in NCR’s Noida. Ahmed started earning a salary of R2.5 lakh a year in 1992 (five years into his career) while his father, working in the government sector earned a similar figure after 30 years of service.
“I got my first credit card as soon I started working. There were plenty of opportunities; buying durables, like a good car was easy and we didn’t have to — or want to — wait,” he says.
People like Ahmed who were part of the dream run say they’ve had to cut back in recent times when the slowdown has gone from “low steam to high steam”. “From a salary raise of 20% plus earlier, we’ve had to settle for 10-12% in the last few years. I’d taken a home loan in 2005 at 7.5%. Then, the interest rates started rising and last year I paid 11.5%. My EMIs took a huge upswing because of this and with the value of properties not going up I had to sell the house by foreclosing the loan. We ultimately had to settle for a smaller house,” he says.
Ahmed is part of a generation of Indians who came of age at about the same time as the liberalisation of the Indian economy. “Today, this is a critical mass of people with a pan-Indian characteristic,” says writer-diplomat Pavan K Varma and author of Being Indian (2004) and Becoming Indian (2010).
The Indian middle class increased from 2.7% of the total population in 1995-96 to 5.7% in 2001-02 to 12.8% in 2009-10, according to How India Earns Spends and Saves (National Council of Applied Economic Research, 2010).
They were not only the early and first benefactors of an economy opening up, they also symbolised a changing, modern, post-reforms India. And now, as the economy shows signs of crisis and the India Story is put on hold, they are feeling the pinch.
Call them the Pleasure-Pain generation.
“This term, an oxymoron, aptly defines this group. After years of pleasure and success, they’re experiencing a sudden bite of pain. It’s a reality check and should ideally make them more robust,” says brand expert Harish Bijoor.
“In the early 90s, economists, planners and marketers across the world woke up to the concept of the ‘Great Indian Middle-Class,’” says Rajesh Shukla, former director of National Council of Applied Economic Research and a consumer economy expert. India pulling itself out of the stigmatising ‘puddle’ of the ‘Third World’ became “a shining emblem that helped to groom the notion of ‘middleclassness’,” says anthropologist Christiane Brosius and author of India’s Middle Class: new forms of urban leisure, consumption and prosperity (2010).
As the dream ran from the 1990s till the 2010s — average growth rate went from 5.7% during 1990-2000 to 7.3% during 2000-2010 — this segment with its huge aspirations and liberated mindsets rode the waves of success.
Between 1985 and 2005, average household disposable incomes roughly doubled, consumption expenditure rate grew from 6% to 18%, savings and investments grew by over 30%… it was all being celebrated.
Now, with the economy slipping into slowdown, like it did in the late 2000s, it seems that the brakes have been jammed on the new middle class’s escalator ride of plenty — shrinking jobs, layoffs, rising home-loan interest rates, falling economic growth.
“If economic growth falls below 7%, the job market shrinks. In India, economic growth is already hovering around 5%, leading to such a scenario. Then, our ‘employability quotient’ is coming under stress with the neglect of the education sector. Coupled with high inflation (above 10% in the last two years), all these factors are puncturing the middle class dream in the short run. Given this scenario, you’re actually turning the demographic dividend on its head,” explains Varma.
At once both principal witnesses and primary participants in what was called, through the decades after reforms, the rise of The India Story and now it’s likely demise, this generation has ridden to both ends of the spectrum with the economy, experiencing the highs and the lows.
Part of the reasons for the move from pleasure to pain is what German sociologist Ulrich Beck calls ‘risk society’ — a society that invests in bubbles, of real estate, education, art, etc. (According to a study done by a housing finance company, in India, as annual incomes increased between mid-90s to 2000s and property prices fell sharply, the number of years it took an average middle class family to own a house went from about 20 to just 5.)
The new risks were seen even in other choices. The earlier middle class consisted mainly of civil servants, living in government housing and sending children to government schools. Its heroes were Mahatma Gandhi and Jawaharlal Nehru. The segment of people who entered the workforce in the 90s became “a creature of the economic reforms, connected to rapid growth in the private sector. Its heroes were business captains and its success came to be celebrated in Bollywood movies and on more than 400 television channels in different Indian languages”, writes commentator Gurcharan Das in India Grows at Night: A Liberal Case for a Strong State (2012).
The ‘new’, neo-liberal middle class came up similar to the model of the American dream, observes Brosius. “Coming from various social, regional, education and caste backgrounds, they also evolved from lower strata of society. It also marked a shift from national acumen to merit-based individual careers and dynamics, like the American model,” she says.
But it’s also imperative to recognise the Indian middle class heterogeneity and anxieties, points out Brosius. “There are middle classes who have just made it to the lower segments of ‘middleclassness’, constantly threatened to fall behind again, to slip back into poverty. Then, there are the affluent middle classes, moving along the upper rim of ‘middle class’, hoping to climb even higher. But here too, and it’s a sign of the last few years, with the global financial crisis, the evidence that anyone can fall down, behind, can fail, has become more and more evident,” she says.
Perception or real pain?
In two nationwide surveys conducted by Delhi-based Lokniti, a research programme of Centre for the Study of Developing Societies, between 2007 and 2011 across sections of society, some interesting findings came up.
The middle class section* dissatisfied with their personal financial condition increased from 19% in 2007 to 27% in 2011, while those who felt the economic condition of their household would be better in the coming years slipped from 62% in 2009 to 55% in 2011. Those who felt it would be worse increased from 6% to 10%.
