Children of Reforms

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Alam Srinivas | July 22, 2016


#economist   #Alam Srinivas   #reforms   #Manmohan Singh   #Narasimha Rao   #economy   #India   #liberalisation   #25 years of economic reforms  
Children of Reforms
Photos: Arun Kumar

You can see them around you all the time. They cut across geography, gender, caste, class, community and religion. Almost all of them have tell-tale signs – they are young, generally between 13 and 25 years; they own swanky smartphones; wear weird but smart clothes; have similar hairstyles, and; walk with a swagger that says that they own the world. These are the Children of Reforms, whose lifestyles, mindset, and attitudes are shaped by the impact and consequences of the giant economic reforms unleashed in India 25 years ago. This is why the real way to understand the impact of reforms is through these post-reforms children.

Only if you can analyse and understand these new kids, who are seen on every block, and in every nook and cranny, will you be able to figure out how reforms have shaped an entire younger generation, and left long-lasting effects in the older ones. Reforms were not just about cataclysmic changes in antiquated business policies. They weren’t about the dismantling of the licence-quota raj, or ease of doing business. They constituted a process, which changed an entire society. They led to significant changes in politics and social issues, apart from business and economy.

This is why the real way to understand the real power of economic reforms is through the Children of Reforms. Study the traits of those under 25 years, or those who are the post-reforms kids, and you are more likely to get a sense of the 1991 transformation, initiated by the then prime minister, Narasimha Rao, and the then finance minister, Manmohan Singh. Let us explore some of the critical characteristics of these children, and how they have changed the elders too.

Connected, yet disconnected, citizens

They are virtually, and mostly wirelessly, connected like no other generation. In terms of hardware, they and their families possess a smartphone, laptop or desktop computer, and satellite TV. They are present on social media, comfortable with mobile apps, and know about Instagram. They spend their physical lives in a largely virtual environment, seamlessly and wirelessly attached to ‘friends’. They are forever texting, messaging, watching, calling, listening and sending photographs. Younger teenagers, who have restricted access to mobiles, have found unique ways to remain in touch. A 13-year-old I know could communicate through devices without a SIM card.

A recent survey by ITU, a United Nations agency for information and communication technologies, confirmed this trend. It found that over half of India’s youth access their social media accounts, like Facebook, while they are at schools. The percentage is higher among children between 8 and 12 years, compared to those between 13 and 17 years. They are unabashedly open and free in the virtual world. The ITU survey found that over two-thirds of the youth post their contacts and address details online. Almost the same percentage don’t switch off their location or GPS services and, hence, they are visible to strangers. Maybe that’s their reason to do so. Less than half of them enable private settings on their social networking accounts.

For the youth, social media and a connected world open up opportunities to meet new and interesting people. Most of them meet people physically, after having chatted online with them for hours and days. A prime example of this is the mushrooming of online dating sites. I know scores of friends, aged between 20 and 40, who use them. They first chat with a person, and only after having confirmed compatibility and likeness do they decide to meet them. Liking a person, or being liked by someone, on social media is also a show of strength. Not too long ago, several of my friends had a bet on who will have the most friends on Facebook. The winner had several thousands.

The key thing is the ability to stay connected forever, even if there is no communication for hours. Marshall McLuhan, a seminal media researcher and philosopher, starts his book, Understanding Media: The Extensions of Man, with these few lines: “After three thousand years of explosion, by means of fragmentary and mechanical technologies, the Western world is imploding. During the mechanical ages we had extended our bodies in space. Today, after more than a century of electric technology, we have extended our central nervous system itself in a global embrace, abolishing both time and space as far as our planet is concerned. Rapidly, we approach the final phase of the extension of man – the technological simulation of consciousness, when the creative process of knowing will be collectively and corporately extended to the whole of human society….”

