Anant Ambani’s glitzy wedding highlights India’s ‘missing middle class’ | Business and economic news

Ten million dollars to fly Justin Bieber to India’s financial capital, Mumbai, for an evening performance.

A Mediterranean cruise for 800 guests costing US$150 million.

A wedding ceremony with hundreds of guests and a price tag of over US$600 million.

These are just some of the figures that have been circulated in speculative and thinly sourced reports about how much India’s richest man may have invested in his youngest son’s wedding celebrations.

Anant Ambani, son of tycoon Mukesh Ambani, married his longtime girlfriend Radhika Merchant in a lavish ceremony held from July 12 to 14 that sparked controversy in India and elsewhere.

The elder Ambani, chairman of the Reliance Industries conglomerate, has an estimated net worth of $120.3 billion, making him the 11th richest person in the world, according to Forbes.

If true, the wedding’s supposed sticker price of $600 million would be equivalent to 0.5% of Ambani’s estimated wealth.

While weddings in India are typically lavish affairs – with people of all income brackets often spending beyond their means – the opulence of the Ambanis’ celebrations has drawn attention to the South Asian country’s growing wealth divide.

While India’s rich are getting richer, the majority of Indians, including the middle class, often held up as an example of the country’s economic success in recent years, continue to move forward.

Compared to China, a rising economy, India’s consumers have much less purchasing power, with the country’s middle class heavily concentrated at the lower end of the income spectrum, according to a report released by Oxford Economics in May.

With approximately 460 million inhabitants, India’s middle class has grown tenfold in the last 30 years. But it’s still less than half the size of China, according to Oxford Economics, despite the countries sharing a similar population of about 1.4 billion.

By 2022, at least 660 million Chinese adults earned more than $10,000 a year, while only about a quarter of Indians earned that amount, according to the report.

Economist Thomas Piketty described India as having a “missing middle class”.

In 2022, average middle-class incomes in India were less than a third of those in China, despite starting from a similar base in the 1990s, according to Oxford Economics.

The middle 40% in China earned an average of $30,400 before taxes in 2022, compared to $8,700 for their Indian counterparts, according to Oxford Economics.

“One of the reasons behind the relatively faster rise of China’s middle income class is probably its relatively rapid urbanization,” Alexandra Hermann, chief economist at Oxford Economics, told Al Jazeera.

In China, government policies have successfully encouraged rural-to-urban migration, Hermann said.

India, however, faces a set of challenges that make Indians less able or willing to migrate.

One of them is ease of movement.

Large distances, combined with limited transportation infrastructure and strong language differences between states, complicate internal migration, Hermann said.

The other is the lack of social welfare, which makes poor Indians want to remain close to the caste networks that provide some of this support informally.

India’s middle and lower-middle classes contracted in the wake of the COVID-19 pandemic, despite the country’s strong economic recovery, said Michael Kugelman, director of the South Asia Institute at the Wilson Center.

These classes are also “deletently impacted by recent inflation” – which hovered around 5.08 percent in June, up from 4.75 percent the previous month – Kugelman said, adding that “significant” inflation and the relentless challenge of unemployment have harmed this section of the country.

“Unemployment has a disproportionate impact on young people in India, and with the country demographically dominated by young people, there will naturally be many people in the lower and middle classes who will be affected,” Kugelman told Al Jazeera.

India also has state-level benefit programs that act as a deterrent to rural-urban and interstate migration, Hermann said.

The growth of India’s middle class will require a change in income distribution, overall income growth or a combination of both, Hermann said.

“In India, progress on several reforms to create non-farm jobs will be crucial to broadly increase incomes and unlock the purchasing power of the population,” she said.