Friday, May 23, 2014

How big is Indian Middle Class? From Laptops to Motorbikes: 10-20%

In my previous post, Malik posed an interesting inquiry- by Global standards, how big is Indian/South Asian middle class.  How large is the size of what we may call the ‘haves’ in this region?

I’ll focus here on India – and pray pundits may do the number crunching for the rest of South Asia or perhaps correct or refine the estimate I propose for India. The object here is not to arrive at an exact figure but a rough estimate whose upper and lower bounds are fairly certain. 

What Census Data tells us

The latest, most reliable and most comprehensive data on Household possessions for India  is the Census 2011 Data . While a middle class household must possess a decent house with all the ‘basic’ global middle class amenities- a modern toilet, kitchen, electricity supply, water supply and so on; Census data does not provide us such holistic picture ( no data on number of households having ALL these basic amenities) but certain key indicators (which one may term as ‘elite’ and ‘Aam Aadmi’ indicators) can be used to arrive at a rough estimate of Middle Class household share in populace. 

Upper Middle class & elite Households 

 Census data on 3 of the ‘elite’ indicators:

o    Households owning Car/Jeep/Van:  4.7%

o    Households owning Computer/Laptop: 9.4%

o    Households having Mosaic/Floor tiles:  10.8%

Assuming any household which owns any of the above 3 items must fall under middle class, one can reasonably claim that middle class size should be atleast 10% of all households (afterall how many poor households can spare money for Laptop/Computer or Mosaic/Floor tiles? Very few I believe).

Mainly middle class members:  Significant chunk, if not Majority of these should fall under middle class)

Census data on some of the “Aam Aadmi” (Common middle class) indicators:

 o    Households owning Scooter/motor cycle/Moped: 21%

o    Households  owning LPG/PNG for cooking: 29%

o    Households owning Concrete roof: 29%

o    Households owning Cemented floor: 32.2%

Again assuming any household who doesn’t own any one of the above items doesn’t deserve middle class status, one can reasonably claim that middle class households should not be more than around 20% of all households (afterall how many middle class households can’t afford even a scooter/motor cycle/moped? Leaving out environmentally conscious, Very few I guess).

Putting the two bounds together one can reasonably claim that going by Census 2011 Data:

 Middle Class households account for 10-20% of India’s all households.

I admit this is a very simplistic analysis (cheaper recycled stuff; elite/middle class separation; traditional cow dung users and many other details overlooked) devoid of intense academic rigor; and can be refined further but very broadly, It does give us a reasonable rough estimate which also sits well with estimates coming from  multiple other sources, for example:

PS: Is it an overestimated, underestimate or needs to be refined further (closer to 10%, or to 20% or somewhere in b/w)? Comments are most welcome.