Indonesia serves warning for India on shrinking of middle class
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Warning bells ring for India’s famed Middle Class
By Manish Anand
New Delhi, September 6: The Mandal politics is rearing its head once more. The Rashtriya Swayam Sewak Sangh (RSS) also has no objection to the demands for the caste census. The clamour for government jobs suggests underlying stress, caused principally by an economy that is not creating enough jobs.
The World Bank continues to spotlight the Indian economy as the fastest growing economy in the world. India may retain the tag of the fastest growing economy for the next few years.
But there are a few warning signs. The ruling parties in the states are on the overdrive for filling up vacancies in government departments.
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The Assam government claims to have filled a record number of government vacancies in a record time. The Assam template has been shared with the other states ruled by the Bharatiya Janata Party (BJP).
The Central government ministries are also examining prospects of creating employments in various departments. The Railways in particular has gone on an overdrive.
India has been a shining example of a fast-growing economy amid the emerging economies. But the emerging economies are now battling the long shadow of the Covid.
Indonesia is now witnessing a shrinking of the middle class. The Central Statistics Agency of Indonesia said that the proportion of middle class in the country declined from 21.4 per cent in 2019 to 17.1 per cent in 2024. It added that 9.5 million people exited the middle class due to loss in income.
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India is yet to hold the 2021 Census. The official data to measure the economic impact of the Covid-19 is not yet available.
Assumptions are being made on the basis of criteria with no relations to income to determine the reduction in the poverty population. The NITI Aayog had made a contentious claim of an almost 25 crore people escaping poverty in recent years.
The basis for the NITI Aayog claim had no income criteria, and it made the assumption on the basis of the coverage of the welfare schemes.
But the political signs of the middle class under stress could be gauged from growing demands for the caste census. The Opposition Congress has vowed a caste census.
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The driving force of the caste census is to seek more representation in government jobs and educational institutions for people from the backward castes.
The World Bank hinted at the stress with its data on the household consumption. The household consumption expenditure in India is yet to touch the pre-Covid levels. It also remains much below the spike seen in 2021.
Indonesia and India share the similarity of fast-growing economy. Indonesia grew by five per cent. It was the fastest growing economy in the East Asian region.
India is the fastest growing economy. But the lack of credible data deprives conclusion on the size of the Middle Class as per the definition of the World Bank. Sandhya Krishnan of the Azim Premji University while writing for the East Asian Forum referred to the 2021 the Pew Research Centre that found the Indian middle class contracting during the Covid-19 pandemic.
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“The Indian government’s 2022–23 Household Consumption Expenditure survey also showed that while rural nominal household consumption expenditure increased at an annual rate of 1.62 per cent between 2004–05 and 2011–12, it increased by just 1.02 per cent between 2011–12 and 2022–23. For urban areas, the corresponding growth rates were 1.85 per cent and 1.12 per cent,” she wrote in the article.
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