Attend Spring Meetings on development topics from Apr 18-23. Comment and engage with experts. Calendar of Events

Syndicate content

Add new comment

Submitted by Ramesh Kumar Nanjundaiya on
This was a response to an earlier article by James Seward (please see below). I feel this article holds good for the present discussion as well. Per my personal observation the growing Indian Middle Class can be generally classified on their "buying power" - which effectively is their monthly earning and/or take home salary. The range would be a monthly salary or "earning band" of INR 20,000 to 35,000 or approx average USD 700/- per month. I personally feel this "class of people" number almost 300 million today (comprising of urban and rural). This is certainly a big and a growing group which actually spends thus creating a huge and a growing market. This phenomenon has attracted all types of Multinationals to the Indian market space along with a growing consumerism off take particularly since the last 6 years and Indian companies/services are also enjoying the boom. Is East Asia leading the world out of the crisis? SUBMITTED BY RAMESH KUMAR NANJUNDAIYA ON THU, 2011-03-17 04:13. James Seward has summed up very well on the current economic situation of the seven countries in this region. He has made a useful observation on the equity markets in these countries to draw some sort of conclusion to see if indeed the equity markets are a leading indicator of economic recovery. While it is true that the major stock markets in the region have regained all of the losses of the 2008 and that they are up by over 66%, with Indonesia, Vietnam, Thailand and Korea leading the pack. Is this the true indicator - it could well be. As a comparison, if one were to look into the Indian economy in the same period that James has analysed the above markets, one observes that the Indian Economy is simply booming. The reasons are varied, but one which has really propelled up the Indian economy (in the last 6 years) is the growing buying power of people in the so called "Middle Income Group" which in the case of India represents almost 400 million people. This is a huge market to cater to and is growing. This group is the one which is pushing demand locally and thus giving a boast to the economy. It is a life cycle change in the population group. The same phenomena is happening in the seven countries of the East Asia analysed above but with different degrees. The Middle Income Group of people in these countries (varies from country to country) is driving demand and thus helping the economy to grow. This is the group which is spending on all goods and related services. Because of such a growth demand for goods/services, banks will witness increase their lending in these countries in the next couple of years. Once that happens, the economy grows, when this happens, the equity markets become much more active and again the economy grows with more people coming into the "Middle Income Group of People" or the people with buying power or cash to spend.