Money and consumption mark hierarchy in the new middle class

49Themiddleclass To buy or not to buy: The middle class is torn between living within its means and stretching for more as its options increase | REUTERS

THE DEFINITION of middle class-ness has remained constant over the years and across the world: living on the knees of comfort, neither in the lap of luxury nor facing the duress of hard living; earning money through steady and regular work, identifying oneself with a profession or a ‘line’ of work; working hard for, and on, one's children to improve their station in life; climbing well-defined ladders of social hierarchy and economic well-being; having hope for the future; valuing education or skills as a way to get ahead; and not rocking the boat that is transporting one to a better place in the future. When we talk of a growing middle class, we are talking of India having enough families who can afford to clamber on to the knees of comfort and think like this.

Thirty years ago, India had a handful of rich people (with white money) and a small group of middle class. The rest were in varying degrees of being poor. Today, India has a very small sliver of families who are seriously rich, but enough to populate a tiny, shiny, disconnected planet that orbits around itself and also is part of a ‘global rich’ galaxy. And then we have a large and expanding planet of middle class Indians, acquisitive and vocal, comprising the top 20 per cent of households. This planet has far less shine than planet rich and is far away from it. But planet middle class is far brighter than the dull constellation of planets with the rest of Indians in varying degrees of less than comfortable living—we have one planet of the near or lower middle class, who can’t yet clamber aboard, but are within sighting distance of planet middle class; and the ‘poor, but getting less poor' and the ‘stuck in poverty' families each on a planet of their own.

Apart from the swelling numbers which make them a collectively important force, there are some very big differences between the middle class of today and the middle class we had 30 years ago. First, they earned much less, though their housing, transport, health care, pensions and club facilities were usually taken care of by the employer. Second, they had so little that they could buy with that money. Things were either so expensive as to be unaffordable or needed a long queuing time to get or were not available at all, like expensive foreign or private school education for children or fancy phones.

Since then, the number of things to buy has exploded, their prices have crashed and quality has improved. In conjunction with income increases, this has resulted in a hugely consumption oriented middle class, which defines present and future markers of success also in terms of what one consumes. Since the things to buy are growing far more than incomes, the middle class is continuously tempted and torn between living within its means and stretching for more. Because policy makers see the value of household consumption in driving economic growth and attracting foreign investment, today’s middle class has been constantly exhorted and incentivised to consume. Because they are growing in number and in money, marketers are wooing them and retail finance companies offer them credit. Terms like masstige and mass affluent are new entrants into the business strategy lexicon. Being in debt was a horrific thing for the old middle class. Poor people were in debt, not them. But now, debt has been morally purified as the necessary working capital for life and packaged in the form of a credit card or a home or car or foreign travel loan. So the definition of being on the 'knees of comfort' has changed to include a modest car and a two-wheeler to go with it, durables, eating out in a variety of places, travelling on vacations and so on.

The biggest driver of change by far in the Indian middle class world view, values and attitudes is its occupation demographics. The middle class of 30 years ago was almost exclusively government servants or people in steady salaried jobs with government-like large private organisations, teachers, doctors, engineers, lawyers or members of the armed forces. Around 1980, when the Market Research Society of India decided on a socio–economic classification system to reflect income, it zeroed in on occupation and education of the chief wage earner of the household as the best predictors of income. And it was indeed a good surrogate for income until the new world happened, post-1991.

Gradually, the growth of such jobs slowed down and most of India is now self employed and fending for itself. Another thing happened. As market forces picked up, the plumber, carpenter, small businessman, crane operator and personal trainer started increasing their incomes and clambered on to planet middle class, changing its world view and attitudes totally, a nice cocktail of brahminical sensibilities and baniya aggression, both resting on a bulwark of skill improvement, a broader form of education.

Rajubhai, the house repair contractor’s son, does a computer-aided design course and the photo studio owner’s son learns how to offer a multitude of digital imaging services. The delivery boy is now an e-enabled aggregator of services and everyone at all education levels is upgrading skills to learn about what’s new and how to deal with it and profit from it.

So, social hierarchies are changing. It is not clear if the general manager of Indian Railways or professor at an IIT is above or below the owner of a large durables retail shop or a small taxi fleet operator. Activism is on the rise but it’s a civil society that wants paisa vasool for its taxes in the form of no corruption and an efficient regime that can help them earn more.

It understands its power as a market, a vote bank and a pressure group. The distance between it and the government has narrowed and it understands the value of speed money, buying its way into schools and colleges, and government approvals. It is the first middle class we have seen that is largely independent of the mai baap sarkar for its income and lifestyle. Money and consumption are the new markers of the social hierarchy within the new middle class.

We are not seeing the full societal import of the new middle class yet, but the morphing has begun. I was part of an interview panel for awarding scholarships to 22 to 25-year-olds proceeding to prestigious colleges overseas and I was intrigued by the fact that most of them were children of the old middle class, as inferred from their parent’s occupation. I ran some numbers and found that even in 2020-21, over half the 'heads of households’ of middle class families will be those born before 1975, about 30 per cent between 1975-85 and only 15 per cent born in 1985 or after, that is, liberalisation children.

And as we have seen earlier, any economic hiccup that dislodges the middle class from its comfort levels will have a huge complaining, whining, protesting backlash.

The author is a management and market research consultant.

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