This is a remarkable study "The Rise of India's Middle Class" and this will greatly help policymakers and academicians. Because to my mind, the story of India’s middle class is really the story of India. And over the years, the middle class has emerged as a very key driver of India’s growth.

It is a very powerful voice that shapes policies and whose demands have significant social, economic, and political implications. Because the rise of the Indian middle class is also indicative of the significant economic transformation that the country has undergone over the decades. You know, since the 91 reforms, millions have been propelled into the middle class. Technological advancement and sustained growth have also led to a growing and expanding middle class. My belief always has been that India needs to grow at high rates for a long period of time. We've grown at high rates but for a limited period of time. We've needed to grow on a sustained basis for three decades.

Other countries in East Asia have done this. This was done by Japan post the World War II period between 1960 and 1990. It was done by Korea and Taiwan and in recent times by China between 1990 and 2010 for a very, very long period of time. So growth is critical. And with the growth, your middle class will keep rising and rising. And middle class will then focus on key issues and will move away from caste to aspects of roads and highways and airports, and housing. And that will be a critical driver of the Indian economy. And the good thing is that it has happened in the last eight years.

We made about 40 million houses for our people. This implies that we have constructed more houses than the entire population of Australia. We've provided about 110 million toilets, which is more than the entire population of Germany. We've provided piped water connections now to about 243 million and which is almost like we provided water connection to almost all of Brazil. So we have also focused on a lot of infrastructure which has been a very key driver of growth during the last three years. The capital expenditure from the budget on infrastructure has gone up by 150%. This is unparalleled and has rarely happened in any country across the world. We've made about 55,000 kilometers of roads in the last eight years, which is like one-and-half times the diameter of the entire Earth.  So as a consequence of all this, my belief is that while we've been able to provide a better quality of life to our citizens, one of the key things to my mind is that as we move forward, you will see more and more people getting into the process of urbanization.

We will see a large-scale urbanization and India has been a very, very reluctant urbanizer. It has been a reluctant urbanizer because our belief always has been that we will continue to put resources into agriculture. We'll continue to put resources into rural development and today actually 42% of our population is in agriculture. But if our ambition is to grow at high rates of 8 to 9%, then my belief is that manufacturing and urbanization will have to become the key drivers of growth and a lot of the population from agriculture will have to move into manufacturing, and this will be critical.

We have also been a reluctant urbanizer because we incentivize rural development. So we have 3782 census towns. Census towns are basically urban. By census definition, they are all urban, fully urban, but the states treat them still as rural areas because the Government of India incentivizes rural development, and therefore they continue to be defined as rural areas. And by 2023 you will have another 2000, close to another 2300 census towns. So you will have about 5500 census towns that are actually urban but will continue to be defined as rural because otherwise, you will not get MNREGA benefit. You will not get a whole range of government schemes. So there is a vested interest in our schemes; there is a vested interest in calling an urban area a rural area because you benefit from that. And therefore, my view is that these census towns need to have master planning, they need to be well-planned, and good sustainable urbanization is the way forward and it's a huge opportunity to drive growth in India.

Now I have been a long-term believer that the bulging middle class holds immense power to drive sustained economic, political, and social growth in India. And the PRICE survey states that nearly one in three Indians fall in the middle class, which will only double in the next 25 years. And that would mean that despite the setback caused by the COVID pandemic, India is fully on track to transition from a small rich class and a large low-income class towards an expanding middle class which will undoubtedly have a huge impact on the very political nature of the Indian economy. Firstly, you will throw up a lot of middle class into politics. You will throw up a lot of middle class which will demand infrastructure, and you will throw up a lot of middle class which will demand growth, and therefore good governance will become good politics.

And this, to my mind, is very important, because with rising disposable incomes, there will be greater demand for quality education, there will be greater demand for quality healthcare, housing, and consumer goods, and therefore outcomes will become very necessary for governments.

