It's local- Part One

 In the last decade or so, I've been hearing this phrase rather frequently in India. "It's local". At first, I just took it to mean not imported. With time, though, I was able to place it in context, and realized that it meant "of inferior quality".  The flip side of this phrase means, of course, that anything made overseas is, by perception, superior to anything made in India. Perhaps that explains to some degree India's overwhelmingly negative balance of trade.

 Over the years, I've been a critic of India's economic policies, the so-called "liberalization". Not so much for changing the status quo, but the manner in which it was done, and the enormous corruption and ineptitude with which it was, and continues to be, accompanied. Yes, India has transformed. There are real highways built and being built, high-rise apartment buildings in far suburbia, shopping malls seemingly in every upscale neighborhood, a forty-fold rise in two and four-wheeler sales, European designer kitchens in upper middle-class homes, and apparently every international brand name has an Indian presence.

  It's a morphing which is startling and seemingly ubiquitous to a people accustomed to a century of glacial change, but otherwise unremarkable. Unremarkable, because when you look at even a country like Rwanda, which was devastated by a long-running civil war and genocide, you find growth rates which have averaged over 8% over the past decade, GDP has more than doubled, Kigali's grocery supermarkets are better than any I have seen in Bangalore and it is considerably cleaner. Unremarkable, because the same or similar transformation has been occurring worldwide with the advent of globalization, which makes India's rate of progress less than unique in the global context. What is different for India is that it is, more or less, a single market of over a billion people, thus theoretically simplifying business activity, and making it stand out even among faster developing economies. It also lets the Indian government invest in military hardware and research on a scale that cannot be done by less-populated developing countries- unless they band together in a common defense infrastructure- allowing India the luxury of posturing as a major military power.

Kigali's master plan

 However, the legacy of the past continues to haunt modern India, with 90% of the population- contrary to government claims- still in what most other countries would consider poverty. The population has increased by 500 million in the past 40 years alone and is projected to increase by another 500 million in the next 30 years, the vast majority continuing in the subsistence-level poverty of their parents, making more difficult, by orders of magnitude, a task which as far back as the mid-1970s was already considered almost impossibly daunting. The disconnect between the wealth accruing to a small segment of the population and the disregard for the welfare of the people at large was exemplified by the (in)famous words of Lalit Bhanot, secretary general of the Commonwealth Games Organising Committee, who said that foreign notions of cleanliness and hygiene may "differ from our standards". Yes, our standards are "local", at least for the proletariat. One wonders if Mr. Bhanot would tolerate in his own home the same standards he found acceptable in the Games Village, or if his standards at home are noticeably different from western standards. "[T]here has been a dispute with [Planning Commission] figures because there has been a perception with everyone that within the planning commission they have one standard for the poor and another for the rich," says Nikhil Dey, a social activist.

 Most Indians I've spoken with seem to be in denial of the reality, and get quite upset at the suggestion that progress has not, in fact, touched just about every Indian. They point to cellphone penetration, which is apparently at 70%(close to 800 million) now. The fallacy of this claim seems not to impinge on anyone's consciousness. About 350 million Indians are below the age of 20, most of them in families earning less than $80 a month. Realistically, how many poor Indian families, together accounting for almost 900 million of India's 1.1 billion, provide cellphones to their children? Even among the relatively better-off, say those earning upto $200 a month, I would say that cellphone usage among their children is extremely low.

 So how does one account for the 800 million cellphone numbers in use? Simple: multiple phones and multiple SIMs. Even my housekeeper has a dual-SIM phone- as does her husband- and she keeps a couple of "spare" SIMs(which she refers to as "shims") with her. It's cheap enough to do so, unlike most cellular accounts in the west. Most middle-class to affluent people also keep multiple phones and SIM cards, and many of their children do, too. A group headed by Suresh Tendulkar, former chairman of the PM's Economic Advisory Council, reported that 42% of rural Indians(or approximately 300 million people) live on less than Rs. 15(25 US cents) per day. I don't think using a cellphone is exactly a priority for them. So claiming mobile penetration of 80% and projecting it at 98% in two more years is simply delusional, just like various other projections being made in and about India.

 What leads modern, educated and otherwise rational Indians to think that India is on the cusp of achieving developed status or becoming a superpower is that things are being seen in India, in the past decade alone, that have never been seen since Independence. One sees sleek new cars on the road, never mind that their sales total just 2%, in per capita terms, of any western country. There are swanky new high-rise buildings, with luxury apartments replete with Jacuzzis and wading pools, dotting the landscape. None- or at least not most- of this was the case even twenty-five years ago. So it does seem like there is tremendous change going on. But the reality is that this change positively impacts a relatively tiny percentage of the populace- in my estimation, fewer than 100 million. For validation of that estimate, look at first and second-world countries with a population of less than 100 million, and compare economic activity and consumption of consumer durable goods.

 Elite Indians are also unduly sanguine about the runaway population growth, arguing that as the rest of the world ages, India's young population would be able to fill in the depleted workforce. This seemingly sensible argument falls on its face, though, when one understands that in order to fit into a modern workforce around the world, the hundreds of millions of young Indians would need to be educated and healthy, two criteria that are not only inapplicable right now, but also not being adequately- if at all- planned for. Fifteen years ago, there was a rush among western companies to invest in the Indian consumer, having been misled(mostly by expatriate Indians) into the belief that India had a middle-class of 300 million and growing. Today, with a population which has grown an additional 150 million in the meanwhile, there is still no sign of that USA-sized middle-class, and it may or may not actually materialize in the foreseeable future. Truth be told, India's growing poor will eventually be a ball-and-chain shackling the country, not a fill-in for the shrinking global workforce, diverting and consuming resources which would otherwise aid a general rise in living standards. Think of it as the other side of the same coin which allows India its military strength.

 There was an ad in today's local paper from the State Bank of India, which boasts of having Rs. 1 lakh crore(Rs. 1000 billion or less than $20 billion) in mortgage loans. This is one of the largest banks in India. A loan portfolio of $20 billion wouldn't cover even 100,000 homes in a western country, let alone millions. If 100,000 new middle-class homes/apartments were being built in Bangalore this year, it would be huge news, and yet it would scarcely make a dent in the housing situation of this city of 9 million, growing at several hundred thousand a year. It's a stark illustration of the fact that the overwhelming majority continues to eke out their existence, even while the affluent continue to grow their wealth. The rising tide of affluence should have lifted more boats in India than it has done. The failure lies in the lack of foresight, the lack of planning, the corruption and, not least of all, the "local" mindset. The "local" mindset creates an affluent class which is unconcerned with the welfare of the population at large, or with the environment outside their personal properties, and more involved with propping up their own western-inspired lifestyles, cocooned from the real India of the un-deserving masses.

I clearly need more space to address this topic!


Read more on the "local" mindset in Part Two.