INDIAN CONSUMRES ON A SPENDING SPREE

ARTICLE FROM A PAKISTANI DAILY- DAWN
Indians discover joys of shopping


NEW DELHI: A decade ago, Indian consumers used to be penny- pinching and fantastically frugal. They would research a brand to death before making a big purchase like a television set , comparing prices in 10 shops, holding a family summit to discuss the findings, and in the end deciding not to buy because the old TV could 'do' for another year.

No consumer in the world is as demanding as the Indian consumer. Multinationals who entered the market after liberalization in 1992 to tempt the great Indian middle class with objects of desire were filled with despair at the reluctance to spend.

They soon realized that consuming was alien to the Indian middle class. Its ethic was saving money. This frugality, a product of Gandhian asceticism and a sheer shortage of disposable cash, was its most salient characteristic.

Durability was the most sought after quality in any good because once this class invested its hard-earned savings in an expensive item, the prized object was expected to perform faithfully for decades. Nothing was allowed a dignified death from old age. TVs, cars and fridges were always endlessly repaired, replaced only when beyond resuscitation.

All that has changed. Indians are spending as though they have awoken up from a deep slumber and want to make up for lost time. Part of the reason for the new national hobby is that shopping has become more fun.

For a whole pre-1992 generation, Indians could buy any car as long as it was an Ambassador (based on the British Morris Oxford of the '40s), any colour Ambassador as long as it was white, any TV as long as it was Philips and any toothpaste as long as it was Colgate. Now consumers have choice.

But more important is the sea-change in attitude. After decades of self-denial, Indians want the good life - comfortable homes, nice cars, smart clothes and meals in good restaurants. If they have money, they want to spend it and if they don't, they borrow. Cheap and easy credit has been a blessing for the retail business.

A new study by property consultants Knight Frank shows that India ranks fifth among 30 emerging retail markets in emerging economies with about 25 million square feet of organised retail space - that's about 55 shopping malls - coming up by 2005. By the end of 2006, New Delhi alone will have 23 new malls.

One of the main reasons for the revolution is the growth in disposable income. Consumer spending has grown at an average of 12 per cent over the past decade. The National Council for Applied Economic Research in New Delhi says that by 2006-07, five million households could have an annual income in excess of Rs 215,000 and are classified as the very rich. The 'consuming class', or those with annual income of Rs 45,000 to Rs 215,000 would constitute 75 million households. Another 82 million are classified as 'climbers' or those with incomes of Rs 22,000 to Rs 45,000. Not a single multinational that entered india in teh last decade has incurred losses. It is the worlds second largest growing economy right now after china with sensex jumping 15 percentage points last quarter.

The rich in India have never been embarrassed about flaunting their wealth. It was the middle class that was different, culturally averse to ostentation and imbued with the belief that poverty was somehow morally superior to riches and that self- denial was a virtue.

Its children no longer share those values. No wonder you don't see many of those clapped out old Ambassadors on the roads. -Dawn/The Observer-Guardian News Service.