The economic reason for middle-class discontent
Slower growth as a result of the government’s populist measures has hurt the middle class
If the Congress wants to know why it has alienated the Indian middle class, it should take a look at a remarkable piece of research, India Market Strategy: Penny Rich, Pound Poor, by Credit Suisse analysts Neelkanth Mishra and Ravi Shankar. The report looks at the impact of government spending and welfare payments on the poor and the middle class. Their basic argument: while wages and consumption at the bottom of the pyramid will continue to increase because of government redistribution policies, incomes of middle class are being squeezed because of lower growth and a slowdown in the pace of increase of government wages.