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  1. #1
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    The myth of the Indian middle-class

    You often hear that the Indian Middle class is bigger than the population of the United States. But this is a very interesting article from The Economist.
    https://www.economist.com/news/leade...lass-should-be

    India has a hole where its middle class should be

    AFTER China, where next? Over the past two decades, the world’s most populous country has become the market qua non of just about every global company seeking growth. As its economy slows, businesses are looking for the next set of consumers to keep the tills ringing.

    To many, India feels like the heir apparent. Its population will soon overtake its Asian rival’s. It occasionally grows at the kind of pace that propelled China to the status of economic superpower. And its middle class is thought by many to be in the early stages of the journey to prosperity that created hundreds of millions of Chinese consumers. Exuberant management consultants speak of a 300m-400m horde of potential frapuccino-sippers, Fiesta-drivers and globe-trotters. Rare is the chief executive who, upon visiting India, does not proclaim it as central to his or her plans. Some of that may be a diplomatic dose of flattery; much of it, from firms such as IKEA, SoftBank, Amazon and Starbucks, is sincerely meant.

    Hold your elephants. The Indian middle class conjured up by the marketers and consultants scarcely exists. Firms peddling anything much beyond soap, matches and phone-credit are targeting a minuscule slice of the population (see article). The top 1% of Indian adults, a rich enclave of 8m inhabitants making at least $20,000 a year, equates to roughly Hong Kong in terms of population and average income. The next 9% is akin to central Europe, in the middle of the global wealth pack. The next 40% of India’s population neatly mirrors its combined South Asian poor neighbours, Bangladesh and Pakistan. The remaining half-billion or so are on a par with the most destitute bits of Africa. To be sure, global companies take the markets of central Europe seriously. Plenty of fortunes have been made there. But they are no China.


    Centre parting

    Worse, the chances of India developing a middle class to match the Middle Kingdom’s are being throttled by growing inequality. The top 1% of earners pocketed nearly a third of all the extra income generated by economic growth between 1980 and 2014, according to new research from economists including Thomas Piketty. The well-off are ten times richer now than in 1980; those at the median have not even doubled their income. India has done a good job at getting those earning below $2 a day (at purchasing-power parity) to $3, but it has not matched other countries’ records in getting those on $3 a day to earning $5, those at $5 a day to $10, and so on. Middle earners in countries at India’s stage of development usually take more of the gains from growth. Eight in ten Indians cite inequality as a big problem, on a par with corruption.

    The reasons for this failure are not mysterious. Decades of statist intervention meant that when a measure of liberalisation came in the early 1990s, only a few were able to benefit. The workforce is woefully unproductive—no surprise given the abysmal state of India’s education system, which churns out millions of adults equipped only for menial work. Its graduates go on to toil in small or micro-enterprises, operating informally; these “employ” 93% of all Indians. The great swell of middle-class jobs that China created as it became the workshop to the world is not to be found in India, because turning small businesses into productive large ones is made nigh-on impossible by bureaucracy. The fact that barely a quarter of women work—a share that has seen a precipitous decline in the past decade—only makes matters worse.

    Good policy can do an enormous amount to improve prospects. However, hope should be tempered by realism. India is blessed with a deeply entrenched democratic system, but that is no shield against poor decisions. The sudden and brutal “demonetisation” of the economy in 2016 was meant to target fat cats, but ended up hurting everybody. And the path to prosperity walked by China, where manufacturing produced the jobs that pushed up incomes, is narrowing as automation limits opportunities for factory work.

    All of which means that companies need to deal with the India that exists today rather than the one they wish to emerge. A strategy of waiting for Indians to develop a taste for products that the global middle class indulges in—cars as income per head crosses one threshold, foreign holidays when it crosses the next—may lead to decades of frustration. Only 3% of Indians have ever been on an aeroplane; only one in 45 owns a car or lorry. If nearly 300m Indians count as “middle class”, as HSBC has proclaimed, some of them make around $3 a day.


    Big market, smaller opportunities

    Companies would do better to “Indianise” their business by, for example, peddling wares using regional languages preferred by hundreds of millions of Indians. Pricing matters. Services proffered at the same price in India as Indiana will appeal to mere millions, not a billion. Even for someone in the top 10% of Indian earners, an annual Netflix subscription can cost over a week’s income; the equivalent in America would be around $3,000. Apple ads may plaster Mumbai, Delhi and Bangalore, but for only one in ten Indians would the latest iPhone represent less than half a year’s salary. The biggest consumer hits in India have been goods and services that offer stonking value: scooters and mobile telephony have grown fast, but only after prices tumbled.

    The sharpest businesses work out which “enablers” will allow Indians to gain access to new goods. Electrification drives demand for fridges. Cheap mobile data (India is in the midst of a data-price war that has hugely benefited consumers) are a boon to streaming services. Logistics networks put together by e-commerce giants are for the first time making it possible for a consumer in a third-tier city to buy global fashion brands. A surge in consumer financing has put desirable baubles within reach of more Indians.

    Insofar as it is the job of politicians to create a consumer class, successive Indian governments have largely failed. Businesses hoping the Indian middle class will provide their next spurt of growth should be under no illusion. Companies will have to work very hard to turn potential into profits.
    Last edited by Abdullah719; 13th January 2018 at 22:34.

  2. #2
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    So Indian middle class is more Indian than say American or European and not consumerist like the new Chinese and existing Americans?
    Would think that's a good thing, the article's point of only profit is pretty one dimensional.


    In cricket, my superhero is Sachin Tendulkar. He has always been my hero.
    -Virat Kohli

  3. #3
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    Hate the indian middle class with a passion. In fact despise them. The cheerleaders of the rich and exploiters of the poor. Mental slaves of the western civilization. The rotten core of India...this degenerate, debauched and depraved middle class.