Consumer behaviour expert Rama Bijapurkar feels that while this segment is financially safe, their confidence has been dented. “They are angry that the dream run is getting interrupted. The slump is depriving them of their indulgences and eating into potential savings,” says Bijapurkar.
The reason is the government’s changed discourse. “From ‘please consume, by consuming you are doing the nation a service’ to ‘please share with your less privileged brethren — you have had it very good so far’ is making them angry,” she adds.
Upset at having to pay more for everything (though they can afford it), they see it as a government failure, she says.
Silence from the government has not helped either. “No one has talked to them about what the state of the economy is or why they should share their large surpluses to fund those who have none, and live badly,” she adds. (*Note: The demographics of the middle class sample size as defined in these two surveys are upper class according to Bijapurkar.)
Nearly 80,000 middle class Indians across the country came out when Hazare left Tihar Jail in 2011. “For the first time the issue was not related directly to personal self-interest. Whether he’s right or wrong, Hazare became a symbol of middle-class angst on valid issues like corruption. The contribution has gotten into our collective psyche, bringing middle-class Indians out of their insular shell,” says Varma.
While the middle class earnings have remained largely steady, its consumption has galloped and savings shrunk. “This causes a great deal of pain in any society,” says brand expert Harish Bijoor. Spending patterns have changed — steadily moving from necessities to discretionary spending 1995 onwards.
“The middle class has been using its wants for its needs, causing stress and strain on itself,” he says. Their ‘consume-even-with-credit-card’ model is creating a micro-mortgage-led economy for the future, similar to what happened in the US, Bijoor cautions.
However, experts feel, the Pleasure-Pain Generation is better off in the present scenario than the younger lot, because they leveraged their abilities to buy and possess what they wanted.
“They haven’t seen pain or shortage, having lived in an era of plenty. They worked hard when the economy galloped and laughed at their father’s pay packet. An ‘i, me, myself’ generation who are not expansive or inclusive,” says Bijoor.
But every generation of a country takes the pain for something. If it was the ‘midnight’s children’ for nation building, ‘liberalisation kids’ for the transitioning and building of India’s market economy, then the current segment — the ‘pleasure-pain’ generation — are facing the brunt of the economic fall.
“India is a mixed bag at this time. A pause, not a full stop — I call it an ‘Economopause’. We can either get blame-oriented, pass the buck or get pushed into working harder, cutting back on splurging and being rooted to basics. Being introspective will help us understand why we’ve been pushed back,” adds Bijoor.
Can a generation on the cusp of pleasure and pain propel their anger/confusion into something constructive? The Indian middle class needs to seriously introspect if it wants to become an instrument of change, feels Varma.
“It needs to become better organised on a pan-India basis as a pressure group and channelise its angst to include those below it for a long-term self interest. A five-point blueprint that has governance, democracy, corruption, security and the building of a more inclusive society at its core could be a start,” he offers.
Two people from the generation that benefitted from liberalisation talk about scaling down expectations today
‘Held to ransom in a democracy’
Kamna Prasad Singh
For Kamna Prasad Singh who joined the human resources sector in the retail industry in the mid-90s, liberalisation was taking place with several brands coming in. “The market was buzzing. Salary hikes touched 30% in the early 2000s. We bought cars and flaunted credit cards.” Hungry for success, Singh changed five jobs in 10 years, while his father had stuck to his lifelong job in the steel ministry. Singh picked up a house in 2000 at a 7.25% loan but post 2005 his EMIs reached 14%. “Salary hikes became barely 6-12%,” he says. While Singh prudently managed to ensure his first home, his second property investment is dragging on.
Professionally and personally, it’s a bad situation, he says. “I had friends who with R20-25 lakh salaries never bothered to save. They ended up taking loans to survive.” In 2009, Singh became an independent consultant. There’s discomfort with the government he says, “almost like people are being held to ransom in a democracy”.
‘We crossed the barrier with global careers’
Biotech MNC employee
Sudha Kanago has been working in the operations department of a biotech MNC since 2005. Her parents always lay emphasis on education to ensure success, she says. After an engineering degree and an IIM-MBA, she started working in 1992 at an annual salary of Rs. 100,000. For Kanago, a ‘liberalisation kid’ who witnessed both stages of liberalisation, family life was vastly different. “TV came when I was a teenager, a fridge at the time of my wedding. We never had an AC.”
Over the years, with her advertising professional husband Sushobhan Mukherjee, Kanago came to afford a lifestyle which her parents couldn’t have dreamt of. “For me, this was progress,” she says. Her father bought his first proper pair of shoes when he joined his first job while she managed to pay off a R13,000 education loan within the first year of working. “We came from a lower middle class background and ‘crossed the barrier’ with global careers and exposure. We grew up when before buying something we asked do I need it. Now, I don’t even think before buying a new outfit.” A successful career for Kanago, like for most in her generation, meant changing jobs frequently for better prospects. “In my career of 20 years, I’ve changed four jobs, whereas my father who worked in the government sector for 35 years only changed twice.”
The slowdown has forced Kanago and Mukherjee to tighten their belts. “We won’t get bonuses or hikes, so spending has become more rationalised.” While Kanago may still splurge on clothes, she would think twice before buying a bigger car or taking a fancy vacation.