India’s middle class has no spare money to spend

I love reading the economist, when I get the time, that is. Too bad they don’t cover India very often. But when they do publish something, they offer a new perspective to look at things. An outsider’s prespective. So I was a little surprised when they published not one, but two different articles about the Indian economy in January this year. Revealing and thought provoking, the articles where like migthy sucker punches. What was even more hilarious was the war-of-dumb-words going on in the comments section of both those articles. Patriotic Indians debating both sides by offering proof citing other media articles. I resisted the temptation to join the cockfight. Pretty hard to do when the articles were spot on.Before we proceed, please read these articles on how the magazine works internationally, and why their writers are anonymous.The two new articles about India basically say that the Indian middle class has no spare money to spend on world-class luxuries, as they are getting poorer and poorer. And the whole idea that India is the fastest growing economy and the next place for international brands to set shop is a sham. Something I had long suspected. Most international brands like Apple , Amazon and Google have already learnt this truth, and others are catching on. The articles then go to explain as to how this happened and why the trend still continues.
Why is the middle class of the economy important ? These would be the people whose income is increasing and are more likely to purchase more products and services, specially from new gen companies , probably international markets. The upper class can be considered saturated, they might have already purchased luxuries. And the lower class, well, they can’t be sold.Go over to wikipedia’s article and sort the list of countries according to income classes. India has the lowest percentage of middle and upper class.Other points which stood out.
Ouch !The truth can be distilled out easily, even after becoming the world’s fastest growing economy, Indians do not have the purchasing power that their counterparts in other developing or developed countries have. Indians are spending, but they only buy the cheapest options in every category. Not because they are saving the rest, but because that is all that they can afford. Indian customers buy the cheapest chines manufactured phones and tvs, instead of those fancy western brands. They buy made in India apparel and eat at low cost restuarants, instead of shopping from international brands and eating at international fast food chains. If a middle class family’s bread earner gets a promotion or comes to any extra wealth, they would rather invest that money in better healthcare or save it in a long term account , instead of purchasing non-essentials for the family. They see every expenditure as a liability, and every opportunity to save as a chance to grow. This is not the kind of market which would upgrade their smartphones every few months, or would eat at a five star restuarant to celebrate occasions.But we have known this for years. This is the very defnition of the Indian middle class. Spend only on needs, not on greeds.Some other eye openers: Apple made 0.7% of its global revenues in India in the year to March 2017.Facebook, though it has 241m users in India, probably the most in the world in one country, registered revenues of just $51m in the same period.Google is growing more slowly in India than in the rest of the world.Despite two decades of investment McDonald’s has hardly any more joints in India than in Poland or Taiwan.Starbucks says it has big plans for India but has opened about one new coffee shop a month over the past two years, bringing its total to around 100—on a par with Utah or the United Arab Emirates. A new Starbucks opens in China every 15 hours, adding to 3,000 already operating.Inditex, Zara’s parent firm, has 46 clothes shops in India, fewer than in Ireland, Lithuania or Kazakhstan.Hindustan Unilever, which purveys sachets of shampoo for just a few rupees, has seen virtually no sales growth in dollar terms since 2012.Even after years of enticing customers with heavily discounted wares, perhaps 50m online shoppers are active in India—roughly, the richest 5-10% of the population.India is now the fourth largest auto market, having overtaken Germany, but 80% of those sales was to Indian company Maruthi, which makes the cheapest, or most affordable vehicles in the country. So in terms of money, this is still among the cheapest markets.  International brands have not succeeded in India.Even for someone in the top 10% of Indian earners, an annual Netflix subscription can cost over a week’s income.Apple ads may plaster Mumbai, Delhi and Bangalore, but for only one in ten Indians would the latest iPhone represent less than half a year’s salary.On and on..The reason for this downward spiral are many. First is the bureacracy. Or should I say bureacrazy.Another is the informal industry. 93% of Indians work in the informal sector, earning less than 10 dollars a day.Then there is the education, or lack of.
So, whats the takeaway. The illusion is wearing off. Soon international brands will realize that the only way they can cater to this dissiappearing market is to offer localized, cheaper and affordable options. They may get the market in term of units sold.But not for value earned.x
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Nature’s fury continues

 

 

 

 

 

Whats outrageous is that idiots at the MET department still insist on calling these ‘pre-monsoon’ showers !

New Lounges at Melbourne T2 !

