by Harish Gupta, National Editor, Lokmat Group
In India, 'middle class' can be a dangerously deceptive term. It means several things to several people. For example, it can mean households that possess items like (a) TV, (b) computer/laptop, (c) car/scooter and (d) telephone/mobile. But, according to figures computed from the 2011 census data, the owners of all the four assets, at 4.6 per cent, are horribly shrunken in size. If one is less picky, the figure can be
stretched as far as 63.2 per cent, for that is the share of homes having either a land phone or a mobile handset. But that's cold comfort as only 4.7 per cent have an automobile.
These numbers surely come as a rude shock to the dream of the great Indian middle class which we, the newspaper-reading and TV-watching city-bred Indians, have for the entire first decade of the 21st century taken as given. It was a dream that was structured with so much care, to the last decimal point, by its practised merchants. A leading foreign research group, for example, had predicted that the Indian middle class would hit 250 million, or 20 per cent of the population, by 2015 end. But, however iffy its number, the middle class at least had a voice. It found itself heard in the 2009 elections, when its members thanked the UPA for unimpeded economic growth in the past five years, and voted it enthusiastically. Little did it understand that the economy was driving to a precipice, and the rainbow ahead would disappear soon. The first signs of economic crisis surfaced in 2008. Somehow, Indian economy withstood it. But the middle class dealt such a body blow that in 2014, the scam ridden UPA was virtually wiped out of the Lok Sabha.
In the past 15 months of the Modi government, the trend hasn't been reversed. Rather many evils have combined to batter the middle class further. Stalled industrialization, high interest rate on home buying loans, infrastructure projects that have been left on the drawing board, near-zero growth of jobs in the organized sector, scuttled reforms (Labour & GST) including withdrawal of Land Ordinance—the maladies are just too many and have come all at the same time. And topping the woes is the back-breaking deflation. It's a sign of weak economy despite India reaping the harvest of massive decline in crude and commodities prices. Onion at 80 rupees a kg and high pulses prices, have left families stupefied. In addition, the cascading effects of two years' drought situation in a row, has started staring at 127 crore people. After this, where is the cash to save, to pay for kids' tuition, or to buy a family holiday? The Depawali is now just a few weeks ahead but the evenings are unusually quiet. Merriments are subdued, if not absent. The dollar, which was Rs 45 in 2010, is now upward of Rs 66.50. If it touches Rs 75, the country is certainly in a for a major economic crisis. Though the crude is $45 a barrel, people are still trying to save money. But economic slump has limited the access of the middle class to modern technology and lifestyle products. No wonder that the newer models of smart phone or tablets are more window-shopped than bought, valuable imported books remain unsold on the shelves of book stores, and the paid subscription of an internationally renowned British magazine, after steadily rising for ten years, is now sloping down.
The middle class is also the thinking class. It can reason out the factors that have pushed it to the precipice. It can read that, in the long years till the 2009 global economic crisis, India frittered away the golden opportunity that it had to put the cheap capital to productive use. There could be more roads and warehouses, which could help stabilize retail prices, apart from creating employment. Modi is also resorting to populism and by conceding OROP he has opened a pandora's box capable of taking the fiscal deficit to new heights.
Unfortunately, the UPA wasted the opportunities and enormous amounts of money were put into the 'black hole' of welfare projects that somehow got the poor people remain trapped in poverty, not to move on. If somebody can earn 130 rupees a day without having any skill, why should he strive to acquire one? After 2010, when the flow of money dried up, the price of welfare became unbearably large. It reflected in a gaping fiscal gap, which, in its turn, made capital so costly that businesses found it hard to repay old loans, not to speak of opening a new line of credit. On the other hand, the showering of money on ill-conceived welfare projects made agricultural wages shoot up.
Protests against the middle class getting a raw deal is usually brushed aside with the pompous argument that India's path of growth should be equitable and inclusive. But at no time and in no society have the poor shed their poverty entirely by living on dole. And the least inclusive is the state that fails to offer everyone the same opportunity to grow. What the poor in India actually crave for are education and skill and proper jobs, not a couple of free rotis.
The middle class is intelligent enough to read the motives behind this lopsided policy of pleasing the poor, instead of ‘helping’ then, at the cost of the population at large. But they are not the kind to suffer in silence. In 2009, there was so much money floating around that the UPA overlooked the fine print on the bill that the government had handed them. Unfortunately, Modi has fallen into the same UPA trap. He must remember that so powerful is the Middle Class that, it fetched him nearly 50 per cent more seats in the parliament. He has time on his side. But his long term vision for the growth story is facing a "triple whammy" global economic crisis, two droughts in a row in India and too many enemies within his own party & government. If he continues like this for the next 1000 days, the voice may not be so pleasant in 2019.
