The Growth and Sectoral Composition of India's Middle Class: Its Impact on the Politics of Economic Liberalization

This essay analyzes the growth of the middle classes in India since 1980, focusing on the period of economic liberalization since 1991. Its objective is to understand how the emergence of this class – and the nature of its composition – has affected the process of economic liberalization in India. Conventional wisdom holds that the growth of the middle class since the early 1980s is related to the increase in economic growth rates during this period. Since 1980, annual GDP growth has averaged more than 5%, compared to 3.5% during the 1950–80 period. The middle class has grown to somewhere between 100 and 250 million, with the exact number depending on the criteria used. The emergence of this middle class has changed India’s class structure from one characterized by a sharp contrast between a small elite and a large impoverished mass, to one with a substantial intermediate class. The elite–mass class cleavage tended to support a broadly socialistic ideology, while the elite–middle–mass differentiation has created a broader base for capitalism – hence the increased support for economic liberalization. Much of the debate has focused on the size of the middle class – whether it is, say, 50 million or 150 million or 250 million – and the criteria to be used in drawing boundaries. This article focuses on the politically far more relevant criterion of the sectoral and occupational composition of the middle class – in particular, whether it is largely in the broadly defined public sector, the (entirely private) agricultural sector, or the non-agricultural private sector. I argue that the orientation of the middle class toward economic liberalization – especially toward “second generation” reforms involving privatization, reducing