The internet-mobile-social media revolution has achieved this objective to an extent. The Indian youth symptomises this as the youngsters lead their lives virtually – loving, crying, laughing, talking, sharing, and doing anything and everything. The virtual world, as McLuhan thought, has become the extension of the consciousness of the young people. And this transformative extension was possible by the manner in which the reforms allowed private players to enter and expand in telecom and information technology. In the case of telecom, it was the outsiders – Hutchinson, now bought by Vodafone, France Telecom and Docomo – that came and conquered. In IT, it was the Indian players, who went abroad and conquered developed nations, before returning back to their native country.

However, since all the good things have their negatives, so does the virtual world. Several global studies have concluded that staying in a virtual world can have several and critical side effects, especially when it comes to relationships and emotions. These are valid for the Indian youth too. A fascination for online gaming may disrupt intimacy processes and introduce feelings of exclusion. Being able to crack your partner’s or friend’s passwords on phones and laptops can lead to, what are termed as, investigatory behaviours that can create frictions. Social networking activities can lead to misinterpretations and clashes among friends and partners. In fact, a study in the US found that a third of the divorce cases in 2011 mentioned Facebook.

Look around you, and you will find parents, who constantly complain about their children. He or she isn’t interested in reading, or even watching TV, but is always on the phone, chatting and texting. The youngsters have hundreds of friends on their social media accounts, but they hardly physically meet more than half-a-dozen of them. While friends’ list has expanded, friendship is restricted. The bulk of the so-called friends are those one has confirmed, but never chatted or shared with. Even the kind of virtual communication is weird. I post a photograph of the cover of a recent book I wrote, and get a few dozen likes. I change my profile picture, and the number of likes increases to hundreds. The list can go on and on and on; if you are not a parent, ask one in your neighbourhood.

Globalised Indian citizen

In the last 25 years, Indians have become better and more aggressive travellers, both outside the country and within it. A larger and larger percentage of the population travels more frequently than ever before. A 2014 study by Skyscanner found that more Indians turned towards overseas travel. According to a report on ndtv.com, which was based on the Skyscanner study, “While international destinations have seen a whopping 101 percent growth in volume searches, findings for domestic destinations have seen a rise of 60 percent (albeit over a larger base)….”

The report added: “Nowadays, Indians have become more experimental when it comes to travelling. In the spirit of exploration, they are looking for longer, more expensive trips and are searching for newer destinations.” Another recent study by TripAdvisor concluded that foreign travellers tend to look East now, rather than the West. Although Dubai and the US are the top two destinations for Indians, a majority wishes to travel to Asian cities. The study, quoted on hotelmarketing.com, found that a third of the Indians were willing to stay at cheaper bed and breakfast places, and a similar percentage maintained that ‘outdoor’ was their preferred recreational activity.

This single fact – that Indians travel more – says more about the living standards of middle- and rich-class Indians over the past 25 years. Reforms led to unprecedented job opportunities as more players entered almost every sector, except defence and nuclear, and employed skilled and unskilled people. Similarly, reforms led a change in mindset as more people opted for self-employed and entrepreneurial activities. We will talk more on this issue later. As overall incomes rose, so did the disposable portions. More travel, and frequent travel, is one of the best indicators to show that Indians spend more, and only because they can afford to do so. And this trend will continue.

According to a 2015 study by Euromonitor International, “India is projected to be among the top five countries with the fastest real gains in median income. Over the 2015-2030 period, the Indian median income per household is set to increase by 89.8 percent in real terms to reach $10,073 by the end of that period. This level of median income will not only give the Indian middle class a discretionary spending power, but will also help to transform the country’s consumer market from a ‘bottom of the pyramid’ market towards a middle class consumer market…”

Consumption-led growth is visible in our everyday lives, especially when we watch the youngsters. Almost all of them want the latest gadgets, fashions, and other goods. They are willing to change their mobiles even if the previous one is perfectly fine, only because there is a new model on shop shelves. Youngsters today are more attached to brands, both Indian and foreign, than their predecessors. Well, one can say that this is the case in all the young generations. True, but what has changed is the easy availability of the brands.

