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You Are Not Middle Class - The Income Distribution of India - FutureIQ

36,883 views Wait, is this logic right? • May 26, 2023
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Slog Reference: Misconceptions about income distribution in India

Description

Income and wealth distribution in India. If you think you're middle class or it takes a tremendous amount of wealth to become the top 1% of India by income, chances are, you're wrong by a huge margin. This is because of the lack of information about the wealth distribution in India.

To understand whether India is a rich country or poor, we need to consider the average family income, what exactly are middle class and many such things. That's why, in this FutureIQ episode, we decided to break down the actual data for you and help you understand the reality of the unequal wealth distribution in India.

Hope you enjoyed FutureIQ by Navin Kabra and Shrikant Joshi. Do hit us up on Twitter:
@ngkabra http://twitter.com/ngkabra
@shrikant https://twitter.com/shrikant

Listen it on the podcast provider of your choice: https://tapthe.link/FutureIQRSS
Watch other episodes of The FutureIQ podcast: https://www.youtube.com/playlist?list=PLAppTB0r5_TaYueZ0adD42Wiw5X-wTE4v

More videos for you:
Why Women in India Don't Work: https://youtu.be/x7i4tUFNb80
Universal Basic Income: https://youtu.be/5-cjjC46Oxg
Map is not the territory: https://youtu.be/qxEi0sz4oL8
The real reason behind India’s population: https://youtu.be/Sjur6Bu30YM
Bhagavad Gita lesson: https://youtu.be/95Zi_4OthbY
The problem with India’s English: https://youtu.be/P4TcPyEt1fg
Cool facts about India’s food: https://youtu.be/J1ECp8OmsxA

Chapters:
00:00 Introduction
00:55 The background
02:43 Facts
03:23 The average
06:10 The real India
07:15 The current state
09:04 Big cities
10:10 More facts
11:10 Loans
14:30 Middle class
16:00 Poverty
18:28 Objections
20:12 The poverty line
21:08 Key takeaways

#futureIQ #realitycheck

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Misconceptions about income distribution in India

