Sunday, July 23, 2006

India's Middle Class - Truly worthy or living in misconception.

The great Indian middle class comprising of approximately 300-million population, has been featured in the 7th spot alongwith that of China, Brazil and Russia, in a list of "Top 50 People Who Matter Now", that is published in the July edition of the Fortune group's Business 2.0 magazine. The magazine justified it's ranking by quoting a Goldman Sachs' study which says that more than 800 million people in these countries --outnumbering the populations of US, Western Europe and Japan, will qualify as middle class in the next decade. Sounds good!!!

But the biggest question is "Can our middle class match the might of the top US and European corporations?". The answer is "Still a long way to go".

The idea of creating a critical group of people, who will drive the economy, started during the Rajiv Gandhi years( somewhere in 1991). The first consumer boom was created by handsome payouts to public sector and government employees. However the boom ran out of steam by 1997. A lot of industries were plagued by overcapacity. The manufacturing sector faced a demand crisis and slowdown due to lack of growth of rural economy.

An economy cannot sustain a growth of 8% for a longer duration on a restricted base in proprotion to the size of its population. True, India has serious economic potential, but plenty of that remains to be realised. Though agriculture accounts for 25 % of our GDP, it provides a livelihood to around 57 % of the population. Agriculture needs to improve its productivity to sustain more people. Reforms must be brought about to augment the purchasing power of larger sections of the population, which are not part of the middle class.

Only then, would we be able to say that our middle class has arrived.

Signing off...


Blogger Writer said...

It was a good and knowledgable read for me. I almost felt like I was reading an India Today.

Even I want to learn writing such articles, learn, because my knowledge on them is not complete. Trust me, I had to read the article thrice to understand the jargons et al. It was almost like by a journalist in India Today.

But reforms, have they not been brought in? I have a limited knowledge on this hence please correct me if I am wrong.


July 28, 2006 6:20 PM  

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