Duetsche Bank Research released a report on February 15th 2010 titled The Middle Class in India – Issues and Opportunities
Some highlights extracted from this report that are of relevance to this discussion on Socio-Economic Engineering and targeting Middle India.
#1 -While there is no official definition of the middle class, estimates range from 30 million to approximately 300 million people.
#2 Even using the most generous estimates of the group‟s size, the middle class comprises less than 30 percent of the population
#3 The importance of the middle class lies in the fact that it is the fastest growing segment of the population
#4 while the total population will increase almost 30% between 2005 and 2025, the middle class population will increase approximately 10 times or almost 1000% during this period
#5 the middle class might see less of a link between their priorities (the CLSA survey found the number one political priority for the middle class over the next 12 months was employment) and a new government vs. the poor (who are typically more concerned with things such as basic healthcare infrastructure or farm loan waivers that are more directly linked to the government).
#6 A stronger political drive in the middle class would force or enable the government to also focus on issues that are of concern to them.
The report also puts into perspective why the flawed Liberal Left agenda of the Congress is meeting with electoral success
#1 The Gini coefficient (a measure of inequality where 100 = high levels of inequality and 0 equals no inequality in an economy) is rather low for India overall compared to other EMs at less than 35 but has been increasing since economic liberalisation
#2 although the poverty rate has been reduced, the rich continue to get richer in comparison
#3 As the middle class remains apathetic towards political participation as is currently thought, then the trend of focusing on poorer (often rural) voters to win elections could remain the dominant political paradigm in India.
The Liberal Left agenda of the Congress has benefited from the twin factors of Middle Class apathy and Demographic advantage by simultaneously targeting the poor and the elite rich.
This simultaneous targeting of a Demographic majority by the Congress can be best appreciated when viewed through the prism of what Rahul Gandhi calls “Growth with distribution”.
“Growth with distribution” is not just about targeting the poor with entitlements but it also about keeping the elite rich in power through this unholy nexus between Crony Capitalism and Politicians.
Pratap Bhanu Mehta writing in the Indian Express today (clicking on this link may lead to virus infection), alerts us once again to the Congress’ strategy to consolidate power.
The Congress is widening its target demographic base by giving a new definition to the Poverty Line to expand Entitlements and is giving a religious twist to Backwardness to increase Quotas.
But then as Pratap Bhanu Mehta puts it hubris and complacency can still trip the Congress but it will take bold imagination for an alternative agenda to succeed.
Where is the Opportunity
#1 The growth of the middle class and the economic growth of India are in a virtuous cycle.
#2 As the middle class grows and continues to increase domestic demand, the economy will also continue to grow
#4 The growth of the middle class will force more businesses to expand and also force new business to take root
The opportunity for the Center Right agenda lies in what the Deutsche Bank Report calls
the key point in ensuring that the link between middle class growth and economic growth continues to strengthen
And that is in
providing the right education and skills to the middle class and creating enough opportunities in society to absorb these
Socio Economic Engineering could be the vehicle for the Center Right movement to target Middle India with a “bold and imaginative” agenda.
A beginning must be made by
Step#1 – Giving a new broad definition to this fast growing demographic segment called the “Middle Class”
Step#2 – Micro-targeting based on issues that directly relate to economic priorities of the various sub-segments that make up this broad Middle Class
Step#3 – Structuring an electoral agenda around the “Ladder of Opportunites plus Safety Net” paradigm to address those priorities