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Transcript

in the house who have a I.T job very likely that you are already in the top one percent pressures in I.T earn that much so srikanth are you in the top one percent 10 20 or 50 percent of India as far as monthly income is concerned yeah monthly income not not the top one person for sure top 20 top 10 top top 20 percent probably but uh judging by the way inflation is going maybe soon to be in the 50 percent right so you are very wrong and this episode is for you to understand the income distribution in India and where you are in the hierarchy you have major misconceptions and I am sure the viewers
also have measurements conceptions I am I'm not in the top 10 person then where am I top one person your top half percent okay so let me ask this right uh the reason I know that most of you also have misconceptions is because I did a survey of people like you uh to find out what their household income is and what percentile they think they are at and what they think are the averages for India at different levels and I found that everyone's guesses were way off okay so we will talk about some of that let me ask you this okay what do you think is the monthly household income effort top one percent family of one percent
family I don't know two three five lakhs per month so correct so this is what you think yeah this is what most people think right so most people in my survey uh thought 70 of the people thought that two and a half lakh per month or above yeah puts you in top one percent in fact more than half the people thought that 5 lakh or above is needed to take you in the top one percent would you like to know what is the actual number per month for the top one percent yes what is the actual number needed for top one percent it is 000 per month no way right so if you have two freshers
in the house who have a IT job very likely that you are already in the top one percent wait freshers in it earn that much yes I didn't Mistake by not getting into it and getting into media for a living media people don't earn that much at all man you're right about yes that is true but we are not running anything with these episodes at all and he thinks I'm in the top five yeah so here is the thing right let's look at the data again um the reality is that in my survey 88 of the people were within the top half percent of India wow okay now this is true not just of my survey
across India there was I mean all of this data is based on a real survey done by a proper organization which used a nationally representative sample and a whole lot of statistical techniques to make sure that they're doing a good job and an accurate count yeah because your survey basically tells me that you are asking a lot of rich people right which is not true uh I'm asking people like you and me okay not even me a whole bunch of youngsters I.T youngsters and so on right so most people have serious misconceptions about what top one percent in India means right right most people think that ninety percent of the top one percent would have four wheelers cars yeah right
reality it is only 60 percent right most people actually don't realize that 36 percent of the top one percent actually live in our villages okay in fact if you go take the top 10 percent only one quarter of them have college degrees okay so if you know a person who has a college degree they're already in the top half percent most likely right very high chance very high chance right so your idea of what is average in India is really bad right average household income per month in India is 22 000 per month okay right we go around saying that oh only one percent of India pays tax or only one and half percent of India is
going to show my ignorance to you guys I apologize it's not your ignorance it's the ignorance of everybody including me before I saw this data okay okay the number of people I mean you have to earn at least five lakh access to pay correct the number of people who earn 5 lakh in India is less than two percent that is why the number of taxpayers is less than two percent the most of them don't make enough money to pay tax 98 of Indians earn less than 5 lakhs a year what did I just tell you right right so denying that you said it I am I'm in denial about the fact that the number is
as high as 98 percent yes because we already discussed right I am going through five stages of grief in this entire episode denial anger bargaining depression and no depression bargaining and acceptance or whichever way it is yes so mark that right yeah about 10 11 10 lakhs puts you in the top one percent or half percent okay right so yeah 98 percent are below 5 lakh okay and in fact that's a lot more data lots of surprises okay in the actual data I'm still trying to wrap my head around the fact that 98 of Indians don't even make five lakhs and that makes India really really poor country absolutely in fact you have not seen the real India okay I
agree so you live in a Metro like Pune Bombay Bangalore the people who live there right most of the people around you your drivers and your maids and your house help they are probably in the top 30 percent of India bottom 70 percent you don't even come in contact with you you can spend an entire year without coming in contact with anybody from the bottom 70 percent okay so you have no idea what India is no I'm not I I never claim that I have an idea of what India is but some of these numbers are really throwing me for a loop like yes it it it's it makes me a bit angry that uh this kind of
inequality has gone unnoticed by all of us and I'm including myself you you yes yes it makes me angry that it has gone unnoticed and we that there doesn't seem to be anything being done to uh to to improve or to make changes here so um things are being done some things are improving right we did an episode on uh earlier about how the world is getting better right so I want to quote three important lines from that right the situation is terrible like you said yeah the situation is much better than it was 20 years ago 30 years ago 40 years ago the situation can be much better than it is right now yes all
