According to a quarterly report by McKinsey, India’s consumer market is likely to develop. This is under the assumption of a set of reasonable economic variables. A real compound annual growth of 7.3 % is said to take place, making the standard of living of an average Indian person drastically different by 2025 . The reduction of poverty and rapid urbanization has mainly been in the urban areas of India. As a result of all of these shifts, a debate has been triggered questioning who in India actually belong to the middle-class, their size, political and social behavior. This is a debate with major implications because a lot of scholarly studies conducted has established that the middle class is an instrumental driver of a nation’s social, economic and political growth . There is no exact definition that could describe the middle class in India. The middle class not just classifies as an income group but could also have social and political connotations. It could also represent a consumer market …show more content…
As discussed previously, the Indian middle class is a constantly growing consumer market. Furthermore, there is a negative correlation between aggregate poverty and average consumption rate. This explains that the decline in poverty results in an increase in the consumption . Certain studies have also illustrated that a rise in income of the middle class has resulted in the increased spending on not so necessary items (luxury goods) as opposed to basic need items . The emerging middle class and the growth in economy are in an ongoing cycle. Rise in income leads to rise in consumption, thereby increasing economic growth and employment opportunities. Subsequently, the wages and salaries increase continuing the cycle . The emerging middle class has also contributed to a higher investment expenditure on education and healthcare, thus contributing to expansions in infrastructure. Also, education has been considered the third largest expenditure of the emerging middle class, after rent/mortgage and grocery purchases . According to reports collected by RBI, there is also a rise in financial investments in bonds and shares made by the emerging middle class in