What the middle class wants

The reforms of the 1990s accelerated the growth of income and poverty reduction, demonstrating the virtues of a competitive market economy powered by entrepreneurship. Consequently, India has moved over the last decade from being a low income democracy to a lower middle income one. The stirrings observed in Delhi during the past two years are a precursor of the emerging middle class, and political demands for better governance are likely to follow. The middle class has historically grown in every country along with income, and has demanded, and got, better governance in every (now) developed country. This process has been accelerated in India by the early establishment of democracy and a flourishing media.

The anti-corruption agitation of 2011, and the public outpouring of support for it, was a precursor. The common Delhi resident's passionate outrage was less about the specific scam allegations relating to the CWG and telecom and more about the basic mistreatment of citizens by the government service providers (water, power, police, MCD). The new middle class, which has had a taste of freedom and equality in the marketplace, was fed up with the arrogance of local government functionaries and the humiliating treatment meted out by corrupt and self-serving officials, while their bureaucratic and political bosses hypocritically claimed to be "servants of the people." The protests were an expression of outrage against the inequality between the government as service provider and the general public on the other side of the counter. Though both events would have been damp squibs without media attention, underlying them is a cry for attention to the citizen's personal security and equal treatment to all, men and women, rulers and the ruled.

The 23-year-old woman who was gangraped migrated with her parents to Delhi from a village in Ballia district in eastern UP. She was training to be a physiotherapist, acquiring a skill that would earn her a decent income. She represented the dream of numerous families, including those who protested on the streets: women of all ages, income classes, castes and work categories, who saw something of themselves in her. She was the child of the new era of economic opportunity.

From the many definitions of "middle class", I would emphasise the two most common shared elements: a level of income that is above the level needed for survival (including savings for emergencies), and a level of education and skills necessary to earn the posited level of income. The education has to be at a quality-level to make the individual aware of the world beyond the immediate environment. This awareness is essential for making an empathetic connection between one's own selfish concerns and the concerns of other, similarly placed individuals. Thus, the third element is usually a set of shared values that, to varying degrees, are common to the "middle class".

To be a part of the (lower) middle class, you have to have sufficient education to be aware of issues and elements that are outside the ambit of the skills needed for your job and to navigate the space that you inhabit, but not necessarily educated to a level that makes one capable of participating in debates about these issues or deriving solutions to social or economic problems. That is a criterion for classification in the middle class intelligentsia.

Is there a key "middle class value"? There are two values that support each other. One, that as a human being, one has a fundamental right to life, liberty and the pursuit of happiness. Two, an understanding and appreciation of true equality, that it is universal and indivisible. That is, if I have this right, then all individuals must have this right, and that the only way I can truly have and preserve this right is for all others to have the same right. Practically, this translates into a demand for equality of opportunity and equality of treatment. The competitive market economy embodies these ideals to a much greater degree than the hierarchical and segmented Indian society or the self-centered politico-bureaucratic system that now constitutes the ruling class.

The fast growth unleashed by the 1991 reforms has created a demand for education and skills with which to earn income. It has also shown the current and potential members of the middle class that a market economy cares primarily about skills and competence when it is seeking to get a job done, and about the money you want to spend on its products as a consumer, and much less, if at all, about your caste, class or family background. Therefore, this demand for equal treatment is focused on the services that government provides, both public goods and services such as personal security that only government can provide, as well as private goods and services it has deliberately chosen to monopolise or control, such as higher education and electricity.

Simple welfare theory teaches that there are three elements of social welfare. One, private income and consumption; two, public goods and services (legal, police, roads, public transport, public health-sewage, sanitation); three, the distribution of income, poverty, inclusion. Taxes and transfers can be used to change, within limits, the distribution of income and thus improve social welfare. To the extent that there is a gap between the claims and reality (wastage, corruption), these are rightly called populist measures. Much of Indian political discourse since the sixties has focused on this third element. India under Indira Gandhi was the first country in the world to raise "poverty alleviation" to a national objective under the rubric of "Garibi Hatao".

The economic reforms of the 1990s raised public awareness of the role of faster growth in raising the incomes and welfare of the people, but the balance shifted back to questions of distribution and inclusion from 2004. The dramatic fall in the national growth rate and the threat of junk status, coupled with the recent prominence of the "Gujarat model", have restored some of the importance of income growth. The maintenance of a sufficiently high average per capita growth — between 6 per cent and 7 per cent (about 8 per cent GDP), which generates income opportunity for the emerging middle class, will soon become de rigueur. The rise of the middle class also promises to bring public goods and services, along with governance, into the public discourse within this decade. This will, for the first time, establish a balance between the three elements of social welfare that should be part of the political debate.

Though this new middle class is still relatively small and concentrated in the urban and semi-urban areas, it is projected to grow rapidly in the next two decades if our average per capita GDP grows at its full potential of 7 per cent. The political party that finds the right policy balance between these three objectives, and convinces both the emerging middle class and the lower income groups, will be the winner.

The writer is non-resident senior fellow, Brookings, and former chief economic advisor, Government of India, express@expressindia.com

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