Mains Practice Questions

Introduction

Economic liberalization in India, initiated in 1991, has significantly impacted the country's social fabric, particularly its social stratification.

• This shift from a largely controlled economy to a more market-oriented one has reshaped class structures and consumption patterns.

Body

Influence on Traditional Social Stratification :

• Weakening of Caste-Based Occupations: Economic liberalization has provided opportunities beyond traditional caste-based occupations.
• Changing Rural Social Dynamics: Migration to urban areas for jobs has altered rural social structures.
  • Between 2001 and 2011 census, India's urbanization went up from 27.8% to 31.1%
• Consumer-Based Identities: Brand consciousness and consumption patterns increasingly define social status.
  • The rise of "conspicuous consumption" among the new middle class

Emergence of New Class Structures:

• Rise of the Middle Class: Economic liberalization has led to the expansion and diversification of the middle class, rising at 6.3% per year between 1995 and 2021.
  • It now represents 31% of the population and is expected to be 60% by 2047.
  • The IT sector boom created a new subset of affluent urban professionals.
• Creation of a "New Rich" Class: A class of entrepreneurs and business owners emerged, benefiting from reduced regulations and increased foreign investment.
  • In 2021, India had 7.96 lakh millionaires.
• Widening Income Inequality: While creating new opportunities, liberalization has also widened the gap between rich and poor.
  • India's richest 1% holds 40% of wealth. The Gini coefficient for India increased from 0.32 in 1993 to 0.4197 in 2022-23, indicating growing inequality.
• Rural-Urban Divide: Economic reforms have disproportionately benefited urban areas, creating a more pronounced rural-urban divide.
  • For instance, in terms of digital economic development, according to the NSSO data, only 24% of rural Indian households have access to the Internet, compared to a 66% penetration in cities.

Changing Consumption Patterns:

• Increased Consumer Spending: Liberalization has led to higher disposable incomes and increased consumer spending across classes.
  • India Private Consumption Expenditure data averaging 220.318 USD Billion from 1996 to 2024
• Shift towards Luxury and Branded Goods: The emerging middle and upper classes show a preference for luxury and branded products.
  • India's luxury market is forecast to expand to 3.5 times its current size, reaching the USD 85-90 billion mark by 2030
• Adoption of Western Consumption Models: Increased exposure to global trends has led to the adoption of Western consumption patterns.
  • The India fast food market size is projected to exhibit a growth rate (CAGR) of 9.72% during 2024-2032.

Conclusion

While Economic liberalization has created opportunities for upward mobility and expanded the middle class, it has also widened inequalities and created new social divisions. To ensure that the benefits of economic growth are more equitably distributed, it is essential to address the underlying social and economic challenges facing the country