Are you MIDDLE CLASS? - YouTube

I want to conduct an experiment.

I will ask you two questions. I want you to honestly think and then comment what your answers were.

First, do you think you are from a middle-class family?

Take 5 seconds to answer this question

Second question- How much do you think an average person in an Indian middle class family earns every month?

Take 10 seconds for that.

Now, I don't know what your answers were.

But I would like to tell you that most likely, you are not from a middle class family

Yes, I know that your mom might be asking for free dhaniya from sabzi wale bhaiya.

-It would be extra for Dhania - mirchi. -WHAT?!?!

Or your family uses old T-shirts as pochha(sweeping mop) at home.

Or there is a rule in your family: you squeeze everything out of a toothpaste before throwing it

All these practices are associated with an Indian middle class family

But most likely, you are not from a middle-class family

My guess is that most of you must have said that you belong to a middle class family

And you are not alone.

Devesh Kapur and Milan Vaishnav's research suggested that almost 50% of Indians identify as middle class.

BUT According to Pew Research 2015 findings, middle-class Indians comprise only 2% of Indian population.

Yes, only 2% of 1.3 billion Indians!

And you could now ask the average per capita income of an average Indian family

That is $300-$600. That is INR 22,500-INR 45,500.

This is the average monthly income of every member of the middle class family

This is the real middle class

If you are surprised by these numbers, then you would not be alone

In fact, a lot of us keep forgetting how poor India is

We keep hearing about the rise of the Indian middle class in the news reports and talks of business leaders.

But that middle-class is just 2% of Indian population.

And this is what we will talk about in this video.

*Raju's house was reminiscent of the black and white movies of the 1950s.*

*Now, remove another zero. This amounts to your family's income Mr. Raju Rastogi*

*The good part is that you know that you are from middle class.

The problem is with those who do not know that.*

First, let's understand how did Pew define what is India's middle-class.

The Pew study covered 111 countries and divided the population in each country into five groups

based on a family's daily per person income.

The five groups are labeled poor, low income, middle income, upper-middle income, and high income.

There is generally no accepted definition of middle class

Pew study said that the families with a per capita income of $10-$20 per day would be defined as middle class

This means that 2% of Indian population belongs to the middle class

But economists Sandhya Krishnan and Neeraj Hatekar used a different definition-

where per capita daily income was $2-$10 and not $10-$20.

According to that, more than 50% of India's population is in the middle class.

But this means that this includes people who are earning $2 or INR150 per day in the Indian middle-class.

For example-domestic help, drivers, security guards, construction workers- all would be considered middle class

So these are the research definitions of middle class

But when we generally talk about the middle class, this term of "middle-class" means something else

For instance, we have an image in our minds that a middle-class family has decent well-paying jobs

or it owns a small business.

They own a house of their own and maybe have a secure retirement

Their children go to a decent college

They also own a fridge, a small car or a motorcycle.

For this middle class, education is the ticket to uplift themselves

And because the IT section has been booming in India for several years,

for many families, engineering has been a well-trodden path that can help their children escape poverty

Unfortuantely, our traditional colleges were not successful in doing that for them

Such colleges are often unable to keep up with the pace of innovation taking place in the private sector.

This is why several surveys have shown how Indian engineers are unemployable

This skill-learning gap though can be filled by online upskilling platforms like upGrad,

who have supported me in making this video.

UpGrad offers several courses that can help you match the skills demanded by the private companies

This is because it works with industry professionals while deciding the course content

For example, it offers data science courses with machine learning specializations

The best part is that you can you can study the upGrad courses without leaving your current job.

Now the UpGrad programmes differ from the other regular online certificates

First, UpGrad includes globally recognized degrees offered by reputed national and international universities

such as the International Institute of Information Technology Bangalore and University of Arizona

Second, the UpGrad courses are industry-relevant,

to maximize your chances of landing a job

And third, you get placement support to help you get a job

So if you would like to differentiate yourself in the job market,

do check out UpGrad's online programmes. The link is in the description below!

Coming back to the Indian middle class families, many of us would be surprised to know that

only 2% of the Indian population is middle class

But we were told several times that the Indian middle class was booming.

So, what happened?

