Middle class will be driving force in Indian Economy

The size of India’s middle class will nearly double to 61 per cent of its total population by 2047, from 31 per cent in 2020-21, as continuing political stability and economic reforms with a sustained annual growth rate of between 6 per cent and 7 per cent over the next two and half decades will make the country one of the largest markets in the world.

The report titled, The Rise of India’s Middle Class, is based on an analysis of primary data collected by PRICE through its pan-Indian survey.

The strength of the middle class is expected to rise from 4.32 million people in 2020-21 to 7.15 million (47 per cent) in 2030-31 and to 1.02 billion of India’s projected population of 1.66 billion in 2047.

Since there is no universal definition of who falls in the middle class, the think tank defines a middle-class Indian as one earning between Rs. 1.09 lakh and Rs. 6.46 lakh per year based on 2020-21 prices, or Rs. 5 lakh to Rs. 30 lakh annually in household terms.

Former NITI Aayog chief executive officer Amitabh Kant said that as the number of households in the middle-class category rises, there will be demand for quality health care, education, housing, consumer goods, etc.

“The government increasingly will have to focus on education and health as well as creating job opportunities. The vision of India becoming a fully developed country by 2047 implies that the middle class needs to be the key driver of India’s growth story.”

The report takes note that although the absolute income may well be higher among the rich, the numerical strength of the Indian middle class suggests it will become the driving force of the economy.

“By the end of this decade, the structure of the country’s demographics will change from an inverted pyramid, signifying a small, rich class and a very large low-income class, where a significant part of the low-income class moves up to become part of the middle class.

Consequently, the income pyramid will have a smallish layer at the bottom comprising the destitute and aspirer groups, a huge bulge of the middle class, and a big creamy rich layer on top,” the report notes.

Besides, the report notes that in the current decade up to 2030-31, India will see a five sold increase in its ‘super rich’ households, and a large chunk of the growth will come from rural areas.