The rise of the new middle class: No political party can afford to take them for granted

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Updated: May 1, 2019 6:52:57 AM

What is much more likely is that, as in developed countries, with time, they will enter different political parties and begin to influence political agendas as well as electoral outcomes, much more decisively.

Later this year, it is expected to overtake the UK to become the world’s fifth largest economy.

The most remarkable phenomenon characterising 21st century India is the emergence of the 350-million-strong middle class. The importance of this development is not just limited to the statistical significance of the growing numbers of this class, it also extends to the decisive influence this class will have in moulding public opinion on many national issues. Its voting behaviour may well determine outcomes in the current general elections as well.
Since 1950-51, India’s GDP has grown by about 50 times in real terms. Currently, with a GDP of $2.6 trillion and a growth rate of about 7%, India is the world’s fastest growing major economy. Later this year, it is expected to overtake the UK to become the world’s fifth largest economy.

Decades of economic growth have had two major outcomes: One, every minute, according to a Brookings study, 44 Indians escape the trap of extreme poverty, estimated by the World Bank at $1.9 per person per day. Such poverty, currently at 5%, may decline to 3% by 2022 and be eliminated altogether by 2030.
Two, equally importantly, the country has also witnessed an unprecedented social mobility which has enabled millions to climb on to the bandwagon of the burgeoning middle class. With an annual per capita GDP of nearly $2,000, India is now increasingly becoming a low middle income rather than a poor country.

This middle class, currently estimated at 350 million or about 25% of the population, will rise to 583 million or 41% of the population by 2025. These educated people, with annual income ranging between `2 lakh and `10 lakh, are to be found in tier-2, tier-3 and tier-4 cities. They drive both consumption as well as savings in the economy. At a personal level, they aspire to live in their own houses, and many of them closer to the lower end of the threshold fondly look forward to owning their first refrigerators, washing machines and two-wheelers.

Historically, this new middle class is the product of three forces: One of these was unleashed when economic reforms, implemented in the 1990s, generated opportunities for millions of people. Politically, a new post-reforms consensus centring on a market-based economy thus emerged. This replaced the earlier Nehruvian consensus based on a much more public-sector-dominated command-and-control model.

Two, at about the same time, thanks to VP Singh’s support to the decade-old Mandal Commission report, a large number of backward caste youth agitated for greater representation in public employment and in institutions of higher learning. Eventually, they succeeded in achieving their objectives when the Constitution was amended to grant them 27% reservation. This provided middle class access to many poor people who otherwise may not have been able to gain such entry.

Three, when in the wake of the Mandal agitation, the Hindu society began to split on the lines of caste identity, a worried BJP found—in the birthplace of Lord Rama—a perfect symbol for the revival of Hindu pride and nationalism. And the swelling ranks of this new class readily embraced this ideology.

Currently, too, many of these people are nationalistic to a fault. Not surprisingly, many of them are avid supporters of the BJP. They want their children to be better educated them, and are ready to spend amounts they can scarcely afford on their education in English-medium schools. This is because they see proficiency in English as a passport to success.

Typically, these people prefer simple laws and hassle-free processes. They frown on subsidies financed out of taxes they pay. Like taxpayers the world over, they want to see the fiscal connection between the taxes the government collects from them and the benefits they get in return. Voluntary compliance often suffers when they fail to make this connection. As such, they are unlikely to happily pay taxes for large-ticket dole schemes such as the Congress party’s Nyuntam Aay Yojana (NYAY).

No political party can really afford to take these people for granted. Since they are educated, they cannot be easily manipulated as a vote bank. In Delhi, many of them supported Anna Hazare’s crusade against corruption, and later Arvind Kejriwal’s Aam Aadmi Party. But when the latter failed to deliver on its anti-corruption agenda, many of them withdrew support to this party.

Both the BJP and the Congress have, in their manifestos, tried to woo these people with promises of lowering income-tax rates, improving compliance, reducing joblessness, working towards good governance, etc. However, unless these intentions are translated into action, it is unlikely that empty promises will fool these people for long.
What is much more likely is that, as in developed countries, with time, they will enter different political parties and begin to influence political agendas as well as electoral outcomes, much more decisively.

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