Answer: 

Introduction:

As per the government, Tier 2 cities are the upcoming cities having a population size ranging between 50,000 and 1,00,000. They include the cities of Ahmedabad, Vadodara, Coimbatore, Jaipur, Pune, Varanasi etc.

These are cities that are experiencing growth at rates much faster than Tier-1 cities and the rise of a new middle class.

Body:

Relationship between New Middle Class and Tier 2 Cities:

• Rise of white-collar jobs: The service sector accounts for more than 64% of jobs in tier 2 and tier 3 cities as a result of globalization and LPG reforms in India. It led to an increase in employment opportunities along with higher salaries creating a new middle class with more disposable income.
• Increased entrepreneurial activity: Majority of the Tier-2 Cities like Jaipur, Surat, Indore, Calicut, etc have attracted huge investments and are start-up hubs. This leads to more employment opportunities and also more innovation in the market which helps spur demand.
• Social media and exposure to western consumerism: Proliferation of Internet and increased exposure to social media has led to rising aspirations. This has boosted consumer demand across sectors. The availability and affordability of e-commerce has made it easier for the middle class to fulfill these aspirations.
• Better than Tier-1 cities: The moderate cost of living in Tier 2 cities encourages greater consumption because of the affordability of a better lifestyle. The Tier-2 cities also have greater ease of living which is reflected in the Ease of Living Index.
  • Five of the top 10 cities in the Ease of Living (EOL) index are Tier-2 cities, namely Ahmedabad, Surat, Coimbatore, Vadodara, and Indore and Tier-2 cities typically have 10% – 35% lower cost of living as compared to the nearest Tier-1 location
• Infrastructure development: Enhanced connectivity, attractive real estate prices, better amenities, less crowded, etc. and a focus on improving the quality of infrastructure attracts the middle class and investors. This leads to further boom in the tier-2 economy.
• New market: The capacity to consume along with the availability of all major consumer brands has led to Tier-2 cities to be established as the new market. The tourism footfall has also increased in these cities leading to increased focus on providing quality amenities and hospitality. These further boosts middle class aspirations and thereby the growth of Tier-2 cities.
• Government Initiatives like Make in India, Stand-up India, Start-up India, MUDRA Yojana, JAM Trinity, UDAN, etc. in tier 2 cities have brought more people into the fold of the middle class by increasing disposable income and providing them with avenues to spend.

Conclusion:

Increased wages, the digital revolution, and the westernization of habits along with improvement in infrastructure, business ecosystem, and enhanced connectivity have together contributed to the promotion of consumption culture in the middle class. The virtuous cycle of economy observed in Tier-2 cities is fuelled by the middle class and its aspiration to consume better.

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