three of these statements are true at the same time even though they seem contradictory let me repeat the situation is terrible it can be much better it is much better okay let me show you some more surprises out of the data yeah while he fishes out the surprises go line up that episode It's a Wonderful episode uh it's uh we'll put a link in the description as well and we'll try and put up an annotation on top of this video so um look at this this India right 70 of which you have never seen and you don't even know how bad their lives are ninety percent of them have electricity okay not 24 hours but they have access
to electricity okay 90 of them have mobile phones okay the bad news is only 53 percent have tap water 65 of them have a TV those numbers are actually a lot better than what my brain was coming up with when it heard nice eight percent earns less than five lakhs so these numbers are actually like you said better than what I was expecting but still there is always that feeling that this is still not enough you know of course of course things can be much better and we have to work towards it but uh one thing I really wanted to impress on everybody right uh especially people living in big cities is that big cities is not India
map is not the territory definitely if you live in a metro 87 percent of the people in the Metro including all the slums and including all the people there right 87 percent of them are in the top 40 percent of India which pretty much means that anyone you meet if you go out of 50 of India and the bottom sixty percent is not there at all you know this actually makes me sad or depressed because the people that I was thinking of are already in my mind in a terrible situation and then you tell me that they're still in the top 40 which means there is 60 percent of the population which is living in worse conditions than
that yeah let's try to understand their situation right and I want to again bring out some points to make sure you realize how different that world is right yeah please what is what are your biggest expenses by category uh rent is of course let's stop there okay for most of India the rent is not in the top three expenses oh only 11 percent of India stays in rental accommodation and where does the other 89 percent say in their own house okay fair it's typically a tiny house 500 square foot only yeah and 10 people living in it yes I mean average is about 4.7 no just kidding I I know but no yeah some people are living in a 500 square
foot house at the bottom twin Time bottom twenty percent of India the average family size is six and a half right so that but keep in mind the other thing you must be thinking is that everybody is like you know dying because of loans yes only 27 percent of them have loans wait what yes only 27 percent of India has loans right of course the rest are all living hand to mouth right they don't have savings they are just one medical emergency away from being completely obliterated obliterated yes but by the way the ones who have loans what do you think they have loans for uh credit cards or I don't know uh Home Loans educational loans nope I mean of
course credit cards I mean is not really a thing okay except for you one percenters okay so I don't know why you brought that up but Home Loans is what you would think yeah is the primary thing not in the top three okay the Home Loans is not in the top three forty percent of all loans are agricultural loans okay that kind of makes sense yeah second highest category guess what it is it is not College it is not whom you said that not many people uh well uh well not a lot of people have cars or not nobody's buying cars so not for it is for marriage heavy loans for marriages marriages and other social I mean events functions
important functions that you are supposed to put out right LSR personality so the average family spends 1.2 times of their entire year lease income on a typical marriage wow right in fact marriage just the marriage industry ah is 1.8 times the entire entertainment industry all of Hollywood sorry all of Bollywood and movies and streaming and Netflix and this and that and sports and Cricket everything is less than almost half of the marriage industry okay anybody want um anchors or hosts or MCS for marriage Naveen and srikat will do a brilliant job we'll give you an experience like no other will make your marriage a statistical event to remember it will be statistically Superior than all other marriages we can promise you
the actors so what it's a growing pie we have to make use of it Naveen so what I wanted to point out was that 30 of all loans have which are on marriages and social obligations so 30 of all loans I hate that you call them local loans but I also understand that because it is a brilliant way of naming personal loans and yeah so India is not at all like what you think and it is not at all like you you and I we have you know yeah either rent is our biggest expense or home loan repayment and most of India is not like that let's look at what are the other surprises please I'm I'm all here for
more surprises I mean I thought I wouldn't be surprised but I've been surprised every single moment of this episode all right so you know it is ridiculous the number of people in the top one percent a majority of them think they are middle class I used to think I was middle class until now right and now suddenly my mind is completely so I mean you know it depends on the definition of middle class if you define middle class as from 20 percent of India to 80 percent of India in terms of income income right this group the average salary of this group is 17 000 per month not average salary of one person average salary of
the entire family that's middle class right and that probably goes from 10K to 30k higher end is 30k per month bottom end is 10K per month that's middle class uh okay a different way of calculating it can be middle income yeah middle income is more likely uh I mean yeah okay you have a 10K to 30k still sounds ridiculously low for uh that's a family a household of four five six by the way this is the middle 20 to 80 percent of India the bottom twenty percent I'm not even yeah it's less than 10K a month which is less than one point less than 7K a month okay so that's the bottom twenty percent that's 84 000 rupees a year which is wow
