Jan Nijman is Professor of Geography and Regional Studies at the University of Miami. He is the Director of the Miami Consortium for Urban Studies, and sits on the Committee for Research and Exploration of the National Geographic Society in Washington DC. He recently gave a talk to the Mumbai Study Group on the intriguing subject of "Mumbai's Mysterious Middle Class" - based on some preliminary results from a primary data collection effort on housing and upward mobility in Mumbai among 1,200 households in new residential developments in Greater Mumbai. The object of the research was to better understand the city's changing class structure, and to be able to determine how well Mumbai's experience fits in general theoretical models of social polarization in post-industrial cities.

As Professor Nijman notes, Mumbai and Miami have several things in common: they are both coastal cities, have dens of vice (two recent books - Maximum City by Suketu Mehta and Shantaram by Gregory David Roberts - bear out the local flavour of this) and are the world's leading art deco centres. In his presentation, Prof Nijman observed how the middle class is shrinking in big cities both in the United States and in Europe. This is the result of the unemployment created by globalisation - the phenomenon of jobless growth. The 1960s and 1970s were boom times for these cities; post 1980, there was the emergence of the "new economy", based on information services that required new skills. There were fewer people with greater productivity, as automation and computerisation grew rapidly. In 1967, 22% of Americans earned the country's median income; by 2003, this had dropped to 15%, as incomes moved either dramatically up or down.

The truly frightening thing was that people didn't realise this was happening, and for this the media has a great deal of blame to bear, for lulling their audiences into complacency. According to The New York Times, which recently carried an excellent series on class in America, people actually believe that the work options available to them have increased, rather than decreased. It is true that there is a far greater range of jobs on the market, but not only is the total number available per capita fewer, but many positions are part-time, or easily losable. The prospect of having a job for life has simply vanished. And yet many people did not include this significant change in assessing their own situations.

In India, the middle class is difficult to define by income levels - not least because of the massive concealment of earnings. It is vaguely described as the 200-250 million who are engaged in the market, almost as large as the entire US population. According to the National Council of Applied Economic Research (NCAER), between 1985 and 1999, a quarter of this class earned between Rs 35,000 and Rs 75,000 a year. In the next income category, Rs 70,000 and Rs 105,000, the proportion dropped from 36% in 1985 to one-fifth in 1999. Revealingly, in the next category, Rs 105,000 to Rs 140,000, the percentage increased during this period, from 15% to a quarter of the middle class. And above Rs 140,000, it similarly went up from 22% to 27%. So it seems clear that this consuming class is better off than ever before.

In India, there has been a social polarisation of the new middle class, which is "pulling away from the lower class".
 •  A low-income housing policy
 •  Imaginary cities
 •  What is 'middle class?'
Prof Nijman set out to redefine this class, interestingly enough, in terms of consumption - in particular, by the ownership of housing. He selected 1,200 newly built houses in Greater Mumbai to study the profile of these new home buyers, between 2000 and 2005. The median home value of these new houses is Rs 30 lakh, while the median household income is Rs 50,000 per month. And their 'middle class' homes are really castles, judged by the lives of the great majority who are poor. As many as 62% own a car (but less than 3% a bicycle, which would be considered socially inferior; in his native Holland every family owns one and is happy to do so! Also, to put this in national perspective, only about 3% of Indians own a car). 78% have a college or post-graduate degree. The age of a person who buys his (more likely than her!) first house is about 37, and coming down, which is high by Western standards. Three-quarters of the parents own their homes, which indicated their low job mobility as compared to Western cities. (10 lakh = 1 million)

According to credit analyst ICICI, studies of the supply and demand for housing in Mumbai show that there is a surplus here, compared with housing in other cities. It believes that the excess of supply over demand is as high as 50%, against only 20% in Bangalore, which can only be attributed to speculation.

There has been a revolution of sorts in loans for housing. This was thanks to the deregulation of this sector, a lowering of interest rates, the Finance Minister's diktat to banks to allocate a certain percentage of their loans to this socially desirable sector, tax benefits and easing of loan criteria. This was visible in the advertising and marketing of housing loans, as different companies and banks vied with each other. There was a changing consumer culture, in the words of the ICICI ads, "from a saving mentality" to "affordable indulgence". Mortgages were rising at 35% per year. However, the ratio of the total value of mortgages to the GDP of India is only 2%, whereas it is 52% in the US. In South East Asia, with more developed capitalist economies, it is 15%.

Once again, in tune with the euphoria engendered by globalisation, financial institutions were hard at work making people think that they were doing well. A HDFC Bank ad has an automobile buyer proudly stating: "We just bought our first car; I didn't even wait for a promotion". And in the same vein: "I bought my wife diamond earrings; I didn't even think twice".

However, as Prof Nijman observed, the housing revolution didn't address the main housing problem of Mumbai, where 55% are homeless. "There was a major role for builders (producers) in the definition of the new middle class as consumers," he noted. The malls were the "new middle class imaginaries" where consumers believe that they have temporarily seceded from the rest of India - "just like being in a foreign country"! There has been, and still is, a great deal of hype about the IT revolution in India, but this industry employs less than 2% of the population.

The contrast between the Western and Indian middle class is acute. In the West, there was a clear divide between a pre-industrial, industrial and post-industrial era; in India in general and Mumbai in particular, especially with the closure of the cotton mills, these periods have telescoped. In the US in the 1950s, there was the belief that the sky was the limit; in the 1960s and 1970s, the "Fordist" assembly line mass production was at its height with apparently endless post-war abundance and prosperity. Since then, the unions have all but disintegrated. Capital, on the other hand, has acquired a frightening mobility - literally at the press of a keyboard key.

According to Prof James Tobin, the US Nobel Laureate for Economics, even some years ago, there was over $1 trillion being speculated upon (critics say "sloshing around") daily in the world's markets, simply on transactions involving buying and selling stocks and shares, commodities, foreign exchange and the like. He proposed a tiny tax - known as the Tobin tax, between 0.1 and 0.5% - on these non-productive transactions, which would yield more than enough to pull the world's poor out of their poverty. Needless to add, his proposal has fallen on deaf ears.

In the prolonged discussion following Prof Nijman's presentation, participants noted that the housing market of Mumbai is constantly changing, with areas like Malad and Kandivli witnessing a boom. This is where the BPOs are concentrated, but 70% of these wards too consisted of slums. The polarisation is much more acute here, socially as well as spatially. Geographical Information Systems (GIS) data on slums reveal that there are some 1,200 major slum clusters in a Greater Mumbai population of 12 million. In reality, there is a shortfall of 9.5 lakh houses, even as one speaks of surplus among the consuming class! There were even 81 police inspectors and 2,300 constables living in slums. (1 lakh = 100,000).

The discussion noted also that in India, there has been a social polarisation of the new middle class, which is "pulling away from the lower class". This class is fascinated with cars (the Bentley at Rs 1.7 crore is about to hit the Indian market; only ten will be produced per year, of which seven have already been sold.) Housing colonies are desirable only if there is a swimming pool thrown in, no matter that most of the adults in this class don't swim! The class is typically myopic; it doesn't take its cue fully from the most advanced capitalist country in the world, where to remain middle class, a family now needs two incomes, or that as many as 40 million Americans have to make do without health insurance. Instead, this class seeks to identify more with the affluent elements of Western society, quite unmindful of the broader social context in those nations.