No. 58, Sept. 2014

No. 58
(Sept. 2014):

A Middle-Class India?

A Middle-Class India?

V. India’s Middle Class

In the preceding chapter, we have seen the condition of the vast majority of the petty bourgeoisie. The other ‘middle class’ that figures in Marx is the managerial class and other white collar workers. Their incomes cover a wide range, from very high to quite low. In the present conditions of India, these include such varied employments in the private sector as executives, software workers, media employees, college professors, call-centre workers, and technical and clerical staff. Similar in function and status, albeit with a narrower range of incomes, are Government bureaucrats, schoolteachers, and technical and clerical Government staff. These sections do not have means of production of their own. The source of their income is their labour power.

While many professionals (doctors, lawyers, chartered accountants, engineers etc.) are self-employed, what they share with the other members of the above middle class is the fact that theirs is a special type of labour power, embodying a higher level of education and training. As the gap grows between the incomes of those with higher education and training and those without them, a larger proportion of families from the toiling classes are spending their meagre resources to send their young to college, instead of sending them to find work.101 But there is no sign that the type of jobs requiring college education will grow sufficiently to absorb these college-educated youth in future.
In making an estimate of the size of this middle class, we should take note of a few points:

(i) As mentioned earlier, formal workers account for only 8 per cent of India’s workforce. Among the formal workers a substantial section must be counted among the industrial working class (mine workers, factory workers, construction workers, transport workers, etc), and not in the middle class.

(ii) The largest segment of formal workers is employed in ‘community, social and personal services’, which is largely Government/public sector employment. However, within this category, too, many are employed at very low wages, and their social status is low (for example, sweepers and ‘peons’). As noted earlier, the share of Government employment in total employment has been shrinking since the onset of liberalization in the 1990s. According to Labour Ministry data (Director General of Employment and Training), organized sector workers in the public sector numbered 19.3 million in 2000; this number fell to 17.3 million by 2011. Of these public sector workers, those employed in ‘community, social and personal services’ numbered 9.8 million in 2000, falling to 9.1 million by 2011. As a percentage of the workforce, the fall was even steeper.102

(iii) Some other categories of employment, however, have grown particularly fast in the last two decades. ‘Finance, real estate and business services’ grew rapidly, from 0.9 per cent of total employment in 1993-94 to 1.5 per cent in 2004-05 to 2.6 per cent in 2011-12. Its level of GDP per worker is about 7 times the average for the economy as a whole, and despite its small share of employment it now accounts for a staggering 18.1 per cent of GDP. But even within this sector there exist low-paid workers.

(iv) The Information Technology (IT) services industry has grown rapidly since the latter half of the 1990s, and employed 2.8 million in relatively high-income jobs by 2012.103 This phenomenon has attracted great attention. However, 2.8 million jobs constitutes only 0.6 per cent of total employment. (v) Within the registered manufacturing sector, about one-fifth of the employees are in the ‘non-worker’ category, which includes both managerial and clerical staff. This ‘non-worker’ category accounted for 3 million jobs in 2011-12. The average income per worker of this ‘non-worker’ category rose steeply during the period of liberalization. It was 1.5 times that of workers in the 1980s, but rose by 2011-12 to 3.5 times that of workers.104 However, much of this rise may be accounted for by the very high salaries of top management, who are often members of the owners’ families.

The data we have are thus merely clues. More exactly calculating the size of the managerial, white collar and professional middle class with the existing data is beyond our capacity. We can only say that the data indicate that it falls well within the top 10 per cent of India’s workforce (i.e., the top 47 million workers). No doubt the absolute numbers involved are large. The top 5 per cent of India’s population (63 million) is larger than the population of most European countries, and the top 10 per cent (125 million) is larger than any European country. Hence the top 5-10 per cent are important to the marketing strategies of any international investor. But they cannot be the basis for a broader characterization of Indian society.

During the period of liberalization, the employment share of Government white-collar jobs has declined even as that of the private sector has risen.  As such, while the middle class (so defined) will have grown in absolute numbers over the years, it does not appear to have grown significantly as a share of the whole workforce. Rather, the incomes of a section of this class have risen sharply in relation to the rest. The range of incomes within this class would thus have widened. The combination of some growth in the absolute numbers of the middle class and the sharp rise in the incomes of a section of the middle class may give the impression of a much larger phenomenon. This effect may be further amplified by the ‘demonstration effect’, whereby other classes try to mimic some of the consumerist expenditures of the well-off.

No aspect of Indian society can be discussed properly without taking into account its caste dimension; so too with the question of the middle class. (It is interesting to note that, among the studies we reviewed on the middle classes, only one discusses caste; the rest do not even mention it.105) Members of the Hindu upper castes, who account for only one-fifth of the population, predominate in the top 10 per cent by consumption expenditure. As mentioned earlier, the largest proportion of regular formal jobs are appropriated by upper caste Hindus. However, they have been joined in recent years by some members of the OBCs. As for assets, official data indicate “the wealth hierarchy matches the caste hierarchy”.106




101. The Labour Force Participation Rate of the 15-19 age group fell from 43.8 per cent in 1993-94 to 23.5 per cent in 2011-12; for the 20-24 age group, it fell from 63.3 to 50.9. However, we cannot tell from these data whether youth are withdrawing from the labour market in order to obtain more education, or are obtaining more education because they cannot find jobs. (back)

102. According to another estimate, total Central and state government ‘public servants’ (including all Railway employees) numbered roughly 1.6 per cent of the population in 2011. This would amount to about 20 million workers, or about 4.2 per cent of the workforce. The same estimate also found that the absolute number of Central government employees has been shrinking; moreover, it notes that over 89 per cent of the Central government employees are in the lowest paid categories, C and D. See Praveen Swami, “Figures bust myth India’s bureaucracy is ‘bloated’”, Hindu, 30/1/12. is-bloated/article2843014.ece. Swami notes that the ratio of government servants to population in the US is nearly five times larger, at 7.7 per cent. (back)

103. (back)

104. ILER, p. 107. Also see “Industrial Wages: An Update”, Aspects no. 55. (back)

105.It is understandable that the studies which deal with a number of countries, including India, do not discuss caste. However, it is interesting that Bhalla, Lahiri, McKinsey, Meyer and Birdsall, NCAER (The Great Indian Middle Class), and Vanneman and Dubey do not mention caste at all. (The word ‘caste’ appears once in Bhalla, but in a different context). Sridharan, however, does discuss the caste dimension in some detail. (back)

106.Wei Zhong et al., op cit. (back)


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