India - 60th birthday or 16th?

Confident, Empowered, Roaring Tiger were some of the adjectives used for India as it turned 60 on this 15th August. But what if India wouldn't have opened its economy 16 years back? How would this day be? The day would be similar to 15th Augusts before 1991. The day would have passed in the world media without anybody noticing it or at the most, somebody would have written a sorry article about how India is struggling even after 60 years of independence to grow at more than the Hindu rate of 2-3%. Inside the country, government employees would have forcibly shown up for the flag hoisting ceremony, so that they wouldn't have one less leave on their payroll. Students would have no choice but to show up in school and sit through long speeches that would have told them how India was a great country. And everybody would have wondered, "Where is the greatness!" There was no growth in the country, no new jobs, inflation was rising, corruption was rampant...in a nutshell, future had nothing to offer. This was the sorry state of India before 1991. Patriotism came with a sense of guilt. I remember how everybody used to talk that the need of the hour was a dictator or a magician who could solve India's miseries with one sleight of hand. Or maybe it was time for Lord Vishnu to come on earth in His next avatar to get rid of all of India's problems. I was too young to understand what was happening but all I was waiting for was Vishnu's reincarnation.

I guess that happened in 1991. Thats when India dissolved the license raj system, opened its economy, became dependent on global economy but still became independent in the true sense of today. Things are very different today. Every child is looking forward to becoming a youth and every youth is looking at ways to contribute to the growth. And this time they will also get real opportunities to do that. All this in 16 years is a commendable feat. This growth should not be of worry until one sees the rich becoming richer, and poor becoming poorer. Manmohan Singh doesn't miss any opportunity, be it speech at CII or Independence Day speech, to remind the business world of its social obligations. The business community probably realises that social unrest is not in its best interest and is taking needed steps to help the government. Sunil Mittal said that a major difference between India and China of today is that India lacks behind China in hard infrastructure but India is way ahead in terms of soft infrastructure. I think India's growth is being laid on strong foundations and the soft infrastructure will take it a long way.

Those who compare today's India with today's China and fashionably say that India will need decades to catch up with China, should look at the conditions in both the countries before the economies opened up. That would be fair comparison.

It wouldn't be surprising to find that India was worse off than China before the two economies opened up. India's leading foreign affairs expert C Raja Mohan termed the first five decades of closed economy and Non-Aligned approach of India as '50 wasted years'. You cannot disagree to that. Just after attaining freedom, Nehruvian policies started defining India's future. India opted to follow a path of Non-Alignment - an independent foreign policy framework vis-a-vis a bipolar world. India went behind closed doors and built high walls around it. Intentions of Nehru are not doubtful. But he didn't make sure that the governments after him understood his vision. All the sources of information or knowledge - newspapers, TV, Radio, school curriculum were full of rhetoric such as India is great, Indians are great, etc. Indians' brains got hard-wired to think that everything about India and Indians was great. And even if the country was great, they should have let them discover it and not force it down their throat. Anyway, successive governments used this as a means to manipulate the common people, to hide the governments' incapabilities or unwillingness to solve India's growing problems; the governments exploited it to a shameless level giving empty promises which they had no clues on how to deliver. India was in a very bad state before 1991.

That is why it was India's 16th birthday and not 60th.

Super markets in India - boon or bane?

Recently Wal-mart announced its entry into India in partnership with Bharti Enterprises. It was well on the cards for sometime. But still the announcement generated protests in different parts of India by small shop (Mom And Pop - MAP shop) owners. They think that Wal-mart is a big-size, fire-spitting dragon which if let in, will burn all the MAPs. Long term picture may not be very different if these shop owners just hide behind their counters without rekindling their own fire to fight the big guy.

Wal-mart plans to setup 10-15 stores in India by 2015. Each Wal-mart store currently attracts average 4000 visitors per day. If the 15 stores attract 4000 customers from day one, then roughly 60,000 Indians will visit Wal-mart daily or assuming grocery shopping frequency of 2 weeks, around a million customers will visit Wal-mart. Today India has a population of 300 million upper and middle class people or 60-70 million families. By 2015, this number will grow to 100 million if we assume a conservative CAGR of 5%. So even if Wal-mart is building 100% customer base from day one, then it will attract only 1% of India's upper and middle class families.

Entry of super-markets will be good news for those currently working in the retail industry. The current situation for Ramus and Shamus is not very encouraging - 10-12 hours of work every day, no rights, no job securities, no medical insurances or any other perks and all this for meagre salaries of Rs. 2000-3000 per month. In the new super markets, their working conditions will be better, their salaries will be better and their self-esteem will be higher since they will see themselves as part of a big organization. They will have to acquire new skills though to be saleable to these big super markets. There are concerns about those who cannot be retrained because they are illiterate or they are old or they don't have enough money for retraining. The concerns are that they might be left out of the current boom. But the 'complete' transition to super market culture wouldn't happen overnight and may take more than 20-30 years. That is enough time for the current generation of non-saleables to see through their life in the MAPs and not feel any real threats from super markets.

Entry of super-markets will be good news for consumers too who will have more choices, and cheaper goods. There are many products such as processed food which are not available on a large scale in India. Not that they are expensive but the Indian retail industry never provided them, and consumers never demanded them. It might be a chicken and egg problem which we can discuss offline. But the point is that with growing affluence, consumers demand for better brands, for packaged products is increasing and they will see these demands being fulfilled by super markets. It will be super markets that will flourish the retail supply industry in India. So the consumers will not complain the entry of super markets.

It is not necessary that after 20-30 years, there will be no place for MAPs in India. Take Singapore as an example. MAPs coexist in large numbers with super markets such as Carrefours, Giants and Cold Storages. MAPs cater to needs of two types of customers. One type caters to convenience. These MAPs are in the neighbourhood and stock goods that one needs on a more regular basis and saves a trip to the super market in emergency situations. The second type caters to economically lower class of the society, those who are highly price-sensitive and who don't care about shopping experience. MAPs in India can also reposition themselves to better target the evolving customer needs. People like me think that Indian retailers, with their strong business acumen, customer service focus and survival skills, will be rediscovering themselves and will find their own niche.

Even if the recent protests were not against super markets per se but against foreign super markets, giving Wal-mart some tough competition will be Indian super markets such as Reliance, Big Bazaar and numerous local imitations. There is not much to worry. The Wal-marts and Carrefours of the world are not colonising Indian retail industry.

One loser from the super market boom in India will be resource-crunched earth. Natural resources are increasingly becoming rare species and increased demand for consumer goods will quicken the pace. One can just hope and pray that marketers don't entice people into buying aluminium foil, plastic wraps, kitchen towels, etc. and Indians, who are still 'surviving' without such products, find their current practices healthier and don't give in.

I have fond memories of eating ice cream from our local ice cream wala during summer holidays. As the hot summer sun goes down and the evening approaches, ice cream uncle comes on his bicycle. We run to the front door at the sound of his bell, ask him to stop while we convince mom how much we deserve the ice cream. In the meantime, my brother is already waiting for a signal from me to tell the ice cream uncle to put one delicious scoop in each cup. That one scoop of ice cream used to give us so much satisfaction and the experience left so many fond memories. The super markets, with their sophisticated supply chains, get us huge ice cream packs at much lower prices. As a result, one doesn't need to wait for ice cream wala, all you need to do is reach the refrigerator.

But who knows, maybe my ice cream uncle will supply to Wal-mart and I will atleast be able to enjoy the same taste, if not relive the same experience.