Ask Vir Ask Vir

Medium Term: The prosperity which empowered the middle class is now on the verge of collapse

It is now commonplace to hear that the troubles that crippled this government last year were the consequence

of a peculiarly Indian phenomenon: the economic rise of a politically impotent middle class.      The argument goes something like

this: after nearly two decades of economic liberalization which led to high sales of growth, the Indian middle class has emerged as a vocal and assertive force. Most middle class people today are better off than their parents were. And the things that were once considered luxuries by our parent’s generation --- home-ownership, cars (let alone two car households), telephones, foreign travel, fancy gadgets (there were no computers in those days but any kind of electronic gadget was a big deal) and clothes with foreign brand names  --- are now taken for granted by the middle class. Moreover, the growing prosperity has pushed more and more people into the middle class category.


   But, in one area, there has been no change: the political irrelevance of the middle class. Such is the structure of Indian society that it is hard to think of more than a handful of parliamentary constituencies where the middle class vote can swing an election. Even in so-called affluent constituencies ---- say South Bombay --- there are so many slum-dwellers and poor people that the middle class finds itself outnumbered.


   The middle class response to its political impotence has been to ignore the electoral system (all statistics suggest that the affluent are the least enthusiastic voters) and to create a parallel politics.


   This politics takes the form of public interest litigations on issues of national importance (the higher judiciary is solidly middle class), debates in TV studios, furores and  explosions on social networking sites and the odd public protest: the Anna Hazare movement which had so much traction last year is a good example of electorally-irrelevant but influential middle class political activity.


   One characteristic of all middle class parallel politics is a deep-rooted contempt for the political class and a vicarious delight in a politician’s misfortunes, arrest or decline. Sometimes, electoral democracy will be run down (Anna Hazare famously said that were he to stand for election, he would lose his deposit ---- meaning not that he was a terrible candidate but that any system that did not get him elected was, in itself, terrible). And anybody who attacks politicians will earn a huge measure of support no matter what his or her background.


   My concern today is not with whether the emergence of this kind of parallel politics is good or bad. Enough people have already spoken up in favour of electoral democracy and of the need to look beyond the interests of the middle class.


   My concern is with the direction the parallel politics movement is taking. For all of last year, corruption was the main focus which was fair enough because of public anger over the 2G scam and the Commonwealth Games.  Moreover, the judiciary fed this anger by entertaining PILs and by refusing bail to politicians no matter what the legal precedents were. As the anger built up, various other forces including Anna Hazare’s people and Baba Ramdev mobilized the public discontent.


   But now, as the corruption issue seems to be playing itself out, there should be another obvious focus for middle class anger and activism.


   The only reason the middle class is so vocal today is because of the prosperity of the last two decades. Should middle class people not care, therefore, that the very prosperity which empowered them is now on the verge of collapse?


   Consider the facts. The rupee is now at its lowest level in history.  Over the last few months it has lost something like 20 to 25% of its value. In real terms this means that all those middle class pleasures --- foreign holidays, branded clothes from abroad, handheld gadgets, computers etc. ---- may soon be out of our reach.


"So, tell me something: why is the great middle class, so vocal on the Lok Pal bill and so many other issues, so quiet when it comes to this government’s complete mishandling of our economy!"

   Petrol is at its highest ever. There is talk of removing the subsidy on diesel or of raising its price.  So all those middle class people who drive in to work from shining new suburbs or urban conglomerations like Gurgaon can expect to see their fuel bills rise dramatically.


   The Sensex is in free fall. Assume that you had put some money (say Rs 10,000) into the market a couple of years ago when things looked good, you would have lost about 20% of your money without getting much of a return.  (Your Rs 10,000 would be down to Rs 8000 or so).


   Assume now that you were risk averse and had put the money into some interest bearing asset that guaranteed you 6 to 8 per cent return (which was about the norm two years ago). Well, you would still have lost money. You would have had to pay tax on the interest so your real return would have been far lower than the rate of inflation.


   It gets worse and worse. Nearly everything is significantly more expensive today than it was two years ago. The days of cheap air travel are over. Sometimes you can’t even find a flight because the airlines are packing up. A foreign holiday now costs too much. Mobile phone rates are set to rise sharply.


   And while all this happens, our economy rushes headlong into a near recession. Company profits are down, demand is low, foreign investment is at a standstill, foreign institutional investors are pulling out of India and nobody bothers to talk about us in the same breath as China.


   Much of this is the fault of this government. Despite being headed by the father of India’s liberalization programme, the government has shown itself incapable of attracting investment, controlling inflation, increasing production or even of taking decisions. Industrialists are bitter and frustrated. Foreign companies stare at us in disbelief and then move away.


   So, tell me something: why is the great middle class, so vocal on the Lok Pal bill and so many other issues, so quiet when it comes to this government’s complete mishandling of our economy! Even such developed economies as Europe and the US have seen middle class anger push politicians into promising to do better and there have been demonstrations in the streets.


   But not here. Not in India.


   Why on earth are we – so agitated about everything else that the politicians have done to us ---- so unwilling to speak up about an issue that strikes at the heart of our well-being, that affects our futures and can change the way in which we can afford to live?


   Don’t ask me.


   I’ve thought about it. But I can’t find any answers. Maybe we are not as bright as we think we are. Maybe we are too easily distracted.


   But surely it is time for the middle class to rise up in defence of the most important issue of them all: its own survival.




  • Punit 31 May 2012

    Hey Vir,
    Very nicely put... And the point that anything and everything is significantly expensive than just 2-3 yrs before is very bad thing...
    I guess.. where we lost out is... In bomming years pre 2008, none of the governments took hard steps of price rise and other issue when people were getting 15-20% hikes and now when hikes have stopped post 2008... Price rise has been uncontrolled...
    And I dont know where it is headed!!!!

  • RM 29 May 2012

    I think that this is a sign that as a country, society and people, we are at a crossroads. The past twenty years has seen unprecedented prosperity and opportunities for the people to strike out in all directions, of which they took full advantage. But the development also amplified those features of Indian society and polity, which are not so benign: corruption, nepotism, injustice and inequality. The widening fault lines threaten the fruits of development causing the winter of our discontent.

  • Karan Kaushish 29 May 2012

    You hit the nail on the head! I find that most people are simply frustrated and need something to complain about. They will support causes and speak agitatedly about issues, however, having said that, why the ese people won't tackle the issue at hand is, like you implied, difficult to comprehend. today we have social networks and multiple other channels that grant many a voice, but is this being used to its maximum potential - NO. Perhaps we can all start here. Thoughts?

  • To view all please click on More Comments below
More Comments:(5)Posted On: 25 May 2012 07:20 PM
Your email id will not be published.
Security code:
Captcha Enter the code shown above:
Your email id will not be published.
Friend's Name:
Friend's E-mail:
Your email id will not be published.
The Message text:
This email was created by [your name] who thought you would be interested in the following Article:

A Vir Sanghvi Article Information

The Vir Sanghvi also contains hundreds of articles.

Additional Text:
Security code:
Captcha Enter the code shown above:

CommentsOther Articles

See All

Ask VirRead all

Connect with Virtwitter

@virsanghvi on
Vir Sanghvi