In the 70s and 80s, when we were teenagers, foreign brands were hardly available. Since, most of them had to be imported, and the government was always worried about its foreign exchange reserves, high duties – as high as 300 percent – were imposed on imports. There was also the culture of conspicuous consumption, which was looked down upon and in which the purchase of expensive luxuries was scoffed at. Who wanted to spend '1,000 for a shirt, when an Indian brand was available for only Rs 100? Who wanted to buy brands at all? We were taught to conserve, and be conservative, we were asked to use a pencil till the stub stage.

I remember how, as a teenager in Delhi, we used to purchase foreign jeans, like Wrangler. We used to hang around markets like Yashwant Place (Chanakya Puri) and Khan Market, and seek foreign students, who would sell both old and new jeans to make a few bucks. In fact, we preferred old and used jeans, as we were fascinated by faded jeans. Even the new ones we bought were washed once or twice, so that they faded, before we wore them. If we couldn’t afford the foreign jeans, we would hop across to Mohan Singh Place (Connaught Place), and buy the fake Wrangler labels, and then stitch them on to our Indian-made jeans. It made us look like second-class since we couldn’t afford the genuine products, but what the hell, we could show off our foreign fake labels.

All this changed in the mid-80s, when the late Rajiv Gandhi’s government eased imports, and slashed import duties. Foreign products were more readily available on the shelves. But the crucial change came in 1991, and later, when foreign manufacturers set up manufacturing and packaging facilities in India. Suddenly, the Wranglers and Levis were seen everywhere, even in the mofussil towns. Companies like Hindustan Lever, now Unilever India, and Proctor & Gamble went a step further, and introduced foreign branded soaps and cosmetics in the villages.

For once, we were a part of the globalised world, which was the intention of reforms. As we internationalised, so did our minds, hearts and souls. Talk to any Child of Reforms, and one of the things that will hit you is their global outlook. Be it information, theories, garbled philosophies, literature, music, movies or anything related to mass culture, they would know something about what’s happening across the world. When it comes to gadgets, they know the latest to be launched; it is easier now as most companies simultaneously launch their products overseas and in India. This international mindset can sometimes confuse them, but it does keep them informed.

However, all this comes with several caveats. One should not forget that a quarter of our population – and the real figure may be closer to 30-35 percent – is defined as poor, and cannot afford two meals a day. The number of middle-class households is exaggerated; most households boxed in this category don’t own a scooter. This is why economists and politicians now talk of the concept of Two Indias – one that is confident about achieving its aspirations and desires, and the other that feels like it is condemned to live in worldly hell for generations to come.

Coupled with this is the fact that India has witnessed a period of rising inequality in the past two decades. A recent study by the International Monetary Fund (IMF) revealed that the rural-urban income gap has increased in India, and so has the wealth gap between the haves and have-nots in urban areas. One of the key drivers was the persistently high inflation, especially food inflation, which ate into the incomes of the poor. As the IMF study summarised: “In the past, rapid growth in Asia came with equitable distribution of the gains. But more recently, while the fast-growing Asian economies have lifted millions out of poverty they have been unable to replicate the ‘growth with equity’ miracle.” In fact, financial equality was the highest in India, higher than China’s.

An article in a business newspaper, which analysed the IMF report, said: “Much has been said of India’s rising middle class.” Unfortunately, the IMF figures showed that “both China and Indonesia have done much better than India in growing their middle classes.” According to the IMF report, “Higher income inequality has also lowered the effectiveness of growth to combat poverty and prevented the building of a substantial middle class (in India).”

