India's middle class first emerged in the early 19th century as a result of British policies that established a small, educated, upper-caste, English-speaking elite. However, it wasn't until the 21st century that this segment became a significant economic force, gaining global attention for its substantial consumption potential. Today, the middle class in India is multifaceted, with economic growth since the 2000s giving rise to both an established and an emerging middle class.
Determining the size of India's middle class depends heavily on the income thresholds applied. In 2012, using an income range of US$2–10 per day, over 600 million people, approximately half of India's population, were considered middle class. By 2021, a higher income bracket of US$17–100 per day identified 432 million Indians as middle class, accounting for 31% of the population, up from 14% in 2005.
The middle class can be further divided into lower and upper segments, each with unique spending habits. The lower middle class, earning US$2–4 daily, tends to spend on private healthcare, education, and basic consumer goods. In contrast, the upper middle class, with more disposable income, is inclined towards luxury items and discretionary goods.
The liberalization of the Indian economy in the early 1990s opened up high-paying jobs in sectors like finance and information technology, reshaping the occupational structure of the middle class. This economic shift led many from the established middle class to transition from traditional government roles to careers in the private sector. Affirmative action policies allowed lower castes and economically disadvantaged groups to fill the government positions vacated by the middle class.
Moreover, unskilled workers found new opportunities in the private sector as food vendors, security guards, domestic staff, and construction workers. Recent policies, such as the Mahatma Gandhi National Rural Employment Guarantee Act, have increased rural incomes, allowing rural India to integrate into the middle class. Some analyses suggest that the rural middle class may now exceed its urban counterpart.
The growth of India's middle class has brought about changes in political attitudes. During the struggle for independence, the English-speaking middle class was actively involved in politics. However, by the mid-20th century, this engagement declined as the middle class was not large enough to significantly influence voting patterns. Following economic liberalization, the expanding middle class seized better-paying job opportunities, and by the 2000s, its substantial size established it as a crucial vote bank.
Despite economic growth fostering a larger, more inclusive, and politically active middle class, this group remains susceptible to economic downturns. The Pew Research Centre reported a contraction of the Indian middle class during the COVID-19 pandemic. The government's 2022–23 Household Consumption Expenditure survey indicated slow growth in household consumption expenditure, underscoring the fragile nature of the economic stability within this demographic.
Ensuring ample job opportunities is vital to prevent social unrest, as recent demands for affirmative action benefits have demonstrated.
India's diverse and expanding middle class plays a pivotal role in shaping the domestic market. However, maintaining economic stability and fostering job creation are essential to meet the aspirations of this group and avert potential social crises. The government's priority must be to adeptly manage the evolving social and economic landscape of the nation.
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