India’s middle-class riddle: How much do you need to be called rich?

Normally, about 60% of a given population that falls in the middle by a particular metric, such as income, would qualify as the middle class, leaving 20% each being the rich or poor class. While income can be one metric, some also broaden it to occupation, education and social status. But there’s no global consensus on who the ‘middle class’ is.

The feeling of being financially middle-class is deeply ingrained across income groups. Among those earning less than ₹50,000 a month, 90% consider themselves middle-class, the survey found. But so do 57% of those earning over ₹4 lakh a month. 

Interestingly, over 12% of those earning over ₹2.5 lakh also call themselves ‘poor’ or ‘lower middle class’, while nearly 36% of those earning less than ₹30,000 say they are ‘affluent’ or ‘upper middle class’.

The survey covered 10,314 respondents across over 200 cities and towns. Only 7% of those who answered this question identified as the affluent or rich class, and 5% poor, indicating a broad middle-class self-perception, with a tiny share at the extremes.

This was despite the survey having respondents across income groups: Over 32% of those who revealed their incomes earned less than ₹30,000 monthly, 22% earned ₹30,000- ₹50,000, 25% earned ₹50,000- ₹1 lakh, and 21% earned more.

Also Read: Why are so many rich Indians packing up to leave India?

The biannual survey, now in its 12th round, is conducted by Mint in association with survey partner YouGov India and Delhi-based think tank Centre for Policy Research. Since 2018, the survey has shed light on the beliefs, choices, and anxieties of India’s young urban population. In the latest round, 45% of the respondents were post-millennials (born after 1996), and 39% were millennials (born between 1981 and 1996).

Dreams of affluence

But how much income will make you rich? For over half of those who answered (54%), the magic figure falls below ₹1 lakh a month per person. Since many who earn more than that call themselves ‘middle-class’, it puts their self-perception and their threshold of being rich in dissonance: by their own threshold, they may already be rich but prefer to underplay themselves as middle-class. (The responses on the threshold were asked at a household-level, and then adjusted for household size to get a per-capita figure.)

The median threshold income for being rich came out to be around ₹90,000 a month per person. Among those who assess themselves as poor, this threshold is ₹53,000; among those who say they are the lower middle class, it’s ₹78,000; among the upper middle-class, it’s ₹1 lakh; and among those who feel rich, this threshold is ₹1.47 lakh.

The results are similar when analysed against actual incomes: While 62% of those earning less than ₹50,000 a month felt they could be rich with just a ₹1-lakh salary or less, the share was just 21% among those making more than ₹2.5 lakh a month. In fact, among 56%of those who make ₹4 lakh a month or more, a pay cut to about ₹2 lakh would be enough for them to stop feeling rich.

Also Read: Tax overload: India’s middle class is hurting because of inequitable taxation

India’s urban-bred young population is often accused of having lavish expense needs. But post-millennials are the least demanding in terms of what would make them rich: as many as 58% would feel rich if their household made ₹1 lakh or less per person. Among pre-millennials, this was 45%. This could partly be because post-millennials are newer to the workforce, and have lower pay scales. In Tier-III cities, as many as 60% respondents would feel rich at a ₹1 lakh income.

Uneven progress

India has rapidly changed over the decades, with each generation living in a much improved socio-economic situation than the previous one. Urban Indians in the latest survey largely think the living standards of the rich and the upper middle class have improved over the last decade, but not so much for the lower middle class and the destitute/lower class. Around 28% don’t see any change at all in the lives of the destitute. (Supporters of the ruling party were more likely to see improved living standards across classes.)

But around 70% of urban Indians across generations think they are financially doing better than their parents were at the same age (though a small minority, 15%, also believe they are worse off). The views diverge based on self-perceived class: among those who identify as rich, over 90% feel they are doing better than their parents were at their age. Among those who identify as poor, this is true for 37%. Importantly, about one in five urban Indians who identify themselves as poor or lower middle class said their situation is much the same as their parents.

India certainly has made progress with its rapidly-rising middle class, but the dreams of getting rich keep getting bigger as incomes rise. Worryingly, most urban Indians don’t perceive this progress as equitable, and see it tilted more in favour of the rich and upper middle class.

Also Read: Let a middle-class boom fend off a middle-income trap

This is the third part of a series about the findings of the 12th round of the survey. The previous two parts covered political attitudes. These surveys are skewed towards urban, well-to-do netizens, with 90% of respondents falling under the NCCS-A socio-economic category.

 

Part 1 (14 October): 2024 polls changed the electoral pitch — but only a little
Part 2 (15 October): Making sense of urban India’s political faultlines