households, 13.5% (less than one-third of the original number) were in the same status group in 2004-05; 7.6% moved to the next higher status group (bicycle); another 5.6% climbed up two status groups (moving to fan); 8% moved still higher (to TV); and 1.7% moved all the way up to the middle class. Similar transitions in each of other status groups of the starting year (1993-94) can be tracked by looking at successive rows of Table 6.

Now consider the situation in 2004-05 by looking down the columns of Table 6. In 2004-05, the no asset group constituted 23.4% of the rural population (down by 12.9 percentage points from its 36.3% share in 1993-94), while the middle class con-stituted 12.7% of the rural population (up by 8.4 percentage points from its 4.3% share in 1993-94).

There has been improvement overall in rural areas with fewer people than before in the lowest status group and more people in higher status groups. The share of the rural popula-tion in the next-to-highest status group (TV) also went up from 11.6% in 1993-94 to 28.6% in 2004-05, another indication of overall progress.

Not every rural household has moved upward, however. A large number of households moved from a higher to a lower status group. The shaded area in Table 6 relates to those house-holds who either remained within their original status group or who fell to a lower position. The un-shaded area relates to households who moved to a higher status group. A total of 50.8% of households moved to a higher status group, while an

almost equal number remained where they were or fell below, with 34.6% remaining where they had been in 1993-94 and 14.6% fell into a lower status group.

To understand what has happened to the rural middle class over this period, consider the row for two-wheelers-or-cars. A total of 4.3% of all rural households were in this status group in 1993-94, but of them only 2.3% (47% of the original number) were still part of the same middle class in 2004-05. No doubt, large numbers of new entrants expanded the ranks of the mid-dle class during these 12 years. What is equally of note, how-ever, is that of its original constituents in 1993-94 nearly half had fallen out of the middle class 12 years later.

Accounting for such large-scale fragility is assisted by refer-ring to the high-risk livelihoods of many in India. Very few have jobs providing regular salaries. Most of the rest live from one day to the next, not sure if there will be any earning to-morrow or what catastrophe might rear its head, depleting re-serves and adding to debt. Large numbers fall into poverty in India, possibly more than in any other country. Poor health and high healthcare costs alone are responsible for putting be-tween 3% and 5% of the population below the poverty line (Garg and Karan 2005; Krishna 2010). Another element of fra-gility has been added more recently: the new sanskritisation, an impulse to acquire consumer assets, even if they are unaf-fordable, by taking on debt. Investigating this phenomenon in Mumbai, Nijman (2006: 772) found that

middle-class status is most commonly associated with visible con-sumption which creates a temptation for aspiring upwardly mobile In-dians to spend even if they dont have the money as long as they can get the credita sort of anticipatory socialisation These consumers are not middle-class or upper-middle class (yet), but they are acting like it. And the fi nancing industry is there to help.

Our examination of rural households whose status fell bet-ween 1993 and 2005 showed that they had disproportionately taken on debts.

A more thoroughgoing examination is necessary for deter-mining the extent to which each of these candidate explana-tions irregular jobs, health expenses, unaffordable asset pur-chases, and high-interest debt is responsible for the observed volatility and fragility. Sources of vulnerability must be ren-dered harmless before claims of regular rapid growth can be sustained.

4 Education, Connectedness, and Health

Groups aspiring to middle-class status are further weakened in other ways. Higher education, English-language competence, media exposure and health status, are important attri butes as-sociated by scholars with the new middle class. Our analyses showed that status groups below the middle class are consider-ably handicapped in relation to each of these attri butes.

