Everyone in India thinks they are ‘middle class’ and almost no one actually is

Another myth of Indian economy goes down.

Rohan Venkataramakrishnan reports on research on India’s middle class:

In a country quite as large as India, it’s hard to identify anything that actually counts as being in the “middle.” Yet most of us claim we are middle-class, no matter where we fall on the spectrum, whether compared to the rest of India or the globe. As far as the Pew Research Center is concerned, all those stories about India’s burgeoning middle-class have little to do with reality: India is, as it has always been, woefully poor.

A Pew Research Center study looking into the break-up of income levels across the world released last week offers a wake-up call for those familiar with headlines in the English press touting the promises of India’s massive middle-class. The study, which looked at changes in income levels across the world’s population, points out that the first decade of the 2000s saw a dramatic, historic reduction in global poverty. Yet, despite this, the actual number of people who could be considered middle-income remained under 15%.

The study divided the population in each country into five groups based on a family’s daily per-capita consumption or income. The thresholds are based on various things, with $2 being the daily per capita income level under which people are globally considered poor, and $2-$10 fitting people in under the low-income category. As per this measure, the middle-class falls into those who earn between $10 and $20 a day. (As a reminder of how low this still is, the study reminds us that the poverty line in the United States, comes in at around $16 – on the upper end of what this report considers middle income).

A look at India’s break-up, based on these parameters, would leave you asking where that celebrated middle-class actually is.

Only 2% is really middle class compared to global average of 13%. 95% is low and poor.

So going to middle class is also an aspiration for most Indians:

The Pew Research Study points out the essential problem with having such a broad definition for middle-class. Although we keep hearing about India’s massive middle class, probably because so many Indians think they fall into the category, the reality is that only a tiny amount of Indians qualify to be in a very conservative middle-income category, and the gap in living standards between economically advanced nations and developing ones is not narrowing.

“The first decade of this century witnessed an historic reduction in global poverty and a near doubling of the number of people who could be considered middle income. But the emergence of a truly global middle class is still more promise than reality,” the report said.

India is still classified as a low income country. So by simple logic most of us should be a low income as well. However, thanks to media and hype most of us believe we are actually middle class. Compared to global averages, we are no where close to being a middle class either.. Did I just hear we are a economic superpower already?

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