Risk-taking entrepreneurial citizen

Since 2000, India has been called the new land of entrepreneurs. A 2015 article by Rohit Arora, a successful entrepreneur, stated: “Today, India currently has 48 million small businesses, double the number of all the small companies here in the US (23 million).” It added: “According to Indian government data, Micro, Small and Medium Enterprises contribute nearly 8 percent of the country’s GDP, 45 percent of the manufacturing output, and 40 percent of the country’s exports. Small businesses in India create 1.3 million jobs every year and provide the largest share of employment after agriculture. They play a significant role in the country’s GDP.”

There is yet another way to look at this trend, especially in a country like India. In 2014, researchers at the Imperial College Business School found that India had the second highest number of shadow entrepreneurs; the first position was held by Indonesia. According to a media report, “Shadow entrepreneurs are individuals who manage a business that sells legitimate goods and services, but they do not register their businesses. This means that they do not pay taxes, operating in a shadow economy where business activities are performed outside the reach of government authorities.”



While Indonesia had 131 shadow businesses for every legitimately registered one, the ratio in India was 127:1. The figures for the Philippines, Pakistan and Egypt were 126:1, 109:1, and 103:1, respectively. The shadow businesses define the urge among Indians to start their own businesses. Walk into any commercial or residential area, and you can see the small and large boards of several companies. You intuitively know whether they are registered or not. Self-employment has become a craze in both cities and towns. Most youngsters today want to do something on their own.

Obviously, as we mentioned earlier, the growing opportunities in the post-reforms era was a major reason. However, another important factor was that as India opened up, grew its economy and incomes, its middle class boomed. With this came the urge among foreign companies and, more importantly, rich Indians settled abroad, to invest in India. More and more Indian-origin entrepreneurs, who had made it big in the developed world, especially the products of Silicon Valley in the US, came back and became entrepreneurs again. Their success stories, and their massive wealth encouraged other Indians to do the same, but in India.

There are other reasons for the rise in entrepreneurship in India. A 2008 study by the National Knowledge Commission came up with the following findings:
 

  • Key entrepreneurial triggers are: individual motivations, socio-cultural factors, access to early-stage finance, education, and business environment. (All these factors changed dramatically since 1991.)
  • 95 percent of entrepreneurs believe education is a critical success factor. Education is a key trigger to evoke entrepreneurial inclinations. 98 percent of the entrepreneurs are graduates. (Education, especially private, though non-quality, boomed in the country during the 70s and 80s and continues to do so after three decades.)
  • Prominent ‘motivation triggers’ are ‘independence’, ‘market opportunity’, ‘family background’, ‘new idea’, ‘challenge’, and ‘dream desire’. (As India globalised, and so did their citizens, the youngsters were more keen to draw lessons from abroad and seek independence and opportunity, and chase dream desires.)


In the 1970s and 80s, the two preferred professions were engineering and medicine, and most of us wanted to join the government for stability and the top private sector firms for more money. The luckiest among us went abroad to study, and found jobs there. Most didn’t come back. Well, the preference for the two professions and government jobs is still there; what has changed is that a larger proportion, maybe a majority, wants to work on their own – as entrepreneurs, self-employed, consultants and contractors. There is no shame in saying, ‘I am in-between jobs’, and ‘I have just started my own firm’, or ‘My last firm went belly-up and I am trying a new idea’.

This shamelessness among young Indians came from the Silicon Valley culture. A lot of Indians worked there as employees or entrepreneurs. In 2000, I visited a Sunday meeting, called especially to enable budding entrepreneurs to meet potential financiers and investors in the former’s ideas. The place was full. I could sense a caste system that I realised later. Those with ideas sat on the floor with their laptop PPTs trying to catch the eyes of those who sat on the chairs, and who were clearly the Mr Moneybags. There was a twinkle in almost every pair of eyes – the entrepreneur could see his idea take off, and the investor thought of huge returns on his initial investment.

