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India’s middle class: Drivers of Inequality?

21 May 2014

By:- Nandita Gupta

The middle class in India has been growing since the colonial rule. The land reforms (which removed the highest classes and handed more control to middle level and upper level peasantry), the emphasis on higher education and ‘centres of excellence’ during the early post-independence years, the influence of the middle class in local politics, and the limited effectiveness of policies such as that of positive discrimination, have all contributed to the growth and consolidation of the middle class in post-independence India. Today it is a powerful lobby, and it is needless to emphasise its influence on India’s policies. However, there is very little understanding of the role of the middle class in India’s inequality trajectory, and the pattern of inequality vis-à-vis this large group.

The consumption Gini for India has been showing an upward trend. Poverty rates have been declining. Piketty’s work shows that since independence till the 1980s, the income of the top 1 per cent reduced in India (based on income tax records); this is consistent with the land reforms, and breakdown of traditional social and economic structures. However since the 1980s inequality seems to be rising. So while we know that the bottom 50 per cent are gradually escaping poverty (of course the poverty-line itself is a contentious measure), and we know that top 1 per cent has gained (but probably not to pre-independence levels), we have very little knowledge about the movement and mobility of the middle section i.e. those who lie between the top 1 per cent and bottom 50 percent. It is this bracket which needs to be disaggregated and scrutinised. There is some historical evidence and intuitive evidence to show that the middle class has gained due to India’s policy trajectories and they have been helped by the liberalisation and globalisation processes that have come in later. This trend is being further augmented by the drive towards greater privatisation. It has been considered that the Indian middle class may in fact be resisting the introduction of welfare measures intended for the more deprived groups and minority groups; and have therefore not resisted measures such as greater privatisation of education. In such a context the middle class may in fact be driving the rising inequality.

There is limited scholarly understanding of forces which determine inequality in India. The role of India’s middle class and the movements/ changes in the pattern of wealth, income and opportunities within this heterogeneous group is one such gap and is central to India’s inequality story.



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