We started by looking at average educational achievements. In contemporary India, more than ever before, ones educa-tional credentials are critical for ones future well-being. Re-cent studies have consistently shown how a large and widening gap in earnings and wealth separates higher-educated workers from less-educated and less-skilled ones (e g, Chamarbagwala

Table 6: Movements Into and Out of the Rural Middle Class (in %)Status Groups (1993-94) Status Groups in 2004-05

No Asset Bicycle Fan TV Two Wheeler or Car Rural India (Middle-Class+) 1993-94

No asset 13.5 7.6 5.6 8.0 1.7 36.3

Bicycle 7.3 10.4 5.2 7.7 2.7 33.2

Fan 1.6 0.8 3.1 6.4 2.6 14.6

TV 0.8 0.4 1.6 5.3 3.4 11.6

Two-wheeler or car (Middle class+) 0.2 0.1 0.5 1.2 2.3 4.3

Rural India (2004-05) 23.4 19.4 16.0 28.6 12.7 100.0

Source: HDPI-IHDS Longitudinal Survey.

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2006; Sarkar and Mehta 2010). Attaining only primary or mid-dle school education does not substantially enhance ones earning capacity. High school is the critical threshold beyond which education begins to make a real difference to income and wealth.

Table 7 reports the percentage of individuals aged 15 years and older in each status group who had achieved higher sec-ondary (or higher educational qualifi cations) by the time of

each of these surveys. Data are drawn from three suc-cessive rounds of the Na-tional Family Health Sur-veys (NFHS). While the defi -nition of the middle class is consistent with that em-ployed in the rest of this analysis, lower status gro-ups are perforce defi ned somewhat differently.7

The largest increase in the percentage with higher second-ary (or better) education was experienced within the highest status group. In the group with cars this percentage went up from 68.7% in 1992 to 73.2% in 2006. Among all other status groups, the share of adults with higher secondary or better ed-ucational qualifi cations fell over the 14-year period, 1992-2006, most considerably in the case of the status group, TV, from 39% in 1992 to 32.2% in 2006, representing a diminution of their chances for getting ahead. The spread of capabilities between the highest and the two lowest status groups instead of nar-rowing has also grown larger, one indicator among others of widening differences. To be sure, the population share of the two bottom status groups has also fallen simultaneously while that of the top two groups increased over the same period (from 11% to 20%) giving rise to a higher average educational capability for the country. However, a preoccupation with a rising mean can obscure the simultaneously widening differ-ences. The top and the bottom of the distribution have pulled further apart even as the mean has grown, and the chances that many will move up and become part of a stable middle class have diminished, at least in terms related to education.

This conclusion is reinforced by looking at three other char-acteristics English language competence among children, media exposure, and civil society participation (Table 8). Among children of the three lowest status groups, English- language competence is virtually non-existent: fewer than 5%

can read or write even a word. Among the middle-classes, lower and upper, these percentages are much higher.

Similarly, fewer than 20% among the three lowest status groups have exposure to media of all three types news papers, radio, and TV whereas the majority of both the lower and up-per middle-class has this kind of exposure. Lack of English and low media exposure combine to circumscribe the economic ambits of people in lower status groups, limiting their chances of becoming middle class. Finally, similar to what Harriss (2006) found, there is less participation in civil society by lower status groups. Adding to their travails, health status is a great deal worse for lower status groups compared to the middle class, as Table 9 shows.

In multiple ways, therefore, whether one considers educa-tion, health, media exposure, English competence, or social capital, there is a yawning gap between the middle classes and groups below. This combination of handicaps severely limits the chances that people in lower status groups have for upward social mobility.

Small-scale surveys undertaken in different parts of India among lower and intermediate status groups have shown how, in fact, the scope for upward mobility is small. One such study found no evidence of a signifi cant expansion of the middle class in terms of upward mobility from previous low-income groups (Nijman 2006: 770); another returned a verdict of limited and precarious upward mobility (Krishna 2013: 1015).

