India’s Current Trends
“India is, the cradle of the human race, the birthplace of human speech, the mother of history, the grandmother of legend, and the great grandmother of tradition. Our most valuable and most instructive materials in the history of man are treasured up in India only.” - Mark Twain
The Story of Rural India
60+ % of the population lives in Rural India. India’s economy is an agrarian economy. Simply put, we depend on land, labor and nature to play its role and nature, as we all know, thanks to Al Gore is very fickle. Droughts are common along with the uneven distribution of rainfall or excess rainfall which all cause wastage of crops. Recently installed irrigation systems are the best-in-class according to some, but they don’t reach every farm throughout the vast plains of India.
The darker side of Rural India? The farmers are committing suicide. These suicides have been causing the political parties to come out with guns blazing and blaming the central government for its lack of support to the primary sector of India’s economy. While going on the defensive, the central government has been constantly releasing random illogical subsides for the farmers and other agriculture related industries which obviously couldn’t and won’t be able to control the situation due to them being conceived only for the sake of conception. Suicides generally happen when the farmers can’t return the monetary loans they had taken from private organisations and non-recognised moneylenders which causes them to lose their farms, leaving the farmers to be left with nothing and relentlessly with no hope or a future. The central government has many laws in place for the betterment of the primary sector, but India is huge and implementation of such laws on a grass-root level is harder than actually making the law.
A recent trend, however, has suggested that rural regions in India have been shrinking dramatically as India marches to it’s goal of being developed before 2020. If not depleting, the rural regions now boosts connectivity in the remotest regions along with basic needs and basic sanitation. Rural India is being educated, getting jobs and slowly doesn’t seem to be so focused on it’s main source of income: Agriculture. That is not a bad thing, per se, developed countries do not have an agrarian based economy, thanks to the Industrial Revolution.
India has recently witnessed farmers selling their land - walking away from their occupation to enjoy their lives and peacefully retire.
Rural India is now home to not only the poor but also the simple millionaires.
Demise of the Middle-Class
The rise of the middle-class (including both the lower and the upper middle-class) gained momentum in the 90s. The ease of economic and foreign policies bought in employment opportunities and investment opportunities. The people earned well, spent moderately and mainly saved their money using the various banking schemes which propped out during those times or they invested it in capital markets, including real estate.
In the early 2000s everything was going very steadily, India was on its way to greatness with the power of the middle-class at its disposal but something happened between then and now which has put a question on the survival of the middle-class.
The death of the middle class has not been exaggerated, it’s an anticipated and an inevitable thing.
You could go into detailed reasoning as to what happened between that period which put a question on the survival of the middle-class but it all boils down to the same thing, India got complacent with it’s reforms and the corruption grew. The rich got richer and the poor got poorer, the vicious economic cycle.
The cost of daily necessities in the last several months has seen an upward trend in prices. The inflation index is not under control and the falling rate of the Indian currency has added a burden to the middle-class. The only thing they can do is try harder, working overtime on their jobs and cutting down on certain expenses such as entertainment and outings.
The only saving grace for the middle-class has been the easily available loans provided by the financial institutions which is available freely and on every product available in the market causing people to purchase things they normally wouldn’t, on credit. Credit, historically is not something Indians were very happy about but as India changed, so did the mindset of the people. The influx of the Western Culture, which has become the synonym for development came into play when the Central Bank of India, known as the RBI eased out policies for financial institutions to give out credit. Credit is a wonderful thing, it makes you forget that it’s really money you’re spending. The financial institutions giving out credit without proper background checks may have caused, according to some, a credit bubble. Simply put, balance sheets are made in anticipation of money coming in and that doesn’t sound good on paper or in reality.
Even credit, however, cannot save the inevitable, it can prolong the process but it cannot stop it. The guy on a 6000$ annual salary buying a 15000$ sedan is a bad idea, no matter how you put it. My professor used to put this in perspective by saying “If you factor in our ever-growing needs and wants along with the fact that credit is easily available, it just spells out disaster, doesn’t it?”
“Get Rich or Die Tryin” - 50 Cent
The middle-class either moves up the class-ladder or falls down, unless obviously every other developing country’s economy suddenly dies and there is an influx of foreign currency by FII’s and FDI’s in India. However, reality doesn’t seem to support that theory, anytime soon.
The Web Startups
Startups have always been a part of India’s culture, folks of the previous generation have been quite enterprising in their own untrained way. Some have been quite successful financially and have seen their companies become insanely famous and attract a tremendous amount of brand loyalty and customer satisfaction. The goodwill generated by these so-called startups decades ago is still valuable and acts as an important asset to these companies who thrive on it and build on it, year after year and decade after decade. Most of these have turned into corporate mammoths now, but the tales of them starting up runs fresh in everyone’s mind. Stories have been told, twisted and modified and movies have been made about them. These corporate mammoths now pretty much run the country influencing government policies and decisions in a major way.
The early 2000s was when cellular technology started it’s penetration in India, in a major way. The cellular phones kept becoming cheaper along with telecom providers providing users with cheap plans making the mobile phone a must-have, overtime. The phones became better too, as the years went by, which meant you could do more things on them. Fundamentally, by 2007 you could browse the internet on them, contact your colleague by email, and keep in touch with people using social networking websites by just using a device which was in your pocket, not to forget the cheap mobile internet plans available in the market, it all ended up causing a surge in mobile connectivity which led to the true emergence of the internet in India.
However, there was a lack of local content available on the internet thanks to analysts who were still nodding their heads and giving their opinion on how the internet was solely for nerds convincing the corporate mammoths that doing anything online except having a website which used Flash animations, was useless. Essentially, this meant that a wide platform was left unattended due to people not being able to see where the puck is headed instead of where it’s at.
Certain individuals did realise the power of the internet and found a niche they would cater to, which meant that consumers would have to deal with broken websites and get used to extremely poor customer service since these self-funded startups didn’t know any better nor could they afford any better. Things however did get better overtime, as the competition increased and an extremely profound thing became quite clear: It was going to be that most of the startups will primarily have web-based front-ends, even though they necessarily wouldn’t be in the web-services and web-products market.
“Indian startups have a designer shortage. The Indian education system needs to gear up and introduce more design thinking.” - Ravi Gururaj, Frictionless Ventures
One of the reasons to make web-based front-end’s was due to the high real-estate costs throughout India and the increasing labor costs, rentals and other fixed-assets. For a startup, having the web as a platform, at least as a front-end meant less capital investments, less maintenance expenses and overhead costs.
All kinds of startups sprang-up, some catering to web-based products and solutions, some decided to go on the e-commerce bandwagon and some decided to target their own niche and compete furiously with generic products and services. Self-funded startups started expanding and venture-capital funded startups became bigger than corporations who had been walking around thinking that the internet was for amateurs. Startups were in business and they had trained, skilled employees along with international partners and mentors.
Startups were viewed as an anarchy towards the big guys who drowned us with annoying sales-pitches and bad product placements in every movie possible. It was as if karma had finally decided to catch up with these corporate giants, many already are on the verge of giving up entirely on their existing business models and changing gears: trying to adjust to this new era of business. Given that they had the opportunity to shape the web as a platform and mould it from the start, they decided to not even tinker with it. And now, they have to adjust to a particular threshold another company has set in their respective industry.
Startups have captured the web in India and you’ll just see them becoming not only bigger but also better as the internet penetration grows, along with a surge in the purchasing power and per capita income of the people, the startups will multiply and cater exclusively to certain sections of people, the idea of them is to provide something unique and personalised at affordable prices along with localisation and meeting customer satisfaction levels, the startups are now run like semi-corporates and SME’s themselves.