Dr. M.S. Kapadia dwells on an ADB study titled The Rise of Asia's Middle Class
which says that Asia's consumers will likely spend $32 trillion by 2030, comprising
about 43 per cent of worldwide consumption.Consumer spending in
developing Asia comprising
22 countries reached
an estimated $4.3 trillion
in 2008-nearly a third of private
consumption in the OECD
countries. Assuming consumption
expenditures maintain the
same rate as in the past 20 years,
they are likely to reach $32 trillion
and comprise about 43 per
cent of worldwide consumption
by 2030, placing the region at
the forefront of worldwide consumption.
Developing Asia's middle class
($2-20) has grown dramatically
relative to other world regions in
the last couple decades. While it
made up only 21 per cent of the
population of the developing
Asian countries in
1990 (using survey
data), it more than
doubled to 56 per
cent by 2008; up more
than threefold from
565 million in 1990 to
1.9 billion in 2008.
However, while 56
per cent of developing
Asia's population
was already considered
part of the middle
class based on an
absolute definition of
per capita consumption of $2-20
per day in 2008, nearly 1.5 billion
Asians were still living on
less than $2 per day.
Moreover, the majority of the
Asian middle class still falls in
the $2-4 range, leaving them
highly vulnerable to slipping
back into poverty due to economic
shocks.
The five countries with the
largest middle class shares are
Azerbaijan, Malaysia, Thailand,
Kazakhstan, and Georgia; the
five smallest share countries are
Bangladesh, Nepal, Lao People's
Democratic Republic (Lao
PDR), Uzbekistan, and India.
With the exception of Malaysia
and Thailand, the population
share of the upper-middle class is
miniscule in most of the countries.
In South Asia's Bangladesh,
Nepal, India and Pakistan, the
vast majority of the middle class
(75 per cent or more) falls into
lower-middle class.
China added more than 800
million people to the middle
class during 1990-2008. India
comes a second, with 205 million
joining the middle class
over the period.
Size of middle class and annual spend in selected countries |
|
% of Population |
Annual Spend (billion) |
| |
$2-4 |
$4-10 |
$10-20 |
Total |
$2-4 |
$4-10 |
$10-20 |
Total |
| China |
33.97 |
25.17 |
3.54 |
62.68 |
233.72 |
311.96 |
95.57 |
641.25 |
| India |
20.45 |
4.15 |
0.45 |
25.05 |
117.11 |
44.39 |
10.96 |
172.46 |
| Thailand |
33.5 |
41.69 |
10.63 |
85.82 |
23.25 |
60.66 |
33.47 |
117.38 |
| Philippines |
31.49 |
19.65 |
3.8 |
54.94 |
27.97 |
36.54 |
15.98 |
80.49 |
| Pakistan |
32.94 |
6.56 |
0.62 |
40.12 |
49.13 |
20.25 |
4.59 |
73.97 |
| Indonesia |
34.96 |
10.46 |
1.16 |
46.58 |
37.71 |
22.98 |
5.87 |
66.56 |
| Vietnam |
35.53 |
14.81 |
1.93 |
52.27 |
30.01 |
25.61 |
7.74 |
63.36 |
| Malaysia |
27.05 |
48.1 |
14.13 |
89.28 |
7.36 |
27.74 |
17.11 |
52.21 |
| Note: data are in terms of 2005 PPP$ |
The population share of the
middle class in India increased
from about 29 per cent in 1993-
94 to 38 per cent in 2004-05, as
seen in the National Sample
Survey. The increase was roughly
similar in rural and urban
areas (about 8-9 percentage
points). Most of the increase was
in the group with daily consumption
of $2-4.
The NSS data suggests that in
2004-05 the Indian middle class
comprised 418 million people
out of a total population of billion-
plus, and its spending
spawned the markets for lowcost,
locally produced products
and services such as Tata
Motor's $2,200 Nano car, Godrej
Group's $70 battery-operated
refrigerator, and cheap mobile
phone rates.
The rise of the middle class in
Asia is likely to aid not only the
growth process, but also result in
substantial social, political, and
environmental changes. Thus,
the contention is that, building
on strong growth and continued
progress in reducing poverty,
developing a stable middle class
requires governments to formulate
and implement middle
class-friendly policies, including
greater spending on education
and health.
Also, in the next 20-30 years,
Asia will be faced with an increasing
number of chronic diseases
on a scale previously unseen.
What this means is that much
greater policy attention is needed
on these emerging challenges.
Definition: Unlike poverty
that can be defined in absolute
terms based on caloric requirements,
there is no standard definition
of the middle class. The
study uses an absolute approach
defining the middle class as
those with consumption expenditures
of $2-20 per person per
day in 2005 PPP terms.
In particular, the middle class is
divided into three groups. The
lower-middle class-consuming
$2-4 per person per day-is very
vulnerable to slipping back into
poverty at this level. The "middle
middle" class—at $4-10—is living
above subsistence and able to
save and consume nonessential
goods. The upper-middle class
consumes $10-20 per day.