Recently, at an event organised by Panchjanya magazine, Finance Minister Nirmala Sitharaman said that she identifies herself as 'middle class', to convey that she understands the pressures and problems they face. Sitharaman also said that the government does not tax income under ₹5 lakh, with no extra taxes being imposed on the 'middle class' under the government; portraying facilities like metros, smart-cities and better drinking water coverage to be middle-class friendly initiatives.
However, there is no fixed definition of who can be called economically middle class. Rather, there are several approaches to defining it - depending on the author - which can span across income brackets.
Her comments come just weeks before the presentation of the Union Budget for the next fiscal year, scheduled to be delivered on February 1. This will be the last full budget of the incumbent government which will last till 2024, during which a general election is scheduled to be held.
What does being middle-class mean?
Here's what several private and academic authors have to say about what being middle-class in India means.
PRICE Research: Estimates published by People Research on India’s Consumer Economy (PRICE Research) think-tank, divides income-earning households in India in four categories.
- Affluent households earn more than ₹30 lakhs a year
- Middle-class households earn from ₹5 lakhs to ₹30 lakhs a year
- Aspiring households earn from ₹1.25 lakhs to ₹5 lakhs annually
- Destitute households earn below ₹1.25 lakhs annually
Their survey had an average household of 4.6 persons.
The middle-class forms 55% in metros, 52% in boom towns and 43% in niche cities, with India's 63 biggest cities being home to a quarter of India's middle-class.
This can be seen here.
Mastercard: A 2021 report by the Mastercard Centre for Inclusive Growth cites survey data from PRICE Research to divide Indian income-earning households in three categories or 'Three Indias' as the report puts it.
- 'Rich India', or the top 20% of households, earning ₹3,94,271 annually. They are also referred to as the 'consumer class'
- 'Middle India', often conflated with the middle-class, or the middle 60% households, earning ₹151,651 annually
- 'Poor India', earning ₹80,529 annually.
The study says that 'Middle India' totals nearly 164 million (16.4 crore) households. 70% of this category lives in rural areas, with many lacking basic amenities such as tap water and stoves. 69% of this category says that they meet their needs "with difficulty" and save 7.7% of household income.
This study can be seen here (triggers download).
National Council For Applied Economic Research (NCAER): The NCAER is a prominent independent non-profit research organisation focusing on economic policy.
Data from a 2010 survey conducted by Rajiv Shukla shows that the middle-class earned between ₹2 lakhs to ₹10 lakhs ($4,000 to $21,000). Below them were the aspirers earning between ₹90,000 to ₹2 lakhs ($2,000 to $4,000). Below them were the deprived earning below ₹90,000 ($2,000).
The highest class was the rich earning above ₹10 lakhs.
All of these prices are at 2001 - 2002 prices.
This can be seen here.
Pew Research: A 2021 analysis published with Pew Research shows the gradual decrease of the Indian middle-class which fell a rung lower into poverty.
It broke 'middle-income' into two.
- Upper-middle income earners earned between $20.01 to $50 daily
- Middle-income earners earned between $10.01 to $20 daily
Low income earners earned from $2.01 to $10, while the poor earned less than $2 a day. The rich, or high-income earned more than $50 a day.
Overall, the study showed 75 million people in India entering the 'poor' class, while the high income, upper middle income, middle income and lower income fell by 1 million, 7 million, 32 million and 35 million respectively.
All of these figures are at 2011 purchasing power parity in 2011 prices.
This can be seen here.
How much does Sitharaman earn?
In 2022, Sitharaman was re-elected to the Rajya Sabha representing the state of Karnataka.
Her election affidavit shows her income shown in her income tax returns for the past five years.
Further, she has declared ₹63.39 lakhs in movable assets such as fixed deposits, jewellery, vehicles, interest and loans advanced to others.
She has declared ₹1.87 crores in immovable assets like buildings and land.
Her affidavit can be downloaded from here (triggers download).