December 18, 2008
Former Deputy Director of Census Operations in India
Media reports on the “exploding” middle class in India would lead any reader to believe that Indian society is undergoing a top-to-bottom transformation into a society of Western-style consumers.
A recent Business Week article quoted a McKinsey Global Institute study that claimed that India, in one generation, would become a nation of upwardly mobile middle-class households, consuming goods ranging from high-end cars to designer clothing. In two decades, India would pass Germany as the world’s fifth-largest consumer market, the article went on. That, in fact, may not be much of an achievement given that India has 1.2 billion people and Germany 82 million! While it is certainly true that even small percentages give rather large numbers in India, a more realistic assessment of the true situation is needed.
Is India’s middle class surging? We first need to consider the term “middle class,” which can convey a variety of images. Those in the West undoubtedly have a fairly clear idea of what they mean by it. In this article, we will not try to define the concept for India but we will take a look at how the average Indian household actually lives. Readers can draw their own conclusions.
Visitors to India who may have spent all of their time in New Delhi might well return home believing India had “arrived,” and that the middle class was thriving. While poverty is always visible in the city, the number of new cars and SUVs, shopping malls, and tony restaurants would leave a lasting impression. Even so, just 7 percent of households in Delhi owned private cars according to the 2001 Census. And this affluent city contains just over 1 percent of the country’s households. Most of India’s population lives in smaller cities or rural areas in extremely simple housing and with few modern amenities.
There are two principal official sources for information on such topics as household amenities and consumer expenditures, the decennial census and the National Sample Surveys (NSS) taken by India’s National Sample Survey Organization. The NSS measures monthly per capita expenditure (MPCE) for households each year. MPCE consists of both cash household expenditures for different classes of goods and services and cash equivalents since barter is quite common in the rural areas.1 Actual money income is not asked in the census or in the NSS.
In 2006-2007, the average MPCE in the rural areas, where most Indians live, was 695 rupees or about US$14. In urban areas, it was 1,312 rupees, or about US$27. About 52 percent of MPCE was spent on food in rural areas, while the same figure was 39 percent in urban areas. Housing costs for owner-occupied dwellings are excluded because so many people have constructed their own homes and, in a sense, live rent-free. These estimates do not take into account different price levels in urban and rural areas, but they do provide a rough idea of the level of living.
The 2001 Census provides a detailed look housing conditions and living standards. In 2001, there were 138 million rural households and nearly 54 million urban households. It is worthwhile to remember that, although India is often referred to as a billion-strong market, many purchases, such as refrigerators, are peculiar to households. India’s households include more people than they do in the United States and other Western countries, so a billion people does not translate into as large a market for household goods as it would in Western countries. In 2001, the average Indian household consisted of 5.4 people in rural areas and 5.2 people in urban areas. The average was just 2.6 people per household in the United States in 2001.2 Thus, although India’s population is about four times the size of the U.S. population, it has less than twice as many households. India had 192 million households in 2001, compared with 108 million in the United States.
In 2001, nearly 110 million of India’s households lived in dwellings with a mud floor, 72 percent of rural households and 18 percent of urban households (see Table 1). This represented an improvement over the 1991 Census in which 79 percent of rural households and 27 percent of urban households lived with mud floors. Urban houses are, as one might expect, more solidly constructed and more permanent.
The census also lists 50 percent of houses as being in “good” condition, 44 percent as “livable,” and 6 percent as “dilapidated.” The figures are somewhat better in urban than in rural areas. The overall picture these data show is certainly at odds with a Western view of the middle class. And, the census data do not capture the small size of most houses or their vulnerability to the elements.
|Construction Materials||Rural Households||Urban Households|
|Grass, thatch, bamboo, wood, etc.||17.5||13||2.1||4|
|Mud, unburnt brick||54.9||40||6.9||13|
|Grass, thatch, bamboo, wood, etc.||38.3||28||3.7||7|
|Metal, asbestos sheets||13.6||10||8.7||16|
|Mosaic, floor tiles||3.0||2||11.0||21|
Source: 2001 Census of India.
Seventy-eight percent of rural households lack a latrine within the house, while less than half of urban households have a flush toilet, or water closet. Only 24 million out of 192 million households have a proper sewage connection (see Table 2). A majority of households use firewood for cooking although LPG (liquid petroleum gas) is widely used in urban areas. The NSS indicates that the proportion using firewood for cooking did not change from 1999-2000 to 2006-2007, although there was an increase in LPG use in both rural and urban areas. Although it is often commented that television ownership is commonplace even in high poverty countries, nearly 63 percent of Indian households did not have one. In villages, however, many televisions are shared by multiple households so that viewership is larger than census data would suggest. Among the most popular programs are cricket matches, religious programs, and game/talent shows.
|Rural Households||Urban Households|
|Toilet within house||30.3||22||39.6||74|
|With water closet||9.8||7||24.8||46|
|With pit latrine||14.2||10||7.8||15|
|No toilet within house||108.0||78||14.1||26|
|Type of drainage (sewage)|
|Availability of kitchen within house|
|Cook in open||19.7||14||2.9||6|
|Fuel used for cooking|
|Liquified petroleum gas (LPG)||7.8||6||25.8||48|
|Car, jeep, or van||1.8||1||3.0||6|
|None of the above||56.0||41||10.2||19|
Source: 2001 Census of India.
That ultimate Western measure of middle class status, the automobile, is a relative rarity in India. Less than 5 percent of households had some type of vehicle. In the rural areas, vehicles tend to be rather old and in disrepair. In Delhi, vehicles more than 15 years old are not allowed, but these vehicles often begin a second life in rural households outside the city. The much-anticipated introduction of the US$2,000 Nano by Tata Motors will undoubtedly boost the number of cars on the road, primarily in larger cities. The Nano is quite small. with a motorcycle-type engine, and the first model will not be air-conditioned. Its price, however, is only a little more than the most expensive motorbikes and it does get one out of the rain. It can be anticipated that some will be purchased by nonresident Indians (NRIs) working in Western countries as wedding and family gifts. Still, the sight of a family of four aboard a scooter or motorbike is likely to remain more common than a family riding in a private car for a very long time to come. The number of two-wheel vehicles increased by 52 percent between 2000 and 2004, from 34 million to 52 million while, over the same period, the number of cars, jeeps, and taxis rose 54 percent, from 6.1 million to 9.5 million.
NSS data for 2002 show that 1.5 percent of urban households in nonslum areas had a personal computer with an Internet hookup and an additional 1.9 percent had a computer with no Internet (see Table 3).
|Amenity/Consumer Item||Rural||Urban Nonslum|
|Computer, no Internet||0.6||1.9|
|Computer, with Internet||0.0||1.5|
These figures are probably at odds with the image of urban Indians one often gets from the Western media. Computer ownership was virtually nil in rural areas. Ownership of a telephone in urban nonslum areas was 26.4 percent for fixed phones and 3.6 percent for cell phones.
The NSS also provides times series data on the source of household energy and lighting. By 2001-2002, the use of electricity surpassed that of kerosene in rural households and stood at 56 percent electricity, 42 percent kerosene in 2006-2007. In urban areas, the availability of electricity rose to 93 percent in 2006-2007. These survey statistics, however, conceal the fact that power cuts are a frequent fact of life in India so that many households are without power for many hours of the day.
Even a cursory examination of the types of data cited in this article shows that many stories written about the contemporary lifestyles of Indians are fraught with exaggeration. There is, without question, a middle class that has been growing slowly over the past few decades. Yet even that group has but a passing similarity to the concept of the middle class in the West.