no that's terrible that's that's poverty or worse then poverty is it it depends again on how you define poverty in fact that has become unnecessarily a political topic right so if you I mean my definition of poverty is simple if I can't get the three basic needs fulfilled food clothing and shelter if I can't get those fulfilled within whatever I am earning or whatever I'm making in in a day in a week in a month in a year then I am poor yeah so again there you have to Define what is shelter and what is clothing and how much food is food so it becomes two meals a day caloric uh calorically satisfying two meals a day whether they
are preferably not junk preferably healthy but then can make some concessions enough clothes to last extreme weather conditions and uh a roof over your head to sleep at night with a door that closes there are various definitions that you can use different definitions and they give you different numbers of people no this I'm talking poverty man there's some talking desperation this I'm talking frustration this I'm talking like I don't I don't even know that actually frustration is a different concept it is completely independent of poverty right because it is very likely if you do a survey of these poorest people they will end up being the happiest people in the world possibly right and if you do a happiness
survey Bangladesh comes at the top okay and India doesn't do too badly either so happiness is this is why I hate and love talking to Naveen because he completely flips all your opinions all your beliefs on on their heads like yeah but I get what you're saying but okay so generally I would agree with you that the situation is bad and there's so much work to be done yeah yeah we have reached as you can see the acceptance stage of the coupler model of grieving we have gone through all five stages denial anger bargain depression and acceptance and now that we have reached acceptance is there anything else you would like to pile on on top of
this misery that you subjected in this entire episode I want to talk about some common um objections people have please do this data because one is they find it hard to believe that this is true as you see so what do you think is the most common objection of people who want to believe that this is not true this is terrific data I don't believe it at all no the most common objection is oh there is Under reporting what about all the black money right all the black money is anyways with the top one person how does it matter you know there is a large number of people who believe that even like little people in villages are not
reporting their salaries and whoever looked at the salary data uh just doesn't know how much money people are making and the answer is that you know these were pretty smart people who did this survey they're not idiots right so they did a lot of calculations and using that they have also come up with a range saying that in the worst case right in the worst case Under reporting might account for up to a 1.6 X Factor okay so in the worst case these numbers might be 1.66 inflated to get the real numbers yes right that changes the numbers a little bit but it doesn't change the big picture right I mean instead of middle class
being 22k it is 30k does that change your opinion on how India is Rich no right definitely but yeah it's difficult to digest the numbers that you've given so I'll I'll actually have to sit down and ruminate on it a little bit Yeah but if I want to add more to my ruminations is there anything you would recommend I'm in one question you might ask is that oh if I'm supposed to be top half percent why am I living struggling so much right right now I'm I'm asking everything and nothing yes but yes so why am I struggling I mean I'm barely making ends meet correct dot yeah I mean the thing is you eat out
once in a while how much do you spend on an average too much too little right so I mean you know we're talking about hundreds right yeah and some of you are spending thousands on one meal outside but hundreds right ten thousands and yes five figures yes figures no not six but five maybe you know 30 rupees per day and people I mean of course there are lots of people who do not eat out at all entire year the take away message I want to give from this is not depression right I I want oh I've already gone to accept this so go ahead so your first of all accept and understand the fact that
you are in the top half percent except okay accept the fact that you don't really know India as in whatever um steps you can take to change this is probably a good thing I have a friend who went and personally visited 200 villages in India she's written a article about it I will post a link please do um and this applies to many other aspects of life not just incomes right we do not know how the other 99 percent of the world is living 99.5 actually right now right so because of that I would suggest that we all change our attitudes a little bit to more gratitude for our privilege agreed for how lucky we are and more empathy for the people
who are not right and generally be kind that is that is anyways a good message to take but in the light of all of the data that we've provided today that message takes on even more of an important uh hue light so this episode itself we just talked about a few data points because uh you know in a episode like this you can't just give all the data but there is an actual article with all a lot of the more data and links to the sources take a look at the links make sure to read that yep I will definitely be reading that because until today I genuinely genuinely believed that I was probably in the top 10
percent and by calling myself in the top 10 percent I was doing you know uh as exaggerating stuff but I was so definitely not exaggerating stuff and I am anything but the top 10 the top half percent wow that is going to do a number on me uh but thank you so much for this wonderful Revelation and thank you not wonderful but Revelation yes you know Wonderful for me because I am now wondering what the hell I've been thinking all this while yes srikant Naveen this is future IQ thank you