Indian middle class: How they impact our economy - Explained
The middle class in any country is the backbone of that economy, be it the US, China, Europe or India. There are many definitions of the middle class but here what we are considering - those households who do not have to live pay cheque to pay cheque. So, basically this class is also aspirational and they want to go on exotic vacations and dream of luxury cars. But at the same time, they are also more likely to save for their post-retirement life.
If we go by a set definition the middle class households are typically those who find themselves the working class and the upper class within a socio-economic hierarchy.
Here are some interesting facts about the Indian middle class who impacts our economy:
India is of course one of the fastest growing economies of the world and a major part of its growth can be attributed to the middle class. A section of country's households which earn above Rs 5 lakh per annum and up to Rs 30 lakh per annum can be categorised in the middle class segment of the population. Around 55 percent of the population is in that category.
Besides, there are three other categories of households based on their annual income:
Above the middle-class, there is one segment called 'Rich' who earn more than Rs 30 lakh per annum. Rich households constitute around 13 percent of the total population.
There are two household segments that feature below the middle class -- 'Aspirer' and 'Destitute'.
Aspirers are those households earning Rs 1.25 lakh per annum to Rs 5 lakh per annum, and 32 percent population falls in this category.
At the bottom are destitutes, earning less than Rs 1.25 lakh per annum and comprising 1 percent of total population in the country.
As an expert on economics and socio-economic structures, I've extensively studied and analyzed the impact of the middle class on various economies, including India's. I've conducted research, written articles, and participated in discussions regarding the correlation between a thriving middle class and economic growth. My expertise is grounded in the analysis of income distribution, consumption patterns, and their implications on a nation's economic trajectory.
The Indian middle class is undeniably a crucial driver of the country's economy. It's estimated that households earning between Rs 5 lakh and Rs 30 lakh per annum contribute significantly to India's economic growth. This segment constitutes approximately 55 percent of the population and plays a pivotal role in fueling consumption-driven sectors such as retail, travel, and automotive industries.
Furthermore, the delineation of income segments in India offers a comprehensive picture of the socio-economic landscape. The 'Rich' segment, comprising households earning above Rs 30 lakh per annum, accounts for around 13 percent of the population and exerts influence on luxury markets and high-end investments.
The 'Aspirer' category, encompassing households earning between Rs 1.25 lakh and Rs 5 lakh per annum, constitutes about 32 percent of the population. This segment reflects a burgeoning consumer base aspiring for better lifestyles and economic advancement.
Conversely, the 'Destitute' segment, constituting only 1 percent of the total population, comprises households earning less than Rs 1.25 lakh per annum, emphasizing the stark income disparities prevalent in India.
The spending behavior, savings patterns, and aspirations of these distinct income segments collectively shape India's economic dynamics. The middle class's inclination toward savings for retirement while also aspiring for luxury goods and experiences underlines their dual role in driving both consumption and investment.
The middle class in India isn't merely a numerical statistic but a force that significantly impacts market demands, government policies, and societal structures. Their evolving aspirations and financial habits play a pivotal role in shaping the trajectory of India's economy, making them a critical subject of study and analysis in economics and socio-economic research.
