THE INCOME GLASS CEILING OF THE FRAGILE MIDDLE CLASS

THE RAPID GROWTH of the last three decades has pulled a majority of Indians out of poverty and lifted a large percentage to a life of comfort and dignity.

- Vikas Singh

Growth has largely been driven by the disposable income and spending power of middle-income households. The vibrant middle-class is an avid consumer and a catalyst for growth. It comprises six crore households who are the backbone, growth engine and the heartbeat of the economy. Over two-thirds of the economy is domestic-focused and contributes to a sizeable indirect tax revenue.

'Invasion' of the 'Aspiring'

This is good news. The segments are porous and the transition and mobility are seamless. The pandemic earlier and job layoffs now, have added to the porosity. However, the threshold for the upper-middle income bracket and the rich is high, rare, and generational'. Not decadal. The middle-income bracket rarely transits up.

Policymakers do not have a definition for the middle class. Most others use it loosely. Anyone above the threshold of the poor' or below that of the rich are 'bracketed' as the middle-income group. A Crux study of 16,000 house-holds across five income spectrums gives an insight into the fact that India needs a composite and holistic indicator, based on multiple economic features intertwined with social characteristics. While income indeed is the key, credentials like skills, occupation, education, housing and other factors like social networks and lifestyles too, are important components. The study concludes that welfare and subsidies must be pivoted on more holistic and equally relevant indicators. We have none.

The Middle-Income Group is neglected