  4. #4
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    Quote Originally Posted by CricketCartoons View Post
    Hate the indian middle class with a passion. In fact despise them. The cheerleaders of the rich and exploiters of the poor. Mental slaves of the western civilization. The rotten core of India...this degenerate, debauched and depraved middle class.
    I agree! They see everything through Bollywood, hate Pakistan chat shows and what America says! Absolutely obsessed with celebrity culture all they want is for their kids to reach the USA as soon as possible. I would know more about India's history then they do!


    PP's own self proclaimed sharpshooter and defender of Islam and Pakistan.

  5. #5
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    Quote Originally Posted by PakLFC View Post
    I agree! They see everything through Bollywood, hate Pakistan chat shows and what America says! Absolutely obsessed with celebrity culture all they want is for their kids to reach the USA as soon as possible. I would know more about India's history then they do!
    I have a lot to say about this ghatiya and beghairat class but don't want to ruin a beautiful sunday morning. All of my inner bitterness and the hatred I carry is because of my interaction with this damned middle class.

  6. #6
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    $20,000 PA is around 13L PA in Indian rupees Ofcourse a lot of people won’t earn that much.. There are plenty of people earning 3-5L PA around $8000-9000 who would actually come under middle class I supppose..
    Last edited by Abdullah719; 15th January 2018 at 00:56.

  7. #7
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    A bad article. So they judge a middle class by how much they love western companies.

    In India, they are losing out to the chinese brands , and some homegrown companies. They no longer hold a monopoly in markets.

  8. #8
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    Some of you are now very near bans. Fix your posting style now.


    For the latest updates on Cricket, follow @PakPassion on Twitter

  9. #9
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    The top 1% of Indian adults, a rich enclave of 8m inhabitants making at least $20,000 a year, equates to roughly Hong Kong in terms of population and average income. The next 9% is akin to central Europe, in the middle of the global wealth pack. The next 40% of India’s population neatly mirrors its combined South Asian poor neighbours, Bangladesh and Pakistan. The remaining half-billion or so are on a par with the most destitute bits of Africa.
    That sounds about right.


    Roses are red
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  10. #10
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    Quote Originally Posted by JaDed View Post
    So Indian middle class is more Indian than say American or European and not consumerist like the new Chinese and existing Americans?
    Would think that's a good thing, the article's point of only profit is pretty one dimensional.
    Pretty sure that's not what the article is saying. What it's saying is that the size and purchasing power of the Indian middle class has been greatly exaggerated.


    Roses are red
    Violets are blue
    Military and mullah
    *Redacted*

  11. #11
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    Quote Originally Posted by DW44 View Post
    Pretty sure that's not what the article is saying. What it's saying is that the size and purchasing power of the Indian middle class has been greatly exaggerated.
    I am surprised to see you take the bait on this article. In what world is a country with a billion+ population and a 2 trillion economy expected to have a burgeoning middle class? China with an economy nearly 5 times of India is still considered a middle tier consumer base. All projections on India are on the expected growth over the next decade and even then we are expected to hit 6 trillion, so you could rehash the article and it will still be relevant. The articles presents no new information and simply states the obvious dumped down with charts; we have this thread

  12. #12
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    Can't really speak for the esteemed posters from India on PP but a couple I have got to know recently who work for a big company in the UK as contractors via an India based company are desperate to leave their home country but unable to given contractual restrictions. They pointed out how severe levels of inequality remain, lack of career progression, corruption and backward mentalities are rampant. But given their skill set and wage in India have a decent living but are not satisfied, one of the blokes hopes for a future where India is more like the UK while the other finds it laughable because it's impossible due to the generational narrow mindedness which might take light years to eradicate. One of the fellas visa will expire soon, his best bet is to marry a brit but it will be tough; while the other is trying to politick his way out of his contract with the India based company.


    Ah, so this is what it feels like

  13. #13
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    Quote Originally Posted by shaz619 View Post
    Can't really speak for the esteemed posters from India on PP but a couple I have got to know recently who work for a big company in the UK as contractors via an India based company are desperate to leave their home country but unable to given contractual restrictions. They pointed out how severe levels of inequality remain, lack of career progression, corruption and backward mentalities are rampant. But given their skill set and wage in India have a decent living but are not satisfied, one of the blokes hopes for a future where India is more like the UK while the other finds it laughable because it's impossible due to the generational narrow mindedness which might take light years to eradicate. One of the fellas visa will expire soon, his best bet is to marry a brit but it will be tough; while the other is trying to politick his way out of his contract with the India based company.
    All that is true,India is fairly a young country that was(subcontinent) exploited for a long time by Brits,cannot change society overnight.

    Levels of inequality are pretty high even in USA btw,the rich always get to go to better schools and recommendations work well too.

    Italy,Sweden and Ireland might be pretty decent now,but had high immigration during the early 20th century.


    In cricket, my superhero is Sachin Tendulkar. He has always been my hero.
    -Virat Kohli

  14. #14
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    Quote Originally Posted by JaDed View Post
    All that is true,India is fairly a young country that was(subcontinent) exploited for a long time by Brits,cannot change society overnight.

    Levels of inequality are pretty high even in USA btw,the rich always get to go to better schools and recommendations work well too.

    Italy,Sweden and Ireland might be pretty decent now,but had high immigration during the early 20th century.
    Still blaming the British and not your leaders like Nehru and the Ghandis. They started with 40 crore population and the entire country to themselves, got to rule for 60 years, yet they have delivered a country bursting at its seams and running with chaos, corruption and casteism, a human rights abuser and lackey of any power willing to pat their backs.

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