The Pew report said that the poverty rate in India did decline between 2001 to 2011,

but the share of the Middle-class Indians did not increase much.

According to the report, when the Indian economy grew, the people who fell in the poor category,

shifted up into the low income category

But only a few belonging to the low income category made a jump to the middle income category

A comparison with China's data in the same period shows that

revealed that Chinese middle-income proportion spiked from 3% to 18%

And our mistake of assuming the proportion of Indian middle class as high in the Indian society

is repeated by several companies

They think that Indian middle class is quite large. But that is not so.

This is why many multi national companies realize upon coming to India

that their target consumers are not many

The companies that fail to realize this, face disappointment in India.

For instance, Starbucks says it has big plans for India

but has opened about 1 new coffee shop a month over the past two years

whereas, a new Starbucks opens in China every 15 hours.

Certainly, this hold true because a person earning barely Rs 150-300 a day,

Would they spend Rs 200 for coffee?

This is also why many successful companies that say that are serving India are actually not serving India

They are serving the cream of the cream of the Indian population

For instance, Ola is operational in about 100 Indian cities

but over 80% of Ola’s business comes from some of the metros.

Another example is of Cred, the rewards app created by Kunal Shah, says it only targets top 1% of Indians.

Because they are the ones that will use his product

In fact, he is not even targeting the top 1%. He's probably only targeting the top 0.1%.

This can be seen from the government data too

The main demand of several companies come from only some of the cities in India

In 2015, Indian government did a survey called the NHFS.

They asked people whether they own a TV, AC/cooler, washing machine, and refrigerator.

You know what they found?

That almost 33% of all washing machines in India, are in just a few cities

15% of all ACs/coolers in India, are in Delhi!

This is why mega companies concentrate on such cities only

On the flipside, if you go outside these cities, you'd find out that the Indian reality is very different

According to a survey, 54% of Indian households still use firewood and cow dung as fuel

This might be surprising for us because we have no idea about India's inequality

According to Oxfam Report 2020, India's richest 1% of the population

hold almost 40% of national wealth while the bottom 50%, owns a merely 3%!

Let's do another experiment.

How much money does a family to need to be counted in the top 10% of all Indian households?

The answer is 17 Lakhs

If your family has 17 lakh rupees or assets worth that much, it means you belong to top 10% of households.

Another study showed that 87% of all the people living in metro cities of India,

are from the top 40% of Indian population.

Navin Kabra, who wrote a fascinating article on this said that in a metro city, it could be rare for you

to meet anyone from the bottom 60% of India.

He says that it is quite a possibility that even your domestic help may belong to the top 40%.

This should you give some idea about how poor India actually is and shows how privileged you and I are

Now, you might wonder why the middle class matters at all!

Be it lower income group, upper income group or middle class- these are all names

This is true to an extent- these are all names of categories

But the middle class has significant contributions in every economy.

First, the middle class is a source of entrepreneurship.

Small businesses and family farms—associated with the middle class—helped America progress.

Second, the middle class in any country is a major contributor to savings and human capital investments,

as savings and the willingness to invest in education are usually associated with middle class households.

Third, in comparison to the low income and poor households,

the middle class has the ability and power to demand better public service from the government

and support growth-oriented policies.

The fourth -the middle class families usually buy domestic goods and services

which gives a kick to the economy.

Families buy consumer durables—cars, motorcycles, televisions, mobile phones and refrigerators

This is leading to an acceleration in manufacturing in India.

You might read it in the news that inflation might badly affect the middle class families

or that the raised price of petrol will negatively affect the middle class families

But whenever you read such news, you should question

whether you actually belong to a middle class family or not

If I use the word "rich Indian", your mind may conjure an image

of someone who lives in South Delhi, flies to London for shopping

and eats in Khan Market.

But maybe that definition is not exactly correct.

Because "rich" is a relative word

Maybe a rich Indian is just someone who has a fridge, a smartphone and a flat screen TV

Because whether you like it or not, most Indians are still really poor and we should recognize that...

So, hopefully, you liked the video. A lot of effort went behind this video.

Do subscribe the channel if you haven't already.

And don't forget to check out UpGrad to change your career path

Also, if such research oriented videos interest you, do check these out.

See you next time!