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So far the business of inclusion, as defined by politicians, has targeted the bottom of the pyramid. Photo: Mint
So far the business of inclusion, as defined by politicians, has targeted the bottom of the pyramid. Photo: Mint

Politicians target the middle class

The middle class, though very audible in urban areas, has rarely appealed as a collective to the political class

Last week, immediately after taking oath for the third consecutive term, Shivraj Singh Chouhan, chief minister of Madhya Pradesh, took four executive decisions for the welfare of different demographic segments in the state.

Yes, the procedure was unusual. Not just because he chose to work from Day 1. Instead, it was because the package surprisingly included the promise of an electoral sop specifically targeting the middle class.

To my memory, this is a very interesting first. So far the business of inclusion, as defined by politicians, has targeted the poorer population segments, or what is often referred to as the bottom of the pyramid. And this—through the entitlement regime—has paid immense dividends to the Congress, particularly in the 2004 and 2009 general elections.

The middle class, though very audible in urban areas, has rarely appealed as a collective to the political class. This is not only because the middle class, particularly in new India, is very variegated and rarely bound by the denomination of religion or caste, but also because urban areas account for far fewer seats in the Lok Sabha than rural India.

But now Chouhan, who some believe has the potential to make the transition to the national stage for the Bharatiya Janata Party, is looking to correct that. He announced the setting up of the Madhyam Varg Ayog, or a commission for the middle class. The terms of reference of the commission, according to a government spokesperson, would be announced in the next few days and an expert would be appointed as the chairman. “The terms of reference are still being finalized," the official said. “Broadly, the commission will first define the middle class and then identify their issues and concerns."

This precedent is not without reason. The Census data, released last year, showed that India has witnessed a sharp upswing in urbanization in the last decade. According to Census 2011, a little under one in three Indians live in urban areas. It was 27.8% in 2001 and 25.5% in 1991. In some states such as Kerala, the rate of growth of urbanization spurted from 26% in the decade ended 2001 to 47.7% in 2011. In absolute numbers, of the 1.21 billion population, 833 million live in rural India while the remaining 377 million reside in urban India.

A significant chunk of this population is what is referred to as rurban (rural plus urban) or census towns—agglomerates that are not entirely either rural or urban. Worryingly for politicians, these segments have in the last few elections begun to mimic the voter behaviour of urban India, which is often defined around their own aspirations outside of caste and religion.

There are various estimates about the number of Lok Sabha seats that fall in urban areas; the most quoted estimate claims it is about 165 seats.

The just-concluded elections to the Delhi state assembly showed the damage that an incensed middle class can do to organized politics. It enabled an upstart like the Aam Aadmi Party to turn the business model of Indian politics on its head. It crowdsourced both funding and support and made the entry barriers in formal politics redundant.

The end outcome was that it came to, against all predictions, within a whisker of forming the government and proved to be a giant killer by reducing the three-time incumbent Congress party to single digits.

I wouldn’t know if this is the thinking that drove Chouhan to make his pronouncement specifically for the middle class. But it is a fair assessment that it would have influenced his decision—anticipating a change before it is upon him, the hallmark of a shrewd politician.

Over the last few years the Indian middle class has benefited immensely, mostly from the rapidly growing economy. Since the bulk of the benefits of economic growth accrued to urban areas, it was only logical that the urban populace was the biggest gainer. Not only did the consumer economy undergo a sea change, the advent of competition meant that the consumer has become king—a huge transformation, even if went back only a decade. Alongside, their aspirations took flight. Not only did they dream of acquiring a home of their own, but also took out consumer and education loans for their children.

However, ever since the economy nosedived from a growth rate of 9% plus to around 5%, the middle class dream began to unravel very fast.

Their agony was worse with the country experiencing the longest ever period of double-digit inflation. Loan defaults have become a common feature—recently a senior bank functionary told me how people were even at the risk of losing possession of their ancestral property that had been put up as collateral.

Unfortunately for them, since they do not exist as an easily identifiable homogenous class, politicians took note but did not specifically address their issues. Presumably now that Chouhan has taken the first step, other chief ministers will follow. If indeed this does happen then the middle class in India would have arrived as a politically important constituent, a watershed moment not just for politics but also for future urban policies.

Anil Padmanabhan is deputy managing editor of Mint and writes every week on the intersection of politics and economics. Comments are welcome at capitalcalculus@livemint.com

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