5 Conclusion: Securing a Middle Class

The middle in India lies between two global extremes, pithily described by Dreze and Sen (2013: ix) as islands of California and a sea of Sub-Saharan Africa. The number of dollar millionaires has grown apace, even as more than two-thirds of the population (69%) live below the $2 poverty line, appropri-ate for a middle-income country. The ratio of billionaires wealth to GDP in India rose from around 1% in the mid-1990s to 10 percent in 2012, among the highest and fastest-growing rates in the world (Gandhi and Walton 2012: 10). But India is also home to some of the poorest people, and there is evidence of large-scale malnutrition. Stark differences in pros-pects connoting entirely different worlds, one of Facebook likes and international travel, and another of mud huts and

Table 7: Percentage of Adults (Aged 15 and Above) Who Completed Higher Secondary Status Groups 1992-93 1998-99 2005-06 (NFHS) (NFHS) (NFHS)

No asset 4.4 4.3 4.2

Watch 13.6 12.7 10.4

Fan 21.8 18.9 19.3

TV 39.0 33.8 32.2

Two-wheeler 56.0 54.9 54.2

Car 68.7 69.9 73.2

Average 20.6 23.0 28.7

Table 8: Connectedness English Language, Media Exposure, and Group MembershipStatus Group English Language Proficiency Exposure to TV, Average Number of 8 to 11 Years Old (% of Radio, and Newspapers: Group or Society Children Able to Read a Word or More) (% of Households) Memberships

No asset 1.0 5.4 5.6

Watch 1.7 12.3 6.6

Fan 3.1 16.0 7.8

TV 9.4 35.7 7.8

Two-wheeler 16.9 51.5 8.4

Car 39.4 56.5 10.6

Average 7.4 31.5 7.4


Table 9: Indicators of Health StatusStatus Group Number of Prevalence of Unable to do Incidence of Per Cent of Households/ Cataract/1,000 Normal Activities Diarrhoea/ Ever Married 1,000 Reported Population in Previous 30 Days 1,000 Women (15-49) Prevalence of (IHDS 2004-05) because of Morbidity/ Children Aware of Messages Tuberculosis 1,000 Population (DLHS 2007-08) Related to (NFHS 2005-06) (IHDS 2004-05) Sanitation and Safe Drinking Water (DLHS 2007-08)

No asset 30.1 7.1 5.3 145 72

Watch 26.2 5.2 5.0 124 82

Fan 18.7 4.9 4.7 136 89

TV 16.8 4.1 4.1 122 92

Two- wheeler 10.1 3.1 3.6 117 94

Car 5.3 3.5 3.5 99 97

Average 18.8 4.5 4.5 128 86

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malarial infection, are what defi ne the range of what is possible in India.

Thus to speak of a middle class in India as if it were the same as in the west with the same kinds of lifestyles and habits and tendencies is to stretch the concept dangerously, depriving it of much of its substance. It is better to think instead of the middle social strata in India as a group of people, many of whom live just above a global poverty threshold, a near-decent exist-ence but hardly amply endowed with multiple modern conven-iences and assets. We work with an everyday asset-based defi nition that is relevant to this kind of context, applying it consistently to examine different nationally representative data sets.

Defi ned in this manner, the share of the middle class rose from 11% of the Indian population in 1992-93 to 22% in 2005-06. In terms of sheer numbers, this middle class increased from 81.5 million in 1991 to 129 million in 2001 and further to 228 million in 2011.8 These estimates, like all others, are approxi-mate and based on contextually-relevant assumptions. They fall within the range of other estimates that other analysts have derived using income- or expenditure-based calculations.

Unlike others who have noted the fast growth of the past and made similar projections for middle-class growth in the future, we fi nd that the growth of the 1990s and the early years of the new millennium could be tapering off in recent years. Particularly in rural areas, the share of the middle class in the population has become static and may, in fact, be declining,

and even in urban areas the growth rate of the middle-class may be fl attening out.

Fragility and volatility, rather than stability or continued progress, appear to characterise the new Indian middle class. Large numbers, formerly part of the middle class, have dropped below.

