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May 15, 2009

Measuring the Middle Class

Rajesh Shukla of NCAER has an article in the Economic Times with the latest statistics tracking the Great Indian Middle Class.
Accordingly, the group that was classified as middle class (households with annual incomes of Rs 2 to Rs 10 lakh at 2001-02 prices) in 1995-96 was just 25 million-strong, has grown to 126 million in 2007-08 and further 153 million by end the decade. Our estimates show that in 2001-02, middle class households were around 6% of all Indian population and expected to grow to 13% in 2009-10, an annual growth rate of nearly 13%.

More importantly, while the middle class forms just 11.4% in 2007-08 of the total Indian households its share of total income is nearly one-fourth and saves more than 55% of its income. The growing clout of the middle class becomes even more apparent when one looks at the ownership patterns of household goods. Nearly 49% of all cars are owned by the middle class, compared to just 7% by the rich. Similarly, 53% of all airconditioners are owned by middle class homes. Nearly 46% of all credit cards are to be found in middle class households.

...While only 24% of rural middle class homes own a car, more than 40% do so in urban India. Televisions too are to be found in 90% of all urban middle class homes compared to 62% in rural middle class homes. Though this is an opportunity for marketers, it’s clear that addressing the middle class with a one-size-fits-all mindset is unlikely to work.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in