Economy
Did The Middle Class Voter Compromise ‘The Thali’? When the Humble Thali Becomes A Luxury. The Urban Middle-Class Households Shrink But The Rich Club Expands!
As the dust settles on India’s socio-economic parameter in 2024, one glaring question that every middle class family is asking – did we inadvertently vote to shrink our own “thali”? The evidence points to a widening gap between the affluent and the struggling, with data painting a troubling picture of growing income inequality.
The Shrinking Middle Class. A Numbers Game
According to Kantar’s India at Crossroads report, urban India is witnessing a seismic shift in its socio-economic composition:
- Affluent households surged by a staggering 86% between 2019 and 2024.
- Meanwhile, lower and lower middle-class households plummeted by 25%.
In contrast, the SEC A households—typically comprising white-collar professionals and business elites—have risen from 24% to 39%.
A Pyramid No More
“The pace of movement from middle to top is significantly higher than households moving from bottom to middle. It’s no longer a pyramid,” observes Soumya Mohanty, Managing Director, Insights, South Asia at Kantar.
This uneven mobility reflects a troubling economic reality—urban growth is disproportionately benefiting the top tier while the middle class stagnates or slips downward.
The decline of the middle class isn’t just an economic trend—it’s a ticking time bomb with wide-ranging consequences for India’s social and economic fabric.
A shrinking middle class equates to reduced purchasing power, particularly for the FMCG sector, which depends heavily on this demographic. Companies like Hindustan Unilever, Britannia, and Tata Consumer Products have already felt the pinch, citing urban stress as a major factor behind weak sales in cities.
Britannia’s Managing Director, Varun Berry, recently said that surging housing costs and stagnant income growth for half of the urban working population have stifled consumer demand. Urban India, which accounts for 60% of FMCG sales, now faces an alarming slowdown.
Economic inequality often breeds resentment. As wealth becomes more concentrated in the hands of a few, the vast majority left behind may feel disenfranchised. This disparity can spark social tensions and even political instability, threatening the broader harmony of urban India.
The middle class has traditionally been the engine of growth, driving demand for goods and services. Its contraction signals a looming slowdown, with negative real income growth in 2024 further worsening the problem.
The Rural-Urban Dichotomy
While urban areas are struggling with stagnation, rural India is witnessing a revival. A combination of plentiful rains and diverse income sources has fueled rural consumption, with FMCG sales growth in villages outpacing cities for the first time in three years. Yet, this rural uptick, supported by price cuts and a lower base, does little to mask the larger urban malaise.
Questions to Ponder
- Is the growing affluence at the top sustainable when the middle is eroding?
- What does the decline of mass-priced goods tell us about India’s consumption patterns?
- Are government policies inadvertently widening the gap instead of bridging it?
The Rising Cost of “Thali” and Urban Inequality Is A Tale of Two India’s
Here’s more to ponder upon, in November 2024, the humble Indian thali, the quintessential symbol of affordability and sustenance, became a mirror reflecting deeper societal challenges. While the cost of a home-cooked vegetarian thali rose by 7.2%, non-vegetarian thalis saw a modest increase of 1.8%, according to CRISIL’s latest report.
But beyond the numbers lies a growing concern of rising living costs, urban inequality, and the uneven distribution of progress in India’s rapidly developing cities.
The Middle-Class Squeeze
For decades, India’s middle class has been celebrated as the backbone of its economy and a driver of its aspirations. But in 2024, this backbone seems to be buckling under mounting pressures.
The increasing cost of the humble thali—a staple of every household—is just the tip of the iceberg. From stagnant incomes and mounting EMIs to the societal pressure of meeting growing aspirations fueled by social media, the middle-class struggle is a story of quiet resilience meeting relentless challenges.
The Thali. A Barometer of Economic Pressure
When the price of a basic vegetarian thali rises by 7.2%, and even a non-vegetarian one sees an increase, it sends ripples through the middle class. Potatoes up by 50%, tomatoes by 35%, pulses by 10%, and oil by 13%—all while income growth remains a distant dream. The middle class, already juggling tight budgets, feels the pinch not just in their grocery bills but in their ability to manage life’s essentials.