 

For a long time, the tourist city of Melbourne was notorius for not having a general access lounge in its international terminal (or even domestic, for that matter.) except those for business class travellers. Well starting April 2018, they have opened multiple new lounges, and one by Plaza Premium. Looks to me they actually rearranged the ones they actually had, the AMEX lounge in T2 is now Plaza Premium.

Its a little watered down than what is generally expected from PP. But theres also another AMEX, apart from Etihad and Emirates lounges. They are all conveniently housed one level down from the international departure gates. With a selected range of foods, an open bar, and juices, they are visibly focussing on larger population of travellers. There were four dishes on offer, apart from the salad and cold cuts, and coffee and snacks. But if you walk through the path to the restrooms, you enter another section equally spacious, and with an identical buffet.

There are enough charging pods and wifi for everyone !

 

 

 

Happy Journey !

Dust Storms now

 

For anyone still looking for proof of climate change : Today a freak dust storm killed more than 100 people in India.

 

Reading the Martian, and book experiments

 

I’ve been travelling in Sydney trains for a few months now. I spend about 40 mins travelling one way, so its more than an hour of commute each day. Though the distances covered is larger than those I covered in Bangalore in the same time, or any Indian city, I would venture. And good thing about my commute, there are always seats ! Even during the rush hour, you could find seats to slid into. So I figured the best way to spend time on these commutes would be to listen to podcasts, or just read a plain old book when the batteries die down.

I’ve been also running a crazy experiment of sorts. After I finish reading a book, I leave it on the seat. There. Abandoned. For the next commuter on that seat. You see, the building I live in has a library of abandoned books. Books which their owners throw out when its too much cargo when they move out. So its a free library ! I’ve read and left about four books on the trains so far. Just finished reading Andy Weir’s The Martian. This novel was turned into the hit 2015 movie by Ridley Scott. The movie was Ridley’s best work in this decade, in between all those Alien duds.

I could see why the book was a hit, its a story of survival in the harshest conditions. Its a fight against nature, and the cosmos itself. Its a story of the whole earth uniting to save one man stranded on a distant planet. But I also could not see why the book was such a hit. Its nerdy. Its full of long jargon, longer, meticulus calculations, and technological exposition. Engineers and scientists would love this kind of thing, but anybody else would find it..hmm…boring. Repititive.

I didn’t !

I loved it. Most of it. But then even I got bored of all those calculations, error variance, and best estimates. There is a lot more of the story happening in the book, which got cut out of the movie. And that was good, because there is no way a 2 hour movie could capture this much techno-babble.

We all know what happened to the stranded fictional astronaut Mark Watney. He is eventually rescured after 500 days alone on planet Mars. But the book goes into great detail to explain all the problems he and the NASA team faced along the way. There is a journal entry for most of the 561 sols he spend on the planet. There are other subplots not discussed in the movie.

Like the incident during the drilling of the second rover’s rood. Mark accidently shorts out the electronics on the pathfinder, and loses his ability to communicate with earth.  This is not shown in the movie. But in the book, Mark has no choice but communicate one way using stones arranged in morse code on the route he follows across Mars.

Or when the rover tumbles into the crater.

But I still had questions, which I hoped would be answere in the books, but was left disspointed.

For starters, Mark is extermely optimistic. Like, he is the most optimistic literary character I have read till date. He beats Robinson Crusoe hands down. Its unnatural , the guy simply does not give up. He does talk to himself a lot, but he voices his optimism clearly. I wanted to know the why he was so. Wanted to know about his childhood, his college days. Was he in the forces ? Does he belive in a god ? What pulls him to earth ? Was it his family ? Speaking of family, neither the book nor the movie tries to shed light, what kind of family did he grow up in ? Does he have siblings ? A girlfriend ? His best friend ?

Another question, this is more of a tease. The story mentions that Mark travels more than 3oo days travelling across Mars in rovers. He was carrying all the equipment to keep him alive, but he was not carryin a porta-toilet or something. So, where did he poop ? How ? And how did he cook the food he brought along ?

But what I find most astonishing is the passage of time. 500 days is almost 2 years. He spends a lof of that time travelling, and completing all sorts of tasks. Its easy to say 100 days of travel. But Mars has a barren crust, its the same shade of red everywhere. 100 days of travelling through it is not at all easy, with no one to talk to, and having to be alert all the time. At some point, one will at least think of giving it all up. But not Mark.

Anyway, despite all of this, the book is still a good read. The epilogue in the movie is missing in the book. It ends with Mark’s rescue from the planet. Science, technology, humany ingenuity and persistence, this is what the story is about.

Now that I finished reading it, I am going to leave it on the train tomorrow. For someone else to enjoy.