The consuming class households with an annual income of Rs 45,000 to 215,000 at 1994-95 prices, which is normally considered as the middle class, now totals 53.4 million. About 27.5 million of these middle-income households are in urban areas and 25.9 million in rural areas.
Granting an average 5.56 people per household, the size of the middle class consumers can be pegged at about 297 million. As a proportion of the population the consuming class has doubled from 14 per cent of total households in 1989-90 to 30 per cent on 1988-99.
This proportional will rise to 40 per cent by 2006-07, when there will be 80 million middle class households with 445 million people.
The percentage of very poor households is shrinking. It has dropped by almost half in the past decade from 25 per cent in 1990-91 to 13.2 per cent in 1998-99. And, the figure is expected to fall further to 7.7 per cent by 2006-07.
The Destitute (income range: Rs 16,000 per annum) and the ‘The Aspirants’ (income range: Rs 16,000-22,000 per annum) will shrink significantly.
In other words, the poorest class will roll back from more than 51 per cent of the total population to about 14 per cent by 2006-07.
At the other end of the income spectrum the very rich will account for 2.6 per cent of all households in 2006-07 up from 1.6 per cent in 1998-99 and 0.3 per cent in 1989-90.
In terms of numbers, the affluent will jump from mere 4 million in 1994-95 to 35 million by 2006-07.
The consuming class will grow the fastest:
Economic liberalization has had positive impact on Indian households, pushing up their incomes ad expenditures.
Voting for credit purchase: Though India has not yet become a totally credit oriented society like the West, consumer credit is gaining ground. The middle class is in the vanguard in this regard. Compulsions on the social and economic fronts are driving him towards consumer credit. Basically he lives on a fixed income and manages within a rigid budget. But he stays in a fairly decent house, hired or owned. He has some furniture. His wife selects reasonably good furnishings and uses modern cooking gadgets. He has his personal transport. His children study in good schools. How does this happen? He obviously manages such a lifestyle through credit facilities made available to him by different agencies. Today, practically anything from sewing machines to personal computers is available to him on installment payments. The very availability of credit facility acts as a temptation. And his present value system approves purchases on credit. His desire to possess more and more material comforts is realized through credit It is estimated that 50 to 60 per cent of most durables are bought with credit facility. The middle class is pledging future income pr current consumption.
In fact, the middle class is the target of all consumer credit facilities extended by manufacturers, marketing firms, banks and other financing agencies in the country. Even the credit card system in the country depends heavily on middle class numbers. In credit cards, India is expected to soon become the second largest in the world, next only tot the US.
The Indian Consumer market:
The economic reforms and liberalization of 1990s has given a boost to the growth of the middle class.
A recent study on the Indian Consumer Market provides some useful insights on the Indian middle class consumer. The above points show some of the finding of the study. The new middle class is buoyant from a marketing man’s perspective and marketers are sparing no efforts to attract and satisfy consumers in terms of quantity and quality.