I met all kinds of people at the meeting. There were those who were serial entrepreneurs, and who had set and sold several enterprises. They were millionaires, or possibly billionaires, and now had turned mentors for budding entrepreneurs. One of them reeled how he sold his first company for tens of millions of dollars, and his last for $300 million. I met those who had quit their jobs and, inspired from the examples of the Apple and Google founders, had set up their own garage shops. Every new entrepreneur wanted to take a shot at becoming a millionaire, but the investors knew that only one of the ten ideas they fund may succeed. Even that wasn’t a surety.

Look around you, and you are likely to see youngsters with similar desires and ambitions in their eyes. They speak like the Silicon Valley individuals. My friend has a son and a daughter. The son is an engineer, who has done his MBA, and works for a well-known foreign consultancy firm. He works out of home, and rarely goes to the office. So, he is a kind of a consultant. But what does he want to do now? He wants to make a new health drink using a specific kind of bacteria. So, his house and refrigerator are full of plates and slides on which he grows bacteria. His daughter, who is studying History Hons, is simultaneously learning the skill to become self-employed tattoo artist. Another friend’s daughter used to spend all her nights listening to radio signals from outer space; I am not sure if she pursued astronomy or astrophysics when she grew up.

New apolitical citizen

There was a time in the late 1980s, and through the 1990s, when I was young, when the youth was against politics. Most of the youngsters were disgusted with politics. The voting percentages in the national and state elections were low. The figures for municipal elections and college elections were dismal. I remember that we wrongly thought voting was a waste of time, all the politicians were corrupt, especially after the Bofors scam, and we shunned elections. The worst offenders were the first-time voters, who never exercised their rights. Whoever wanted to become a politician, or work with them, was looked down upon by us. We were anti-politics.

How the times have changed. In the recent assembly elections in West Bengal and Kerala, the voting percentages were 80 percent, even 90 percent, in several areas. A 90 percent voting implies every voter in the constituency voted, if we account for dead voters, those who are ill, and those who couldn’t vote for pressing reasons. This is impressive because it also means that the youth, especially first-time voters, are walking to the booths. Even in the last national election, in 2014, one of the reasons for the gigantic electoral success of the BJP was the support the party got from the youth, especially first-time voters. The party used the social media extensively to woo them.

So, does this imply that today’s youth is more interested in politics, and governance? Not really. Today, the youngsters have turned apolitical, not political. They don’t care who comes to power, or which political party rules the country, as long as they can deliver the goods. The goods, in the eyes of the Children of Reforms, are economic growth, development, and good, honest and transparent governance, which can then translate into better opportunities and higher incomes. This is why a 2015 Hindustan Times survey found that 80 percent of the youth polled said that they were not interested in politics. The figure was higher at 89 percent in Pune and Mumbai. This is the point: they don’t bother about politicians, or political developments, but they are interested in deliverance of their desires, wishes, ambitions and aspirations. So, they now go to vote for the one who can do it.

This understanding of the political mind of the youth adds another layer to their thinking process. Most of them understand the politics behind governance and reforms, which are the key to their financial and aspirational fulfilments. They understand how parties oppose reforms, when they are in the opposition, and openly embrace them when in power. This is why the current criticism of the current regime, that it opposed reforms like goods and services tax (GST) when in opposition, is not accepted by the youth. The youngsters know why this happens. Their interest is that it gets passed as it will make the tax system transparent, boost government revenues, and add to growth.

In fact, it is exciting to understand the politics of reforms since 1991. When Narasimha Rao came to power, his Congress government was a minority one. There was no way he could have politically pushed the policies that he did. But he did, despite the huge opposition. The reason: there was a political will because the country faced an economic crisis. For one, India had foreign exchange to finance a few weeks of imports. The next regime, the United Front coalition, also managed to do so even though it had so many political parties to cater to. In fact, one of the budgets by P Chidambaram, the finance minister during that short regime, was hailed by almost everyone, including the masses, as a ‘dream budget’. So, reforms continued.

