India’s ‘middle class’ delusion

India’s ‘middle class’ delusion

E paperSubscriptionLogin OpinionIndia’s ‘middle class’ delusionIf you’re reading this piece, you can possibly do with a reality check on where you stand on India’s economic ladderThe poorest families in India, often six members strong, make do with less than Rs 10,000 a month

Yogendra Yadav Published: 11 Jan 2025, 4:15 PM

In my teaching days, I often introduced my students to a game that revealed the true picture of India. I’d ask them to imagine a hundred-step ladder where every individual in the country stood according to their income — the poorest on the first step and the richest on the hundredth. I’d then ask them to place their family on this ladder. After hearing their answers, I’d present to them the real data. Disbelief would be writ large on their faces, and that is how their ‘discovery of India’ would begin, so to speak.

The Indian government recently released income data for rural and urban households for 2023–24; it is officially known as ‘Household Consumption Expenditure Survey’.

Economists have found that people either cannot or often do not want to accurately disclose their income, but when asked about their expenses, they are more forthcoming. Based on information about daily food expenses and on other heads such as clothing, education, healthcare and entertainment, the National Sample Survey Organisation (NSSO) estimates monthly per capita expenditure.

For decades, this survey — conducted with large samples and using credible methods — has been considered the most trusted source of data, forming the basis of many government policies.

Let’s play the ‘discovery of India’ game using these figures. First, let’s visit the home of Mr Krishnan, who was recently promoted to branch manager at a government bank. He earns Rs 1.25 lakh per month, while his wife, a private school teacher, makes Rs 35,000.

After living in a rented house, they bought a flat five years ago, where they now live with their two children. They own a modest car, and their son rides a motorcycle. There’s an air-conditioner in the bedroom. A typical ‘middle-class family’, you’d think.

Kanta works as domestic help in their house, earning Rs 8,000 a month, while her husband, Suresh, is a driver who makes Rs 15,000. Together, they support a family of five, including their three children, in a rented house. They dream of buying a scooter someday — a hardworking family.

Mr Khanna, who has an account in Mr Krishnan’s bank, earns Rs 2.5–3 lakh a month. He owns a factory, which employs six people, and he lives in a large house with his wife, two children and elderly mother. They own two cars and have even travelled abroad once — not old-money aristocrats, but well-to-do. In everyday urban lingo, Mr Krishnan’s family would be labelled ‘middle class’, Mr Khanna’s ‘upper middle class’, and Kanta’s as ‘poor’.

On the hundred-step ladder, most would put Kanta around the 20th step, Krishnan between the 50th and 60th, and Khanna somewhere around the 80th or 90th. And this is where our understanding falters.

Let’s test this perception against real data. According to the latest figures, the urban middle class — those between the 40th and 60th steps — spends less than Rs 4,000 per person per month.

This means Kanta and Suresh, who run their family on Rs 20,000–25,000, are the true urban middle class. Urban households in the bottom 20 per cent can’t even afford to spend Rs 3,000 per person per month.

On the other hand, any family that spends over Rs 20,000 per person per month is part of the top 5 per cent in urban India. Households that spend Rs 30,000 or more per person per month are in the top 1 per cent. So, whether they believe it or not, Mr Krishnan stands on the 95th step, and Mr Khanna is perched at the very top.

In rural India, the situation is even more grave. A family that spends Rs 7,000 per person per month (or Rs 35,000 for a family of five) belongs to the top 10 per cent. The rural middle class consists of families (of, say, five members) surviving on Rs 20,000 a month. The poorest families, often six members strong, make do with less than Rs 10,000 a month.

This, incidentally, is the national average, which hides worse regional disparities. Eastern states like Bihar, Jharkhand, Odisha, West Bengal, Assam and eastern Uttar Pradesh fare the worst. In these regions, fewer than half the families can afford to spend even Rs 15,000 a month.

Countless iterations of the ‘discovery of India’ game have yielded the same conclusion — our understanding of India’s economic stratification is deeply flawed. Urban Indians, cocooned in relative privilege, have little to no idea of the harsh realities of the life of an average Indian. The truly poor are practically invisible. The real middle class is mistaken for the poor and those at the top of the ladder are conveniently labelled the middle class.

When will the country’s ruling elite wake up from this comforting illusion?

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