Affluence is a Moving Target

- By Rahul Nandan

Affluence is often defined by material possessions, those that are aspirational and considered symbols of status and wealth. But these symbols keep changing periodically to redefine what is considered affluence at a certain time. In a way affluence constantly sets new bars for itself and is a moving target. 

All of us remember when not long ago a cell phone or a television, washing machine, dishwasher or a car were symbols of affluence that most Indians, who could not afford them, only aspired to. Switch to today when most of these products are common in ordinary households which no longer look at them as luxury lifestyle products but as life easing necessities. 

Today affluence is not just about a car or a cell phone but their brand and model. Let us consider cell phones as a classic example. The number of smartphone users in India is expected to touch 100 crore (1 billion) by this year with phones costing between Rs 10,00o and Rs 20,000 having maximum sale.[1] Today we literally see a cell phone, and more a smartphone, in every hand, from a street vendor to autorickshaw driver to a daily wage labourer. Now, the brand and model of a cell phone you own are symbols of affluence. And, people keep replacing their phones for better.  

Growing disposable income and purchasing power are fuelling a visible class jump in India. Around 13.5 crore Indians moved out of poverty to become a part of the new middle class between 2016 and 2021, according to the recent Niti Aayog report National Multidimensional Poverty Index 2023. Poverty in India has declined from 24.85% in 2016 to 14.96% in 2021, with the rural areas seeing the fastest drop. 

A survey by independent think tank PRICE projects that India’s demographic structure by the end of this decade will change from an inverted pyramid — a small wealthy class and very large low-income class — to a rudimentary diamond where a considerable part of the low-income class moves up to join the middle class. 

The middle class is the fastest growing segment of India’s population and their increasing purchasing power is leading to a constant change in the pattern of consumerism and affluence. Let us examine how this has impacted home buying, which was once a post-retirement dream. Today, around 44% of young Indians wish to buy a house in the next two years, a significantly higher percentage than rest of the world and they are the major drivers of the real estate market.[2] Also, the idea of comfort and ease in a house has changed. Earlier, two-three family members sleeping in a room was okay but now families are increasingly looking at separate rooms for every member, even young kids having their own exclusive rooms. With booming aspirations and growing income, our bar of affluence has moved up. 

We do not often pay much attention to the constantly moving targets of affluence in our lives, what we used to aspire before, we do not anymore, and yearn now for new things. It is important to note this human growth and realize that aspirations that were common a decade or two ago are virtually unknown today and have been replaced by new ones. This natural human behaviour of setting new levels of affluence and striving for them will play a major role in lifting India’s poor, making the large middle class a formidable strength of the nation, with its rising income creating one of the world’s largest markets which will spur massive investment and employment.