Indias By Class: Economic Diversity of India

 

There are many ways to slice up Indian society.  You can know an Indian’s state, language, religion, community, and many other elements of their identity.

However, you won’t get very far in India until you understand the monumental economic diversity of India. Being able to classify the economic background of someone can often be one of the best ways to know how to interact with them and which rules apply to them.  People from different economic strata lead completely different lives, have completely different experiences, and represent completely different people groups in India.

Talking about these differences takes a certain amount of sensitivity.  In 2002, the Strategic Foresight Group published a report that divides the Indian economy into 3 sections: Business Class economy (2% of the population), Bike economy (15%), and Bullock cart economy (83%).  The report talks about the different states of India and which states represent which economies.

These terms give a useful starting place for understanding this issue, but 1.) Things have changed since 2002, and 2.) These terms work much better for individuals than entire states.

Below are four strata of the Indian economy, using terms that are both immediately understandable and as accurate as possible when you are trying to fit 1.2 billion people into four neat categories.  Unlike other distinctions, these categories are much more about individual mindset than about specific income levels.  In fact, the different groups may overlap each other if seen on a wealth distribution scale.  Most people you know will probably fall in between categories or are moving from one to another.

1.) Majority Indians – These are the 65% of the country (or more), who under the new definitions of the government (Rs. 62 in expenses per day in cities, Rs. 50 in villages) are considered in poverty.  In US dollars, that is surviving on spending $1 per day.  In this category, we’ve made the unfortunate, but conceptually necessary move of lumping together the urban poor and villagers, although their lives can be extremely different.  Upon Majority Indians’ backs India has been built, fed, and housed.

Unfortunately, they tend to blend into the scenery of most of our experiences in India – the slums that become part of the everyday commute, the countless villages you will never visit, the mass of people who form the foundation for the Indian economy.

About this, economist and Nobel laureate Amartya Sen comments:

“There is, for example, nothing false about Indian poverty, nor about the fact – remarkable to others – that Indians have learned to live normal lives while taking little notice of the surrounding misery.” Argumentative Indian, 127.

 

2.) Classic Indians – If an Indian ever tells you they came from a “middle class” family, this is what they are talking about.  Father was a government worker/bank employee.  Mother was a school teacher/homemaker.  They save most of their money, live in joint families, and try to send their son to study engineering.   They can be auto rickshaw drivers all the way to mid-level managers in family owned Indian companies.  As the name says, these people make up the classic version of what most westerners think of when they picture the stereotypical Indian.

3.) New Indians – This is a phenomenon and a class that has emerged over the last 20-30 years.  They work for multinationals or started their own companies in the tech boom of the 1990s.  Their purchasing power has drastically increased compared to their families.  They move around India where their work takes them, but also may have other aspirations of really making it big and working abroad.  These people have family and cousins living and working in Europe, the Gulf, or the US, and can reasonably save up for a visit every few years.  They can also potentially afford to send their children abroad for higher studies if they wish.  This class of Indian is the face of the New India and the one that India wants the world to remember.

Being a New Indian is much more a mindset and a modern phenomenon than an economic class.  There are young graduates making Rs. 15,000 per month who would be in this category as well as dollar millionaires.  Being a New Indian is about adopting a much more “international” lifestyle in terms of taste and preference.  They maintain most of the core Indian values, but have shed at least a few things the Classic Indians hold onto, such as traditional dress, music taste, or spending habits.

4.) Wealthy Indians – These are families who have owned companies and land for generations and have been the barons of their cities and industries for decades.  They can afford to spend as much as they wish and travel frequently.  They buy one of the nearly one hundred Rolls Royces sold every year in India or might settle for one of the 10,000 Audis sold in a year.  They make up their own class because these people have earned not only wealth, but also power and can mostly do what they please.  Politicians, land-owners, heads of companies, their names are well-known and they travel in large and well-defined social circles.

Wealthy Indians might also be international in their views, but their values and behaviours might more closely resemble Classic Indians, such as living in extended families, vegetarianism, and arranging marriages for their children. Their rise to wealth likely happened before the major influx of western culture that began in the 1990s.

 

Wealth Distribution

Wealth distribution is as much a problem in India as in most countries.  However, according to a recent study from Credit Suisse, India has a more equal wealth distribution than Canada, Singapore, the UK, Russia, France, Sweden, Brazil, Switzerland and the US.  Comparing countries of vastly different sizes and cultures around a topic like wealth can be impossible and misleading in some ways, but this report at least shows that it is a global phenomenon and not unique to India.

That said, the disparities between groups are great.  India has more “poor” people than any other country on the planet.  CEOs in India are nearly paid nearly the same as in Europe and the US, but most other workers earn a small fraction of their foreign peers.  In the 1990s, the top 10% of wage earners earned 6 times the bottom 10%.  In 2010, the rich made 12 times more than the poor.

Here is an image from the National Council for Applied Economic Research from their study done in 2010, showing the breakdown of broad economic wealth distribution.

Different Rules for Different Classes

As mentioned above, knowing the basic economic category someone comes from is helpful to know what social rules apply to them.  For example, let’s talk about visiting someone’s home:

There is very little chance you will ever visit the home of a Majority Indian (odds are you are probably paying your maid well enough to be considered a Classic Indian).  And it’s not a good idea to visit their home without thinking through the longer term effects that would be put on them for having a rich foreigner visit.  If you get to visit a village home, you would most likely end up meeting the entire village as everyone would come out to meet you.  For gifts, keep things very simple and useful: sweets, fruit, simple toys for children.

If you visit a Classic Indian, you are likely to meet three generations living together in a modest, simple residence.   Remove your shoes before entering and greet everyone simply and politely.  Be very respectful in your tone and you may need to speak slowly for older generations.  The best gift is a box of Indian sweets, fruit, or something simple from your home.

If you visit a New Indian, you are likely to find them living in a nuclear family with their children.  Check to see if they have shoes on or not.  You can take a much more relaxed tone with them in your speech and actions.  For gifts, you can bring a nice piece of home decor, music you enjoy, a box of foreign chocolate, or maybe even wine.  (You would never assume to bring alcohol to a Classic Indian household even if you had some drinks with him at a bar earlier.  Brining alcohol into the home can still be taboo and you don’t want to get anyone in trouble.)

If you visit a Wealthy Indian, it might be an extended family again, but they will also have a fleet of nice cars in the garage. Again, check for shoes, but they may be very used to foreign guests and won’t mind either way.  Some foreign whisky or large flower bouquet might make a nice gift (check first to see if they are teetotalers).

Different groups, different environments, different rules.

Mixing Classes

As mentioned, many of the people you will come to know may straddle these categories.  The largest area of transition is between the Classic Indian and the New Indian.  Many families are making that transition now, which provides the film industries with an endless amount of dramatic storylines.   Unfortunately, Majority Indians often make up a whole sub-country whose interactions with the rest of India are quite limited.

Despite there being a lot of overlap, each group is very distinct and you will find it fairly easy to categorize the people you meet.

Aside from rules about visiting a home, giving gifts, and alcohol, the economic class of an Indian can affect:

• Small Talk Topics
• What their weddings look like
• What clothes they like to wear
• What food they like to eat
• What kind of leadership style they prefer in the office
• The kind of movies they watch

 

More Indias here

Photo Credit: rabanito on Flickr