Amount and Meaning | India’s middle class is caught in the vortex of economic crises and divisive politics

India is on track to overtake Japan as the world’s fourth largest economy by 2025, a year ahead of the International Monetary Fund’s earlier forecast. If so, India’s booming economy should be the most important selling point for the country’s current government in the current election. But, in the last fortnight, the party’s campaign has traveled on a brisk curve.Machli” (individuals’ fish and food choices), “Mangalsutra” (truly false allegation that opposition parties steal Hindu property) and Muslims.

However, after two phases of polls, the ruling party did not mention the economy. Instead, there is a hard precedent for communal content. From passionate speeches at rallies to animated videos warning that the Congress, if elected, would distribute Hindu property and assets to Muslims. Why does the ruling party not talk about economic successes, but instead directs most of its narratives and communications around religion, the Ram temple and the familiar yet toxic anti-Muslim narrative?

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The answer to why the BJP is backing away from tom-tomping its economic achievements lies in the missing “M” in the party’s electoral narrative. A shrinking, struggling middle class.

What has changed in the last few years for the middle class and their way of life? Let’s start with how much they save. According to RBI’s own data, household net financial savings, the difference between a household’s assets and its liabilities, has declined to 5.1 per cent of GDP in 2022-23 from 11.5 per cent in 2020-21. The 5.1 percent reading was below its long-term annual average of 7-7.5 percent. At its most basic, household savings in India have fallen to a 47-year low. While savings have declined, household debt levels have risen; In December last year, the gross domestic product (GDP) reached a record 40 percent. Households are saving less, borrowing more—and spending less.

Food inflation is stubbornly clinging. Although inflation figures are volatile, rising prices of essential commodities like tomatoes, potatoes, milk, chicken, eggs and fish have put food inflation figures at risk of 8 per cent. This means that households continue to cut back on other expenditures. A NielsenIQ report expects the FMCG or consumer goods industry to grow 4.5 to 6.5 percent this year. Ultimately, this is half of the growth achieved in 2023 and is an indication of how households are reducing spending on non-essential goods.

The antidote to many of these is a steady, predictable income. The path to that is through jobs. A recent survey of 10,000 voters by the Center for the Study of Developing Societies (CSDS) and New Delhi-based Loknithi found that inflation and unemployment are the top concerns of Indian voters. 62 percent of respondents said that finding a job is more difficult than it was 5 years ago. In a Reuters poll, 15 out of 26 economists said unemployment was the biggest challenge for the government after the national election. The “India Employment Report 2024” released last month by the International Labor Organization and the Institute for Human Development found unemployment particularly high among Indian youth. 83 percent of the total unemployed in India are young Indians between the ages of 15 and 29. Worse still, employment is dominated by substandard employment in the informal sector, even as wages and earnings stagnate or even decline. In short, there are not enough jobs, low-quality jobs for those who do and stagnant wages but rising housing costs.

It is not surprising that there is no mention of unemployment in any of the BJP’s rallies following the growth of unemployment to the extent of India in a decade.

One factor that can change opportunities for the middle class is education. The Annual Education Status Report looks at basic learning outcomes for young students aged 14 to 18 in rural India. About 25 percent of this age group still cannot read standard two-level text fluently in their regional language. More than half of the division problems are expected skills in fourth or fifth grade. How is the current government approaching education? In the most recent Union Budget, the allocation for education for FY 24-25 was 7 per cent lower than the revised estimate for the previous year, with a 16 per cent cut in expenditure on the higher education sector. While the number of higher education institutions is said to be increasing every year, there is no data on the quality of education and the „work-readiness” of many of these graduates. In fact, the same year’s State of Education report found that 80 percent of young adults surveyed would find a particular video on YouTube and 90 percent of them would share it with a friend. A generation with lots of technical skills, but not nearly enough jobs or enough skills for them.

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So why does the middle class politically support the status quo? Underground reports indicate that the country has fared better while middle-class voters have worsened. Some barometers of that success show the depiction of a Hindu state that has consistently demonized „its place” by the Muslim community, and another, the notion that India is now a strong state relative to its global peers, a narrative that asserts itself as the foundation of India’s foreign policy approach.

Several indices recently concluded that India is undemocratic (rated 66th and somewhat free), unhappy (rated 126th out of 143 countries), and unequal (deep inequality not only within economic classes, but also within regions and states).

Derived from Greek, phosphenes A term used to describe the colors or “stars” we see when we rub our eyes, the phenomenon of seeing light without light entering the eye. It’s time for India’s middle class to open their eyes.

Mithali Mukherjee is Director of Journalism Programs at the Reuters Institute for the Study of Journalism, University of Oxford. He is a political economy journalist with over two decades of experience in television, print and digital journalism. Mithali has co-founded two start-ups focusing on civil society and financial literacy and gender and climate change.