Monday, 11 February 2019

Essay on The Swelling Middle Class for UPSC

Essay on The Swelling Middle Class for UPSC

A group of people in the middle of the societal hierarchy or who fall between the working class and upper class socio-economically is referred to as the middle class. The criteria for measuring she parameters of what makes the middle class is variable amongst different cultures. Middle class is normally defined by the level of education, wealth, environment of upbringing, social network, manners or values.

Middle class is defined by the 20th century American Marxist theoretician Louis C. Fraina as the class of independent small enterprises or owners of productive property that derives a livelihood.
Due to the rapid growth in emerging countries, the middle class at present occupies over half the world's population. The middle was earlier class characterized as those who had a reasonable amount of discretionary income. This income allows them to save almost a third of their income for discretionary spending besides paying for basic necessities like food and shelter. They can well spend on their children's education, consumer goods and improve their health care. The emerging middle class mostly comprises of people who aren't rich but are middle-class as per the standards of the developing world. According to this definition, there has been an increase in the number of middle class people in Asia in 2007-08. This increase in the middle class in many emerging countries has not been incremental but explosive in nature. With the flourishing international trade, poor countries get the maximum benefit from cheap labor and it is then when millions of poor start entering the middle class.

The estimated strength of the middle class in America is approximately 45% of the population while in Russia it is nearly 15%. The last decade has seen the fall in levels of absolute poverty and also an increase in average incomes which have led to the even distribution of the population thereby categorizing them as neither rich nor poor but they are considered to be in the middle of the income distribution. These new data, especially on prices and growth, suggest that the global middle class, numbering about 3.2 billion in 2016, may be considerably larger, by about 500 million people, than previous calculations suggested. In 2015, about 50 percent of U.S. adult residents were part of the middle class. Asian households, in particular, are now thought to be much richer, relatively speaking, than before. The middle-class expansion is expected to be broadly based, but heavily concentrated in Asia.

The vast majority (88 percent) of the next billion people in the middle class will be Asian Middle class has a vital role socially. It supports democracy and is progressive in nature. Particularly when middle class is strong, it will also influence economic development by actively participating in political process and expressing its support for political programs and electoral platforms. While developing countries are facing a rapidly expanding middle class, the same is shrinking in countries and is also incapable of defending the standards of living characterized for a middle lifestyle for centuries. Economic crisis has been too much of a burden on the middle-class and also their income has been shifted to the wealthier group.

Economists suggest the expansion in "sweet spot" is due to people entering the middle class in their millions and leaving poverty. A more beneficial "sweet spot" occurs for businesses when a significant mass starts earning the equivalent of over US$ 10 per day, thereby entering the global middle class. Companies that supply to the developed world's middle class markets might get attracted thereby. The size of the middle class is directly proportional to the economic growth, so the sweet spot also produces a "middle class effect" The growth of sweet spot when hit will also increase the middle class and this continues in a virtuous circle.

The expectations of middle class in developing countries are rising with the improvement in their economic situations. They have increasing concern for quality and are not merely satisfied with public services. The quality services demanded by the middle class is rather complicated to provide than simply letting them their access; which further leads to friction, conflicts and political upheaval. Also on one hand, middle class is rapidly expanding in developing countries but their size is shrinking in developed nations where they feel incapable of defending the standards of living that characterize a middle-class lifestyle since ages. Such unbearable situations have called for protests by people on the streets in Egypt, Israel and Spain. The economic crisis has overburdened the middle and working classes.

A radical shift in wealth distribution and economic and political balance of power seems to be effective by 2030 and the effects of the expanding middle class are soon to be seen. With the emergence of a new middle class that has spending power similar to developed nations, there will arise tremendous business opportunities as well.

Talking particularly about Asia, the trending higher middle class consumption caters to two most important countries, India and China. China's middle class is already large has even a larger one with 157 million people. Chinese market is hence the main attraction for retailers and businesses. With the recent emergence of China as the world's largest cell phone middle class is already large and United States market, it has become a home to around 700 million subscribers. As per the surveys, it’s suggestive that China's new middle class is sure to become the leading consumer of the world. At present, 150 million Chinese earn between US$ 10 and US$ 100 per day. If China continues to grow with the need, along with the economic reforms; it is expected that around 500 million Chinese will be entering the global middle class over the next decade. One billion people in China will be middle class by 2030, which would be 70% of its projected population.
India on the other hand has many impediments to sustained growth:
• An unstable regional neighborhood.
• Weak bureaucracy and judiciary.
• Social problems of poverty, migration and unemployment.
• The current economic crisis.
• Global resource constraints.
• Deficiencies in human capital and public infrastructure. 
• The middle-income trap.
Meanwhile there are several reasons to be optimistic as well about the accelerating Indian growth:
• Indian demographics and urbanization are favorable.
• India's emerging middle class can drive growth in the same manner as in other countries.
• Indian investment levels and manufacturing growth have started to pick up. . With fastest growing markets being its neighborhoods, India will benefit and will thereby add to Asia's dominance in growth.

India is soon going to dominate China in the race of middle class population that is increasing surprisingly. It is estimated that the strength of the middle class in India by 2020 will be 200 million and by 2030 it will be 475 million. This shift is seismic and is altering the condition of the society in terms of quality of life, urbanization, purchasing power, inflation, level of education, number of consumer goods and so on. The improved level of education is one of the prime reasons for this mass change. The growing awareness of people towards education is also aiding in the economic growth which is further increasing the per capita income of Indians. The economic reforms in 1991 are another reason for this colossal middle class population. 93% of population in 1985 lived below Rs.90, 000 a year which in 2005 reduced to 54%. Urbanization is also one of the outputs of middle class. The increasing buying power of the emerging middle class means growth in the consumer goods market. Lately there has been increase in the sale of consumer goods like mobile phones, LCDs and goods of personal care. An altogether new consumer market is going to be witnessed in India by 2025.

However, before earning the benefits of young and financially sound consumers, India needs to work really hard on infrastructure, healthcare and education sector. The financial system too needs modernization with India becoming the fifth largest consumer economy in the near future, both the world e well as the nation is going to benefit. Many people will surely be out of the poverty margin and the work for companies will increase leading to hiring of new employees in order to fulfill the growing demands of new customers.

With the growth in consumer demands, there will also be rise in prices of household commodities. More buying habit intends to less of saving and the rise in expenses will also hamper the lower middle class undesirably.

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