Purchasing power increasing


  • Letters
  • Monday, 31 Jan 2005

By COOMI KAPOOR

TIME was not long ago when you saw Indians returning from Dubai or Singapore laden with such mundane goods as kitchen machines, acrylic blankets, colour TVs and VCRs, etc. 

They dreaded the moment at the customs counter for not only was the duty prohibitively high at 200% but they were also made to account for the source of foreign exchange with which they had bought the goodies.  

The virtual demise of the socialist era in the early 90s seemed to have put an end to the above phenomenon. 

Now, what to talk of the humble kitchen machine – or Mixie as a vast majority of housewives call it – most of the world’s well-known brands are available in India itself. Gone is the ubiquitous sight at international airports of Indians returning with portable two-in-one radio-cum-transistors or TV sets while their gold bangles-flaunting women pulled a trolley laden with over-stuffed suitcases. 

The slow but steady globalisation of the economy has made India attractive for foreigners to do business in. After all, with at least one per cent of the one billion population truly affluent, the size of the Indian market is bigger than the entire populations of most of the smaller nations in Europe and the Americas. Small wonder then the top-notch luxury brands in cars, watches, jewellery, clothing, perfumes, cosmetics, leather goods, et al. have all opened stores in this country. And more are on the way. 

Economic liberalisation has also removed the social stigma on the enjoyment of wealth. Now, if you have it, you flaunt it. And still not be considered vulgar and anti-people. Thus it was that only a few months ago, a manufacturer of a well-known brand of Pan Masala (betel-leaf powder) presented his daughter on her 20th birthday the world’s most expensive luxury car, Maybach, from the Daimler-Benz stable costing over Rs 5.25 crores (RM4.57mil). Various privately-owned TV channels showed him handing over the keys of the car to his daughter even as he exulted how he was a self-made man having started as a lowly clerk to now head the country’s largest-selling pan masala brand.  

(It is another matter that the said pan masala manufacturer is now in hiding abroad with the police having issued an arrest warrant against him for his alleged links with a notorious mafia don in connection with a case of extortion and illegal export of pan-masala making machines to Pakistan.)  

Why the world’s best-known luxury brands are in India or on the way is not far to see. 

A recent survey of household incomes by the National Council of Applied Economic Research revealed a huge rise in the number of rich families. In five years, the number of households with annual incomes of more than Rs one crore (RM870,000) had more than doubled to over 50,000. And those with incomes between Rs 50 lakhs to one crore (RM435,000 to RM870,000) had gone up to nearly 2,00,000.  

This is the class that buys luxury cars, sends its children for education abroad, flies business class on work and leisure and invariably holidays in foreign countries. Indeed, such is the increase in the number of families with surplus incomes that in Delhi alone on an average twenty new eateries open every month. Even rich Indians did not like to eat out till very recently on socio-religious grounds. Not anymore. Now, eating in fancy restaurants is the norm rather than the exception. A decent meal for two in a middle-level restaurant now can set you back by at least Rs 1,500 (RM130).  

Nothing illustrates better the rise in incomes than the variety and price tags of automobiles seen on roads of urban India. Two decades ago, India made but only about 30,000 odd cars based on the pre-1950 platforms junked by foreign automakers. Now, Maruti-Suzuki alone is in line to sell one lakh (100,000) cars per annum.  

If you have the money you can buy any car from Maybach, Ferrari, BMW 7 series, Porsche and Audi etc. These are sold up front in big towns like Delhi, Mumbai, Chennai and Bangalore, etc., though occasionally these are lapped up by the small town rich in Nagpur and Ludhiana as well. 

Conspicuous consumption might be frowned up by politicians keen to make common cause with the more numerous have-nots, but it is not uncommon for them to patronise the best in luxury goods. In the on-going campaign in Haryana for electing a new State legislature, rival politicians have been criss-crossing the rural constituencies in imported Toyota- Lexus SUVs costing upwards of Rs 50 lakhs a piece. And they sport wristwatches with a price tag of over Rs 20 lakhs (RM174,000). 

The rise in household incomes has also resulted in the manifold increase in the sale of liquor, specially imported wines and whiskies. It is said but only half in jest that Indians consume more Johnny Walker Black Label whisky than is actually made in Scotland or anywhere else the famous brewer has his bottling plants. Yielding to the rising demand for scotch whisky, the Delhi Government last month allowed the direct import of Black Label and some other brands of imported Scotch to be marketed through the State-run vends.  

The transformation in the marketplace has been so mind-boggling that if you are visiting India after a gap of, say, a decade you wouldn’t believe that this country was earlier starved of such simple household durables like a decent TV or a refrigerator or an effective and noiseless air-conditioner. Indeed, the prices of electronics goods such as TVs and radios or even refrigerators are 30 to 40% lower than a decade ago while their quality is infinitely superior to the shoddy products of the licence-permit raj of the pre-liberalisation period.  


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