Jul 27, 2008

And still a long way to go...

(The last post was about some cultural/moral questions faced by the urban young affluent (UYA) people today. This one raises some economic and social questions. Some of you found the last one 'interesting', though no one expressed their own opinions. I hope this one also catches some 'interest')

Silo lives in Bangalore. He typically spends about 1,000 rupees on dinner-n-drinks on a single weekend evening. He doesn't mind spending 500 rupess on a movie show. He recently went to Thailand for a holiday. He's soon going to Singapore to watch an F1 race, and will stay there for a week. He owns a large LCD TV and a home theater. He doesn't really keep track of his expenses, nor does he really bother to check prices when he buys groceries, clothes etc.

Silo isn't an exception. The things mentioned above hold true for most UYAs in India today. These people buy Swatches, Levi's, iPhones, iPods, Body Shop, Tommy Hilfiger... they watch movies in multiplexes, and even with rates as high as Rs 300, tickets aren't easily available... they dine at restaurants that charge upward of Rs 300 per head for a meal, and you need early reservations at these restaurants as well.

10 years back, none of this was possible. People spent what they had to, on their needs, and spent carefully on their wants. 'Wants' - are things you can manage without, but having them does make life better. This includes things like a  family car, a DVD player, a nice gold chain to wear at those weddings, a nice pair of jogging shoes. 10 years back, people has to budget and plan for such purchases. And they looked for the best value when actually buying a product. This India was tough. They could handle difficult times, and grow even in a hostile environment. They developed qualities that are admired the world over. With their heads and hearts in the right places, they've been unstoppable since the reforms of '91, and have prospered.

Another category of purchases - relatively new to India - is 'desire'. This would include Body Shop's strawberry lip balm, Nike sneakers, 16 GB iPod Touch, movie tickets at any PVR or Inox, Barista's Coffee, a shopping/leisure trip to SE Asia or the Middle-East. In all these cases, you can probably continue with life without spending at all. Even if you do, you could settle for a lesser brand at less than half the cost - with no real loss in quality. However, this is where UYAs spend - and spend big - only because it makes them feel better.

The problem today is - UYAs are giving in to desire - too often, and too easily. Now, I'm not one to support the principle of abstinence. There's nothing wrong in spending on something you want, whatever your motivation, as long as you can afford it. But like any other power, purchasing power also implies responsibility. The current generation is becoming very irresponsible, to the point of being self-destrucive. Credit card default rates are the highest they've ever been, and rising, especially among people under the age of 30. Personal loans are being availed. Credit card balances are being transferred to avoid heavy interest payments. Clearly, the current generation is giving in to desire, beyond their means. And keep in mind - average income has increased in leaps and bounds in the same period. For spending to still have out-paced income, points to a rather disturbing trend of financial recklessness among today's UYAs.

This recklessness does not affect just their personal finances. Underlying this is a vulgar change in mindset that doesn't bode well for the future of the country. The link is not easily established, but think about this:

- These UYAs speak about our politicians and administration in disparaging tones. How many of them actually take pains to get themselves registered with the EC and vote? Do any enter politics? They are educated enough, financially secure, armed with the RTI and have all the means to form forums, ask questions and take action - against the local administration and authorities, if not legislators. They can come together and set in motion processes that can have far-reaching consequences. Does anyone bother? No.

- The Medical, Public Sector, Civil Services and Defense professions (all crucial for every country, especially a developing country like ours) are losing popularity. The number of candidates appearing for entrance examinations for these, have declined rapidly and continuously over the last decade. In the same period, the number of candidates appearing for the JEE and CAT (the entrance tests for the 'ultimate get-rich-quick' IIT and IIM courses) has doubled! Everyone wants to become the comfortable UYA. Social and national interests be damned!

- Restaurants in UK, and Motel chains in USA - are mostly run by Indian entrepreneurs. We have a few in other industries like Steel and IT as well. How many do we produce in India? Why don't we produce more? Because our best minds become UYAs who are already an 'elite' group of sorts, and can fulfil most of their desires (some of which they hadn't even dreamt of earlier) - without the need to take any risks!

We all want our country to become a superpower in the 21st century. We want to live in a country where infrastucture and public services are of high quality, health standards are high, corruption is low, crime rates are low... We need to work towards creating that country. In the long-term, this necessitates the elimination of poverty, education for all, and hopefully the development of civic sense. This should cause the demise of vote-bank politics, and force our goverment and administration to work on our real problems.

We are going in the opposite direction. Great nations are not built by spending on personal luxury and becoming apathetic to larger problems. They are built by responsible, disciplined citizens. Consider an example. We all buy cars to commute to work, and if traffic is really bad, we hire a driver. In London, Hong Kong, Singapore etc., you can travel to and from your workplace using local trains. These are comfortable, reliable, quick and relatively cheap. We pay 30% tax. Shouldn't we be demanding these from our governments (leveraging our power to vote), rather than hiring a driver (because we can afford to, and don't care about the rest).

How does it start? Consider this. The average salary for IT professionals in the NCR is reported to be~5.5 lakh. Assume 2 in a house, and a 60% take-home component of the salary. This gives the family more than Rs 50,000 for a month. Leave out a couple of days of travel/vacation every year, or buy Rbk or Adidas shoes instead of Nike, or have one drink less every saturday evening, and you easily save ~1,000 rupees a month of completely aviodable expense. What can you do with this? Sponsor education, food, health and clothes for a child for a year.

That's one less possible farmer suicide. One less possible terrorist. One less possible voter for a corrupt, caste-based political party.There's no way to be certain, but it is probably a tiny step of progress. Or would you rather spend another 8,000 on a pair of faded Levi's Jeans...

As Obama says all the time (and I love him for this, even though it is in a different context) - "This is our moment to decide.."

1 comment:

  1. This is a phenomenon encountered by almost all countries on their path to development. If you look at history, first European nations, then America, hard work and development gave way to affluence which was in a way 'abused' by people. Eventually, as is the case with European nations today, after the peak a small dip occurs where in people settle down and think as a collective instead of personal needs. Even needs and wants are redefined. The 'UYA' is young. Past a certain point one will have to think long term with regards to money, spending, savings. As you probably realise now, it is a process (the same you have gone through, from reckless abandon to say considerate spending). For example, I know many people who are in the IT sector and a 3-5 lpa package right out of college seems like a lot of money and the new found freedom leads to unrestrained expenditure. However, a few years down the line, the very same people realise, Rs. 2000 spent on a single meal is that much less saved towards a house in the future. The more pertinent question in my mind is, when and will this collective come by. This group is young and will grow up. The question is will they grow up fast enough, and will the generation to follow learn anything from it. On a side not, being a bit of a conservationalist, it worries me if we can do so keeping our culture/heritage/philosophy intact. We as a country made it this far being hardy people, making up with morals what we couldn't with money. Now the balance is shifting and one wonders how it will shift.
    My hope lies in a quote by Vivekananda "God cannot be found on an empty stomach"
    Maybe it will be extrapolated to the present situation.