India’s middle class thrives on ambition, but ambition alone doesn’t pay the bills. In 2024, real income growth turned negative, a sharp reversal from previous years. Job security is another area of concern. With automation and restructuring reshaping industries, many find themselves in precarious employment situations.
Gone are the days when a stable government or corporate job meant peace of mind; today’s middle class walks a tightrope of uncertainty.
Dreams on Loan
Owning a home, sending children to private schools, or even owning a car often comes with a hefty price tag for the middle class—EMIs. Rising interest rates and inflation make repaying these loans a monthly ordeal. Missed payments can mean not just financial penalties but a deep sense of failure, given the cultural emphasis on fulfilling responsibilities and maintaining appearances.
Education. The Non-Negotiable Priority
Then the second most important aspect for the Indian middle class, education is seen as the gateway to upward mobility. Parents often stretch themselves thin to send their children to private schools, invest in after-school tuitions, and prepare for competitive exams.
However, with rising tuition fees and additional costs like transport, books, and extracurriculars, education is becoming less of an enabler and more of a burden.
The Aspiration Paradox
Social media has redefined how the middle class measures success. Family vacations, the latest gadgets, trendy outfits, or extravagant birthday parties—all plastered on Instagram and WhatsApp—set unattainable benchmarks for many.
Children, influenced by peers and online trends, demand the newest toys, gadgets, or experiences, leaving parents struggling with how to say no.
In middle-class India, the pressure to maintain an image extends beyond social media. It’s about ensuring your child isn’t left out in school, neighborhood circles, or family gatherings. Saying no to branded shoes, a smartphone, or extracurricular activities isn’t just hard—it feels like you’re denying your child an equal chance to thrive.
What Does It All Mean?
When the cost of living outpaces income growth, the impact isn’t just economic—it’s psychological and societal.
What does then one resort to, health compromises – skimping on nutritious food to balance budgets can affect long-term family health.
Dreams of retirement or future financial security are often the first casualties. The constant struggle to meet ends creates an invisible toll on mental well-being, which often goes unaddressed.
Urban Poor Are Also Struggling to Keep “The Thali” Intact
As food inflation bites harder, the urban poor face an uphill battle to maintain basic sustenance. Rising inequality has made accessing even the simplest meals increasingly challenging for marginalized communities.
Hence, what does rising urban inequality look like?
While cities symbolize growth and modernity, these benefits remain concentrated among the elite. Migrants and low-income families often find themselves excluded from quality healthcare, education, and stable employment.
A significant portion of the urban poor work in the informal sector, where wages are low, jobs are insecure, and social protections are virtually nonexistent.
The rapid pace of urbanization has also led to an acute shortage of affordable housing. Overcrowded slums with poor sanitation conditions are now home to millions who cannot afford decent living spaces.
Limited access to education and healthcare perpetuates poverty among the urban poor, while social exclusion further limits their chances of upward mobility.
A City Divided
As cities grow and wealth becomes increasingly concentrated, the gap between the rich and poor widens. Rising costs, such as those of the thali, are just one indicator of this inequality. With food inflation disproportionately affecting low-income groups, the strain on household budgets for the urban poor is immense.
A Question of Survival
As the Indian middle class tightens its belt with every rising cost, how much longer can they shoulder the weight of aspirations without breaking? The growing cost of the humble thali isn’t just about food—it’s about survival, identity, and hope.
India’s policymakers must ask themselves, is the middle class, once the economy’s biggest strength, being left behind in the rush for progress?
At the same time, while cities race ahead with infrastructure projects and luxury developments, the question that pops up – is the cost of progress being borne disproportionately by those who can least afford it? If even the cost of a simple thali becomes a burden, how long before the cracks in urban India’s foundation widen into fractures?
The rising cost of living, coupled with deepening inequality, is a call to action. Can India’s policymakers and businesses work together to create a more inclusive urban economy, or will the thali become yet another casualty of a divided city?
Because from where we see, the “thali,” a metaphor for affordability and stability, seems compromised and at the moment it appears that—there is no way out!