Let me share some interesting facts found by an international study about the growing middle class (neither rich nor poor) population.
The study, which was conducted prior to the Covid-19 pandemic, had stated that by 2030, this middle class segment is expected to expand by another three billion, with two-thirds of the residents of the Asia-Pacific.
Prior to the outbreak of the pandemic, some 1.38 billion people were expected to be counted in the global middle class in 2020. But the pandemic is estimated to have driven this number down to 1.32 billion.
The share of people in the middle class globally is estimated to have been 17.1% in 2020, instead of potentially 17.8%.
Another international report states that the world’s middle class reached a total of 3.2 billion people in the year 2021. That’s almost half the human population.
With about 140 million people joining the middle class annually, and the vast majority of them coming from Asia. In 5 years, according to the report, this number can go up to 170 million.
Another interesting fact is that the total market size of middle-class spending accounts today for one-third of the entire global economy. The report further reveals that the world’s middle class is expected to increase to about 5.2 billion in 2030, or 65% of the planet’s population then. Notably, of the next 1 billion entrants, the report estimates that almost 90% of them will come from Asia, with a majority (78%) coming from India and China.
This growing middle class population means growing consumerism. It’s at this level, consumers start having the kind of disposable incomes that will allow them to buy consumer goods like cars, televisions, music systems etc.
Notably, India and China have been slated by this international study to become the powerhouses of middle class consumerism over the next couple of decades. The population numbers of both countries combined is huge – almost 2.7 billion, out of 7.5 billion people on Earth. In other words, 36% of Earth’s population is in just China and India.
As far as consumerism is concerned, it is of course becoming the hallmark of most world economies. Normally the economy is judged by the production and selling of goods. The gross national product is the sum total of goods and services produced for a specific period at a specific time. The more goods produced and consumed by people the higher the growth rate of the economy. The prosperity of a nation is judged by the per capita income of individuals residing in it. The economy is said to be “doing well” if the purchasing power of the people is high.
In a positive sense, consumerism may be an indicator of prosperous societies, but the fact is that the kind of consumerism witnessed here today is diverted to more of lust than limited to needs. At present a confusion persists about what we need and what we want. Today people are stuffing plenty of things which in actual terms they really do not need.
Let me explain it through a live example: In our extreme neighbourhood, a person with limited means bought a new car. Before that, he spent a few tens of thousands on raising a car porch and deposited a few thousands in the bank as margin to raise a car loan.
For some very short period, he sped his car in lanes and bylanes and decided to go for a higher brand of car. He took route of bank loan to get this new branded car which was almost double in price than his first car he had purchased some months ago. But, over a period of time, he rarely used the car and ultimately dumped it in his home.
Expenses of minimum Rs.500 to Rs.1000 per day on fuel left him struggling to meet his routine domestic expenses. Basically, he had purchased the car to satiate his lust and not on need basis. This kind of consumerism simply pushed him into debt. His car stands depreciated in value which is not enough to square the outstanding balance amount of his car loan.
Today, people throng consumer item shops as if they shop vegetables. People replace their goods with newer ones and even purchase the same item of different brands. Any consumer item out of order is thrown away and the concept of repair is fading away fast. All this un-productive consumerism has a strong back of bank finance. Most of the consumer goods are financed by the banks. And it’s here people drive debt fuelled consumerism.
In other words, the kind of consumerism witnessed here is not progressive; it is degenerating our social values. It may reflect a high standard of living of a person, but in reality it breeds tensions, materialism, loss of ethical & spiritual values, squeezing employment generation, and increase in criminal activities as people get engaged in a rat race to possess expensive gadgets at any cost and even stress in personal relationships.
Then there is another side of consumerism in the context of J&K. Basically, ours is a place where within one city, a particular brand of consumer products have different rates. It becomes very difficult for consumers to check whether retailers are actually charging the right amount of local taxes on the products they sell or they are overcharging.
This has led to a situation where the confusion in respect of price of the goods is natural for the consumer. The trader in league with the manufacturers of products most of the time arbitrarily fix the price and the consumers are forced to purchase goods at higher costs.
Even as manufacturing companies have consumer grievance cells in place to resolve such issues, they have proved toothless tigers. No manufacturer would like to see a reduction in sales by annoying a retailer. They turn blind eye to malpractice and don’t take any action on consumer complaints.
Sometimes it also happens that the manufacturer increases the price of a product and sells old stocks/products at new price rates. But this new price does not apply to the stock already with the retailer. And this is where retailers try to make a quick buck by trying to sell the old stock at the new revised rate. So this is simply an unfair trade practice.
Meanwhile, consumerism has to be healthy. The consumers have to help themselves in two ways. First, they should not stuff plenty of things which in actual terms they really do not need.
And let consumerism be meaningful. One of the worst impacts of this consumerism is on our kids. It mounts commercial pressure on them, which exposes them to risk of getting depression and other mental disorders.
The way the middle class is triggering the growth of consumerism while banking on debt from banks and financial institutions, they are not going to graduate into the wealthy middle class. Substituting the element of ‘need’ with ‘lust’ will only affect their psychosomatic order. This way they won’t be multiplying their penny, but leading themselves to penniless.
Secondly, while making meaningful purchases, they should not behave like a dumb driven consumer. There are consumer protection laws in place on their side. These laws are designed to protect the consumer from deceptive and unfair practices.
In this regard, the Consumer Protection Act, 2019 is a remarkable piece of legislation for its focus and clear objective, the minimal technical and legalistic procedures, providing access to redressal systems and the composition of courts with a majority of non-legal background members.
(The views are of the author & not the institution he works for)
DISCLAIMER: The views and opinions expressed in this article are the personal opinions of the author.
The facts, analysis, assumptions and perspective appearing in the article do not reflect the views of GK.