Author: Paromita Shastri
Publication: Outlook
Date: January 12, 2004
Introduction: It's time to turn
cynicism on its head. The feelgood factor is touching the commoner. Updates
India is happening.
The mood is good.
People are upbeat.
Economy is growing.
Sounds uncannily like a finance
ministry press release, but it's actually an invite to an art exhibition
called Let's Rock, by Samir Mondal, a Mumbai-based artist. The invite ends
by saying: "Everything's possible, everything works."
For years, Indians have believed
the possible to be impossible. Twelve years after liberalisation began,
is it finally time to turn that cynicism on its head? To believe that one
day soon, everything will work-roads will be clean, power, water and roofs
will be abundant, governments will govern, citizens will abide by the law,
investment and jobs will multiply, and there will be enough food with many
to spare some for the poorest.
"If it's good news, it must be India
2003," Deputy PM L.K. Advani told a high-profile gathering recently. He
said that the feelgood factor, a phrase he repeated several times in his
speech, has "overflowed the corporate boardrooms and touched the common
man". If a watercolour show invite reads like the India Shining campaign,
he couldn't be very wrong, could he?
Industry
of course is seriously engaged in
talking the economy up. "The prevalent economic mood," says CII chief and
tractor giant M&M MD Anand Mahindra, "can be compared to the atmosphere
at one of Goa's famous rave parties"!
It's not hard to see why people
are upbeat. Ask the average guy and he'll throw numbers at you, numbers
that are solid, irrefutable. B-school students Arpita Mukherjee and Sourav
Hazra are very optimistic about India Shining: "The continuing IT boom,
BPO surge, the growth in pharma and other knowledge industries, plus telecom
reforms-these are enough reasons to feel happy about." These kids are clearly
looking at jobs and the macro-economic scene bolsters their hope. Our per-capita
income has reached $480, up from $370 just four years ago. India is likely
to catch up with China for the first time in economic growth this year,
clocking over 8.4 per cent in the second quarter of this fiscal due to
robust agriculture, services and manufacturing-all three sectors firing
on all cylinders.
The latest tax cuts will now further
boost the economy.
We're also now the fifth highest
forex reserves holder in the world, and the second best emerging stockmarket.
Facts which have triggered an unprecedented dollar flow into the country
through foreign fund managers of late, from a section of the globe suddenly
keen on a slice of the India pie.
As a result, domestic business is
booming. Says Nandan Nilekani, Infosys CEO: "Top Indian companies are second
to none in the emerging markets, be it in terms of governance, products,
financial parameters or ability to grow. We have rediscovered our competitive
abilities." While the upper tier of India's economy is forging ahead, fuelled
by a vibrant high-tech culture, the spending boom is triggered by the main
beneficiaries of this culture. India is increasingly the world's backroom
for services, and the urban elite, most of whom are 25-45 and earning on
an average 8 times per capita income, are the providers.
As a result, the voice of India
is getting younger. B-school student Abhishek Bhattacharya says: "I feel
happy that finally I'd be able to give my parents all the comforts they
went without for me." Many of them were born in the '80s and have grown
up in a period of relative comfort, a far cry from the age of shortages,
ration queues and red-taped licences.
There is also none of the psychological
baggages of the past- acquisition of material comforts is now an acclaimed
goal of life. Pre-reform Indians lived in past glory, adjusted with hardship,
and saved for tomorrow. Today's Indians live and spend for today and dream
for tomorrow.Says Delhi professor Sanjay Srivastava: "Our post-freedom
history can be divided into three phases: the first of scarcity, the second
of fulfilment, and the current one of abundance, knowledge and going beyond."
As a result, malls and spending,
on both pleasure and education, have spiralled. Amit Jatia, MD, Hardcastle
Restaurants (which owns McDonald's in western India), says: "The feelgood
factor is making people get out more and spend.
Our sales are up by about 30- 40
per cent. People are also travelling a lot. I'm quite bullish on growth
and think that reforms will speed up this year." Happy with the 20-25 per
cent rise in traffic in the Diwali to Christmas period, Mahesh Iyer, CFO,
Phoenix Mills, Mumbai's biggest retail hub, is advancing several projects.
He expects the growth to actually increase from February onwards.
And why
not? The consumer boom peaked in
2003 with the cost of both credit and goods dropping like leaves in fall.
Home loan rates have shrunk by 3.5 percentage points with the industry
growing by 35 per cent. White goods prices shrunk by 10-18 per cent, and
car sales shot up close to seven lakh. In PCs, laptops are available below
Rs 50,000 and cell phones have hit rock- bottom. India now sports the cheapest
mobile call rates in the world.
Business reciprocates the feeling.
Says Raman Roy, chairman, Wipro Spectramind: "Earlier Indian business used
to be purely reactive. We were delighted when the ball was thrown our way
and were happy to catch the opportunity. Now the big difference is that
the Indian mindset is proactive, more able to judge and make events happen.
This I think is a result of the learning that has happened in the past
few years. There is past success to look back on and that provides confidence.
This is the one main reason why there is an upbeat feel to the economy."
Even in cricket and films, our two
mass cults, it's been great going of late, spreading stories of Indian
triumph all over the globe. Out of 246 films released in '03, just the
top 20 raked in theatre profits of about Rs 100 crore for either its producers
or distributors. Analysts believe the entertainment industry, one of the
fastest growing sectors, has all the potential to emerge as the topmost
sector after IT. Consultants kpmg have projected a 20 per cent plus compounded
annual growth rate for the industry till 2007, which would take its revenues
to Rs 41,900 crore.
With the perception of India improving
across the globe, especially in the US, a record number of tourists came
to India in 2003-close to 3 million. Still low compared to tiny Thailand's
9 million, but what is significant is that most of these came in the last
five months, after the Iraq and sars bogies were over. And more than half
of them were business travellers.
All this has fuelled the feeling
that the Chinese dragon may have overtaken the elephant in the investment
race, but slow and steady India could win the growth race. Says writer
and consultant Gurcharan Das: "National confidence is a good thing; it
makes ordinary people do extraordinary things. Ask a historian of Rome,
and he will testify to its amazing power. Or of post-Meiji Japan, or 19th
century Britain, or even current-day China-they will all bear witness.
Ask a CEO and he'll tell you that a sustained positive feeling among employees
often separates success from failure."
If there is really such a tide in
the affairs of India now, all we need to do is to see that the helm is
seized. Strongly.
(Paromita Shastri with Archana Rai
and Saumya Roy)
