Financial Inclusion: Focus on Middle India
Most analyses of the Indian consumer economy tend to focus on the middle-class on the presumption that this consumer segment comprises the biggest chunk of the Indian consumer population. However, nothing could be further from the truth. The “Indian Middle Class and the Rich” comprise just the top 20% of the Indian population. The ICE 360° Survey 2014 has sought to provide a deeper look into the real middle segments of the Indian income pyramid—or the large population group that exists between the top 20% (richest) and bottom 20% (the poorest) consumer segments—in a bid to get a better understanding well-being dynamics.
The middle segment of India comprises nearly 60% of the population, wedged between the welfare-driven economy, on the one hand, and the liberalising market-driven economy on the other. Post-Independence, government policies have been designed to benefit either the rich/middle-class or have addressed the concerns of the poor through various anti-poverty welfare schemes. Middle India in the process has largely been ignored.
The ICE 360° pan-India Household Survey was conducted across 20,195 households (comprising a probability sample) selected from seven economic clusters (4 urban and 3 rural) in 21 major states of India in 2014. There are 270.1 million households in the country of which 163.7 million households belong to Middle India, 43.9 million households belong to Poor India and 62.5 million households belong to Rich India. Out of 270.1 million households, 66% (179.5 million) live in rural areas and 34% (90.6 million) live in urban areas. In about one-fifth of all households, the highest education level is below primary, in 23% households it is primary-/middle-school while in 16% households it is matric/secondary. Beyond this, in one-fifth of the total households, the highest education level is higher secondary while in approximately one-fifth (21%) households, the highest education level is ‘graduation and above’.
At the all-India level, in about one-third of total households the primary occupation is ‘casual wage labour’ while the share of regular salary/wages, self-employment in non-agriculture and self-employment in agriculture hovers around 20% each. Within Middle India and Poor India, households engaged in casual labour as primary occupation form the largest share while in Rich India, salaried households form the bulk.
Survey results indicate that there isn’t much occupational volatility, in terms of frequent job change, among Indians in general and Middle India is no exception to this pattern. The majority of Middle Indians work in precarious employment conditions and few have written job contracts or access to the perks of employment that salaried employees do in terms of paid leave, regular remuneration or adequate coverage under social security provisions. The situation is visibly worse for Middle and Poor India. At the all-India level, around three-fourths of the households whose chief wage earners (CWE) are either regular salaried/wage earners or casual labourers, reported that they do not have any written job contract, only 37% are eligible for paid leave and about one-third get at least a weekly day off, 44% get regular monthly salary. The corresponding figures for Middle India: 81% do not have a written employment contract; only one-third are eligible for paid leave; 27% get at least a weekly day off; and 38% get monthly salary. The figures are even more depressing for Poor India and much better for Rich India.
Middle India is also disadvantaged in terms of coverage of social security provisions. The proportion of CWEs (either regular salaried/wage earners) who are covered under provident fund, pension schemes and gratuity are 53%, 29% and 31%, respectively, at the all-India level.