By standard measures, India’s middle class is forecast to grow from 50 million in 2010 to 475 million by 2030. China’s middle class could grow from 150 million to as many as one billion, or about 70 percent of its projected 2030 population. Altogether, today’s global middle class of two billion could swell to five billion by 2030, with $56 trillion in spending power.
But what does “middle class” really mean? The median income in India is only $616 per year. Against an international income standard, like the World Bank’s $2 per day poverty line, a majority of Indians are still in poverty. Indeed, even most of India’s “middle class” is still poor, and almost as many people slip back into poverty as climb out of it. Most households depend on small farms or wage labor for their living. “This middle-income group is not what would be considered middle class in ‘any global sense,’” according to the Research Unit for Political Economy in Mumbai.
Thus, tapping into that $56 trillion requires different thinking. In developed countries, big companies expand their market market share by finding cost savings and making product improvements over time. That won’t work for multinationals trying to reach the new ‘middle class’ consumers of India and elsewhere. The key there will be frugal innovation and rapid scale.
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