What Indians spend their hard earned money on : Rich, the middle class and the poor

What Indians spend their hard earned money on : Rich, the middle class and the poor

New Delhi, May11:Much has been reported about equality in India. But the fact of the matter is that the concept might appear slightly abysmal considering that the divide between the rich and poor in the subcontinent is predominantly visible in spite of stalwarts ranting against the discernible apportion.

India accounts for 3% of the global middle class with 23.6 million people holding almost a quarter of the country’s wealth at $780 billion.

The World Bank further estimates that a third of the global poor now reside in India.

  • It has the lowest threshold for a person to be considered middle class with annual wealth of $13,662 (Rs 737,748 or Rs 61,480 per month).
  • With 23.6 million people, the Indian middle class holds almost a quarter of the country’s wealth at $780 billion (Rs 5,070,000 crore).

These are some of the findings of Credit Suisse, a global financial services firm based in Zurich, from its Global Wealth Report 2015.

The report estimated that 664 million adults belonged to the global middle class in 2015, or 14% of the adult population. India has 23.6 million adults who qualified as middle class in 2015.

There is no clear definition of middle class in India, but the latest definition dramatically lowers the number of Indians considered to fall in that category.

A McKinsey Global Institute study in 2005 using National Council of Applied Economic Research (NCAER) data said 50 million people were middle class, using the definition of real annual household disposable income between Rs 200,000 and Rs 1 million.

At the other end of the spectrum, a study by the World Bank in 2005 estimated the middle class at 264 million, using the median poverty line in 70 countries at the lower extreme ($2 per day) and the United States poverty line ($13 per day) as an upper extreme.

Another method, used by television channel CNN-IBN in its middle class survey in 2007, utilised consumption-based household criteria: Car or scooter, colour television, or telephone. It estimated that the middle class was approximately 20% of the population or slightly over 200 million people.

Middle class measured by wealth not income

The Credit Suisse report has estimated the middle class on the basis of their wealth rather than their income.

“An income-based definition of the middle class misses elements of freedom and security. It suggests, for example, that a spell of unemployment can cause middle class status to evaporate. A wealth-based definition, on the other hand, conforms better to the widespread view that middle class membership is resilient to temporary setbacks,” the report said.

In India, the estimated value of wealth to be considered middle class must be more than or equal to $13,662 (Rs 737,748).

The growth of wealth has been the fastest in India (second only to China) over 15 years (2000-2015), even correcting for population growth.

Yet, more than 90% of the adult population falls in the bottom of the wealth pyramid (less than $10,000), indicating the uneven distribution of wealth in India.

At the top of the global ladder, 2% of high net-worth individuals (HNWIs) reside in India, Africa or Latin America.

Numerous surveys have marked a distinction between the various income groups which are prevalent in the country with most citizens ranking below the poverty line.

Certain figures which have been made available by the World Bank depict consumer spending patterns and pie charts reproduced here represent exactly how the rich and poor, if we might assert, spend their money on various sectors, including food, housing and transport.

You might have been oblivious to the fact that half of an average Indian household’s income is attributed to food and clothing while the elite tend to invest in the housing sector in a blatant comparison.

Food constitutes the basic prerequisite of every household irrespective of the apparent divide. Statistics have described that the lowest income group spends approximately 53.27% on food and beverages while the higher income group occupies 11.88% of the chart. The aforementioned graphic also explains that expenditure on food and beverage decreases proportionally with an increase in the living standard. The poor, figuratively,  spend more on food than other probable sectors.


Buying a house in India for low income groups seems like a remote dream. The expenditure of such families on the housing sector rests at 5.62% while the bourgeoisie invests in property instead, for which they occupy 38.89% on the chart.


Not much of a difference has been observed in the housing and transport sectors per say. Low income groups spend a mere 3.85% of their total expenditure on transport while the rich contribute to 20.20% of this sector.

Unfortunately, there isn’t much we can write about the dismal literacy rate and health concerns in India for a basic comparison of the acclaimed luxuriant sectors explain that citizens, irrespective of their financial status, attribute a considerable amount of their income to basic essentials than education and medicine. The graphic, above, delineates the deplorable figures which constitute the health and education chart.


Meanwhile, here’s a graphic which elucidates what citizens are left with after spending on luxuriant sectors.