New entrants in India's middle class: Drivers, carpenters, pani puri vendors

MUMBAI: India’s middle class has seen new entrants. Pani puri vendors, dosa sellers, carpenters, welders, launderers, drivers and cable TV technicians have all pulled themselves out of the clutches of poverty and leapt into a section of the middle class — the bedrock of the economy.A paper titled ‘The Rise of the New Middle Class and the Role of Offshoring of Services’, co-authored by the head of Mumbai University’s school of economics, professor Neeraj Hatekar and his colleagues Kishore More and Sandhya Krishna, has found that a faster pace of growth and higher intensity of work has led to the upward mobility.“Lower middle class households earn better not because they are engaged in different occupations compared to the poor, but because they have been able to get more of their family members to do the same things than the poor do,” says Hatekar. In the study, “lower middle class” refers to households whose daily per capita consumption expenditure is between $2 and $4 (Rs 134-Rs 268) each. Poor households spend less than $2 per capita per day.Ventakesh Kumar, political scientist and professor at the Mumbai-based Centre for Governance and Public Policy agrees with the findings of the study. “The social base of the middle class is expanding and it is cutting across caste, occupation, age, gender and geography,” he says.A survey of around 800 households conducted by the School of Economics found a significant shift in the type of assets held by those who had just entered the lower middle class. Almost everyone had a cell phone and a watch or clock. Over 70 per cent had access to electricity and about 60 per cent had a fan, owned a colour television, had a pressure cooker and a chair. More than half of them had gold jewellery and steel utensils.“The aspirational expenditure is different because there is a clear difference in aspirations among the lower classes (poor) and the lower middle classes,” says Hatekar.The study proposes a new category called the ‘new middle’ with daily per capita consumption spending range of $2-$10. Though the largest number of the ‘new middle’ families are likely to have moved into the lower middle class, some have also moved up to middle-middle or upper-middle — hence the large consumption band of the ‘new middle’.The period between 2004-05 and 2011-12 has witnessed a dramatic swelling of the new middle class — from just about 28 per cent to a little over 50 per cent of the total population. In absolute terms, the size of the new middle class is estimated to have increased from 304 million to 604 million, according to the study.“The middle class is now a diversified group because the country now offers various opportunities for creation of wealth,” says S Parasuraman, director of Tata Institute of Social Sciences.One of the key purposes of the study was to look at the contribution of off-shoring services (ITES-BPO) to uplift of poor households. Hatekar and More conclude that the sector has not made a significant direct contribution, at least in quantitative terms, to the creation of the new middle class.