The middle class will demand delivery from the political systems and the middle class will force the political systems to deliver. And therefore, my belief is that the governments increasingly will have to focus on education and health, will have to focus on employment, will have to and one of the great things that has happened in India is the huge focus that this government is laid on digital transformation. I mean, imagine that every Indian has a digital identity. Between 2015 and 2017, this government created 550 million bank accounts. That means 55% of the bank accounts opened in the world were opened in India during 2015 and 17 every second bank account opened in the world was opened in India. And then through a massive process, we link the bank account with both the digital identity and the mobile number and this enabled us to do fast payments today India does 46% of the real-time fast payments in the world.

We do 11X of the payments which America and Europe do. We do 4X of what China does and 46% of the real payment we do. China does 18% of the real-time payment. But the important thing to understand is that we built the digital public layer, on top of which we allowed the private sector to innovate and compete through an open source open API model which is interoperable. And because we did this, the next set of innovations happened through a number of startups by providing paperless, cashless credit. So a number of young startups like Lending Card etc, Pine Labs Mobi Quick all started giving credit which was cashless and paperless. And then you add another set of startups, all Unicorns today, which started doing wealth management and they opened up in Tier 2, tier 3 towns and rural areas. Young startups like Zeroda, etc. Zeroda controls almost 29% of the Indian stock market today. Then you have another set of young startups which got into insurance.

What has happened as a consequence of all this is that the cost of the acquisition of a customer has fallen very rapidly in India. The cost of acquisition used to be about $30 which has come down to $1.00 and in the United States, the same cost of acquisition is about close to $100. And that is why a company like Jio when it got into mobile could acquire about 300 million customers in India using biometrics in just about 150 days. 300 million customers in 150 days is unparalleled and therefore, the transformation has happened in digital transformation in housing and infrastructure, roads, water connection, electricity… All this will be a very, very major driver of growth in due course and all this will actually recognize the potential of the Indian middle class, will drive development.

The government, as you have seen, has already taken a series of measures to harness the energy of the middle class. There has been a huge focus on creating an entrepreneurial, entrepreneurship-friendly ecosystem through startups, ease of doing business, through continued investment in infrastructure. Through a focus on facilitating access to affordable credit, microfinance, and banking services. All of these raised aspirations and challenges of the middle class actually mirror the growth and evolution of India as a nation. And the middle-class aspirations for upward mobility, improved living standards, and better opportunities actually resonate with the broader goals of a vastly growing, expanding, developing nation like India. Therefore this whole vision that by 2047 we will have to be a fully developed country really implies that the middle class needs to be the key driver of India’s growth story. And the challenges that this demographic faces highlight the complexities of sustained growth and the need for targeted interventions.

To my mind, there are two key challenges. One is that western India is growing rapidly, it is urbanizing rapidly and the eastern part of India needs to grow rapidly because it’s the most populous part of the country. And therefore we need to ensure that there is a regional balance in growth. The report reveals that over three fourth of India’s affluent population resides in only eight states: Maharashtra, Tamil Nadu, Uttar Pradesh, Gujarat, Delhi, Karnataka, West Bengal, and Punjab. There has to be balanced growth and therefore other states need to bring in ease of doing business.

They need to enhance productivity in a vast range of areas and I have been a believer that actually if India has to do sustained growth over a long period of time, India has to fire on all cylinders. It can’t be that you fire only on the service sector. If you have to grow with jobs, then you need to fire on all cylinders. You need to grow on services, you need to grow even more on manufacturing. You have to enhance your agricultural productivity and you need to grow rapidly in sustained urbanization. Therefore, my belief is that the Indian middle class is a testament to our nation's resilience, its diversity, and the transformative power of inclusive growth.

This report is actually a seminal work in the research on the Indian middle class, and I want to congratulate PRICE and Dr Shukla. It will be extremely useful to policymakers, strategists, and academic researchers. And it will be greatly useful to the private sector and those investing in India to realize the vast size and scale of India’s middle class and how it will create demand for them. Because demand will be a very key driver for the private sector of India and therefore this was much-needed research and path-breaking research work. My compliments to Dr. Shukla and his team for this very valuable piece of research.