The situation is made worse because aspirants to the middle class do not have the capabilities that can help them make and retain middle-class status in the future. Higher education, to-gether with knowledge of English, has become critical for new middle class status. In both respects, the differences between the middle classes and lower status groups are not diminish-ing and may even be growing, producing a situation of higher variance. Upward mobility for lower status groups is further limited on account of the slow growth of formal sector posi-tions. Secure jobs, particularly those of a white-collar nature regarded by some as the defi ning feature of the middle class have not increased as a share of the Indian workforce. More than 90% of the workforce continues to be accounted for by the informal economy. Because of poorer health, the risk of downward mobility is higher for lower status compared to middle-class groups, another indication of growing variance and high vulnerability. Unless these attributes are fi xed, until the risk of downward mobility is lowered and prospects for as-sured upward mobility are substantially improved, the expec-tation that an ever-rising tide will keep lifting millions into middle-class status can seem overly optimistic.

Notes

1 Sanskritisation was the term used by the socio-logist, M N Srinivas, to describe the process whereby ritually lower-ranked caste groups changed their surnames and adopted different rituals and practices in an effort to acquire higher status. Asset acquisition in contempo-rary India is a kind of class-related analog to these earlier caste-based status-improvement tactics.

2 Average monthly per capita income (MPCI) of the status group with no shoes was Rs 293 in 2004-05. The Planning Commission set the poverty line in that year at MPCIs of Rs 356 in rural areas and Rs 539 in urban areas.

3 It may seem odd to consider a group that lies just below the richest 0.4% of Indians as in some ways constituting a middle class. But if we were to identify a group that has even lim-ited resonance with a global understanding, such a depiction is inevitable. As Milanovic (2011: 118) notes, the richest [50 million] peo-ple in Indiahave the same per capita income as the poorest people (as a group) in the United States Only about 3% of the Indian popula-tion has incomes higher than the bottom (the very poorest) US percentile. See also Bardhan (1992) and Gupta (2009).

4 While this statement applies on average, it is not true in particular cases, for example, staunch environmentalists may prefer to use public transportation, even though the state of public transportation in most parts of India is dismal, which goes into the making of this par-ticular asset ladder, apart from the process of status emulation.

5 Other analyses of the middle class have simi-larly found an upper-caste bias. See, for exam-ple, Fernandes (2006); Jaffrelot and van der Veer (2008); and Sheth (1999).

6 Considering, in addition, more rural assets such as tractors and mechanised pump sets did not substantially change these proportions.

7 Some of our earlier transportation assets, such as shoes, do not form part of NFHS data. Defi n-ing the middle class as before, we redefi ned four status groups below the middle class, which are comparable across time periods in these data sets. The lowest status group exam-ined here No Assets does not possess any of a watch, fan, two-wheeler or car. The next lowest status group has a watch but not a fan, TV, two-wheeler or car, and so on. Similar to what we saw earlier, the ownership percentag-es for all other types of assets remain consist-ently greater among higher compared to lower status groups.

8 These numbers were derived by multiplying the percentage shares of the middle class pre-sented in Table 5 separately for rural and ur-ban India to the rural and urban populations provided by the censuses of these years. 1992-93 percentages were applied to the 1991 Census numbers, 1998-99 percentages to the 2001 Census, and 2007-08 percentages to the 2011 Census.

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Appendix A: Data Sets Consulted for This Study Name of Survey Year Implementing Agency Sample Size Rural (% of Total) Urban (% of Total)

1 National Family Health Survey I (NFHS I) 1992-93 International Institute of Population Sciences (IIPS) 88,562 59,740(67) 28,822(33)

2 NFHS II 1998-99 IIPS 9,11,96 60,761(67) 30,435(33)

3 NFHS III 2005-06 IIPS 1,09,041 58,805(54) 50,236(46)

4 IHDS 2004-05 National Council of Applied Economic Research (NCAER) and University of Maryland 41,554 26,734(64) 14,820(36)

5 HDPI-IHDS Longitudinal Survey 1993-94 and 2004-05 UNDP, NCAER and and University of Maryland 13,459(100)

6 District Level Household and Facility Survey III (DLHS) 2007-08 IIPS 7,20,320 5,59,663 (78) 1,60,657(22)

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