Today, the situation is the opposite. The BJP has a majority; along with its allies, it has huge political power in the Lok Sabha. But a few dozen Congressmen in the Rajya Sabha, where the BJP-led coalition is in a minority, have stalled several critical reforms, including the GST. The trick is that any leader has to evolve a consensus among parties to push through reforms. This is indeed happening now, as the BJP has begun talking to all the opposition parties, including the smaller ones. Rao was adept at this; so were several other leaders, including Atal Bihari Vajpayee. Now, Narendra Modi has learnt the art of negotiations and evolving a consensus.

Sub-atomic Indian citizen

It is true that technology has changed the way that youngsters seek love, romance and relationship in their lives. But what is truer is that technology, especially satellite TV, has redefined these concepts for them. Love is not the starry-eyed love for them anymore. Romance is not among the top priorities among the teens, though they like to have girlfriends. Relationships are not stable, but extremely fluid. The concept of soul mates rarely exists in their love dictionaries. However, it should be said that they are probably more intense, serious and committed, when they love or in relationships. It is only that it is not a constant in their lives.

Such a thinking was almost unbelievable in the 70s, 80s, and even in the 90s. Today, it is normal. A young relative of mine, who is only 20 years old, recently told me that now the women too like to openly ‘check out’ a guy, just the way men did with women. The women weren’t embarrassed by it; they enjoyed it too. Teenagers openly talk about their relationships, and their latest boyfriends and girlfriends, even to their parents. The parents too openly ask their kids about their latest crushes. I see this bantering, teasing, and discussion in almost every household with teenagers.

Surveys on marriage hint at contradictions. This would be dependent on the individuals surveyed, their honesty levels, and the cities they lived in. Last year a Hindustan Times survey found that 61 percent believed that premarital sex wasn’t a taboo, but almost two-thirds wanted their partners to be virgins. The number of youngsters, who accepted that they were in a relationship, depended on the affluence of the cities. Their percentage was the highest in Delhi, Kolkata and Chandigarh, with 67 percent each, followed by Mumbai (63 percent). The national average, as per the survey, was 49 percent.

In another survey by shaadi.com, just over 50 percent said they would rely on their parents to find them a partner. But there was still a sizeable 31 percent, who believed in finding partners online, 12 percent through meeting new people, and 6 percent in their work places. When asked for the qualities they looked for in their partners, 37 percent said like-minded, 30 percent educational qualifications, 21 percent occupation, and 11 percent presentable. The survey was conducted among 3,600 youngsters, in the age group 24-35 years. The fact is that relationships is a complex issue, and individual decisions can depend on many factors.

But a sub-trend is that more and more Indians are willing to live alone. It is not just the parents, but also the youngsters and middle-aged. Youngsters, especially the women, are not bothered or worried if they don’t get married by the late twenties or early thirties. In fact, I know of friends who fought with their parents, and told them that they will get married when they are ready or find the right person. Similarly, the young women are willing to date and meet different men in their search for Mr Right, who may or may not exist. Divorced women, including those with one or two children, are willing to go it alone, remain independent, and repeat their ‘mistake’ again. Even older women, who are unmarried, are not exactly looking for a partner in their older age.

The new buzzword in towns and cities is about Single Indian or, what I dub as, the Sub-atomic Indian. In the 1980s, the focus was on small, nuclear families. People wanted to have one or two kids, although there were many families with more children. Today, the nuclear is getting split further into electrons, neutrons and protons. We are truly being quantumised from all angles. Reforms brought us closer to a larger set of people, and made us a part of globalised village. But it is a village, where many households don’t know their neighbours, or rarely meet them. We now earn more, and spend more, but we are not ready to feed or clothe strangers. We love, we romance intensely, but don’t feel bad when we change partners, whether married or unmarried. We are friends with thousands on social media, but we are prone to be lonely.


Alam Srinivas is a veteran economic journalist

(The article appears in the July 16-31, 2016 issue)

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