Middle Class Moment

HOW BIG, REALLY, is India's middle-class? It depends on how you define middle-class: by income or by consumption.

- Minhaz Merchant

Foreign companies look at both parameters. They know that by income in purchasing power parity (PPP), the Indian middleclass has an urban bias though rural India is fast catching up. But when measured by consumption across a range of goods and services, India's middle-class is large and growing.

Let's look at the data. According to the 2011 Census, 63.2 percent of Indian households owned a mobile phone, 47.2 percent owned a television set, 21 percent owned a two-wheeler, and 4.7 percent owned a four-wheeler.

Since the 2011 Census is outdated, it reflects Indian ownership - and consumption - more than a decade ago. So turn to the more recent 2019-20 NFHS (National Family Health Survey).

According to the omnibus NFHS, 93.3 percent of Indian households own mobile phones, 67.8 percent own television sets, 49.7 percent own two-wheelers, and 7.5 percent own four-wheelers.

Even this data is nearly four years old so ownership numbers in these key categories would have risen, especially in two-wheelers, cars and SUVs. Clearly the optimism of foreign companies - in domains ranging from automotive and electronics to FMCG and white goods - appears justified.

In an interview with Britain's Financial Times (owned by Japan's Nikkei group), Masanon Togawa, CEO of the leading white goods company Daikin, said: "India would turn into a market as giant as China in the future, as the middle-class and the wealthy are growing tremendously."

The Caveat