Date : 24.7.2016
25 years of the Open Era: Reviewing India’s post-liberalisation economy
Prime Minister PV Narasimha Rao with then finance minister Manmohan Singh, and other cabinet colleagues and senior officials at the Delhi airport, before leaving for a visit to Russia in June 1994
The 1901 novel Buddenbrooks: The Decline of a Family by Nobel winner Thomas Mann is a story of how ambitions and fortunes change over generations. Economists sometimes call it the `Buddenbrooks’ effect.
The first generation toils a lifetime to earn money, buying means of comfort and securing a better future. The second aspires to climb up the social ladder by occupying positions in bureaucracy and politics. When the third generation comes along, social prestige and opulence become a given. So, they look for a life of music and arts, worrying little about the rather earthy anxieties that occupied their ancestors. India, Asia’s third largest economy, after China and Japan, is a veritable jumble of all the three generations. A quarter century of economic reforms mean some have made their millions, while millions continue to earn their keep from farms but their children aspire to match upscale lifestyles.
At the level of the household, the visible face of the 1991 reforms is the quest to beat poverty through enterprise. It is sometimes said the elephant, a popular metaphor for the Indian economy, has begun moving.
UPWARD MOBILITY
The average earning of an Indian, measured as per capita income, has risen nearly 15 times since 1991 — from Rs 6,295 to Rs 93,293. Even after adjusting for inflation, incomes have jumped five-and-a-half times, mirroring rising spending power.
Desirable jobs for the young have expanded from the fields of medicine, engineering and government service to working in coffee shops and large retail floors. Sixty-five-year-old Jai Singh took a giant leap of faith 20 years ago when he quit his job in an electrical equipment store in central Delhi and started as a newspaper vendor in east Delhi.
This was an era when softer loans, easy land-buying rules and a string of cooperative group housing projects enabled hundreds of middle-class families to own apartments in metropolitan cites.
When the families moved in, captive business opportunities followed. “These societies (apartment blocks) were a market for English newspapers,” Singh told HT. “Sales of business dailies went up in particular, despite their higher issue price. Our sales incentives were hiked,” the last-mile delivery man said.
It may not be statistically rigorous, but the correlation between growing appetite for business information and rising spending capacity is too obvious to miss.
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