Thomas Friedman's enthusiasm for a newly “flattened” world risks adding to the myth of the Indian middle class. The first misconception is the nature of the state itself, whose withering away Friedman posits with an almost Marxian glee. Yet the state is still indispensable to most people. It provides, or should provide, physical security, law and order, economic infrastructure, and basic services. For most people in the world, however, and certainly in many parts of India, the problem is that their state is not strong enough to deliver on those vital requirements. One can rejoice at the rising living standards of Indians working at call centers, tracing lost luggage, and reading CAT scans for Americans, but what is the condition of the country they return to? Friedman waxes lyrical about the Infosys campus outside Bangalore, an oasis I too have visited, which would not be out of place in the West, but the managers of Infosys have to organize their own electricity, their own “mass” transportation, their own health club, and so on, because these facilities are absent, unreliable, or dilapidated in the city itself.
The worst news for foreign consumer goods marketers is that it is only among the one million households of the very rich that there exists a sustainable interest in the products of Kellogg, Nike, Mercedes-Benz, or Johnny Walker. Of course, the others buy goods — but these are more basic, and cheaper, than multinational corporations produce. If you're selling tea or cooking oil, you have a vast Indian market, spanning all five classes; leather sandals and ready-made shirts reach half the population; rubber thongs and plastic buckets delve even deeper; but sports shoes that cost a chauffeur's monthly take-home pay? Forget all but the smallest group at the top.
Not that Indians aren't spending more and acquiring more: since the 1980s, there has been a veritable boom of buying. On my visits to rural southern India — Tamil Nadu and Kerala — I am increasingly struck by how many village houses are of pukka construction rather than mud or thatch, and even more by how many have some sort of vehicle parked outside — in most cases a bicycle, but there were also scooters, other two-wheelers, and in some cases cars. An astonishing number of roofs sprout television antennae, and a few houses even sport a satellite dish. This empirical, if unscientific, evidence is confirmed by the NCAER study: TV ownership is rising, and all but the most destitute own wristwatches, bicycles, and portable radios. Smaller but still significant numbers buy electric irons and kitchen equipment. But this is a far cry from preferring Macallan to Kingfisher, let alone buying a Mercedes-Benz.
Cumulatively, the NCAER survey concluded, India has a “consuming population” of 168 million to 504 million people. But what they consume, and how much they can afford to pay for it, is another matter altogether. One thing that is noticeably changing is our national indifference to global brand names, which is the legacy both of four thousand years of traditional civilization and nearly five decades of self-reliant protectionism. But change is still slow in global terms; and in any case, the items most Indians buy, from household detergents to hair oil, and from cigarettes to snack food, are those where Indian brands have an advantage in both familiarity and price.
All of which suggests that, though we do have a middle-class, in many respects it consumes fewer goods than the working class in the West. The economic transformation of India since liberalization is real, but it will be a while before the average middle-class Indian tosses her Lakmé aside for a Lancome, or trades in her handmade salwar kameez for a Ralph Lauren pantsuit. After all, why shouldn't globalization speak with an Indian accent?
55. Connecting to the Future
ONE OF MY FAVORITE PHOTOGRAPHS ABOUT INDIA was from the last Kumbh mela, the great religious festival that takes place four times every twelve years and is thronged by millions of Indian pilgrims. It showed a sadhu right out of central casting — naked body, long matted hair and beard, ash-smeared forehead and all — chatting away on a mobile phone. The contrast says so much about the land of paradoxes that is today's India — a country that, as I wrote many years ago, manages to live in several centuries at the same time.
There are other photographs I have seen over the years that illustrate the same phenomenon — laborers carrying TV sets on their heads, a bullock-cart transporting rocket parts, a motorcar overtaking an elephant, and so on. But there's something particularly special about the sadhu and his cell phone. Because it is in communications that the transformation of India in recent years has been most dramatic. In recent months, for the first time, seven million Indians subscribed to new mobile phones. That's a world record. In September 2006, India overtook China for the first time in the number of new telephone subscribers per month. We're still way behind China in the total number of cell phone users (just over 140 million against their 450 million), but each month the gap is narrowing. By 2010, the Indian government tells us, there will be 500 million Indian telephone users. China will probably still be ahead, but on a per capita basis there will be little to choose between the two.
Now, to anyone who grew up in pre-liberalization India, that's astonishing. Bureaucratic statism committed a long list of sins against the Indian people, but communications was high up on the list; the woeful state of India's telephones right up to the 1990s, with only eight million connections and a further twenty million on waiting lists, would have been a joke if it wasn't also a tragedy — and a man made one at that. India had possibly the worst telephone penetration rates in the world. The government's indifferent attitude to the need to improve India's communications infrastructure was epitomized by Prime Minister Indira Gandhi's communications minister, C. M. Stephen, who declared in Parliament, in response to questions decrying the rampant telephone breakdowns in the country, that telephones were a luxury, not a right, and that any Indian who was not satisfied with his telephone service could return his phone — since there was an eight-year waiting list of people seeking this supposedly inadequate product.
Mr. Stephen's statement captured perfectly everything that was wrong about the government's attitude. It was ignorant (he clearly had no idea of the colossal socioeconomic losses caused by poor communications), wrongheaded (he saw a practical problem only as an opportunity to score a political point), unconstructive (responding to complaints by seeking a solution apparently did not occur to him), self-righteous (the socialist cant about telephones being a luxury, not a right), complacent (taking pride in a waiting list that should have been a source of shame, since its existence pointed to the poor performance of his own ministry in putting up telephone lines and manufacturing equipment), unresponsive (feeling no obligation to provide a service in return for the patience, and the fees, of the country's telephone subscribers), and insulting (asking long-suffering telephone subscribers to return their instruments instead of doing anything about their complaints). It was altogether typical of an approach to governance in the economic arena that assumed the government knew what was good for the country, felt no obligation to prove it by actual performance, and didn't, in any case, care what anyone else thought.
So the cell phone revolution in India is exciting not only as a sign of India's economic transformation into a twenty-first-century success story, but as a symptom of something far more important, a change in the attitude of our ruling classes. The government is marginal to this success story, since we don't need it to lay telephone lines across the country anymore, and the private sector telecom companies develop their own connectivity. Perhaps the key contribution of the government has lain in getting out of the way — in cutting license fees and streamlining tariffs, easing the overly complex regulations and restrictions that discouraged investors from coming into the Indian market, and allowing foreign firms to own up to 74 percent of their Indian subsidiary companies. The Telecom Regulatory Authority of India (TRAI) has also been a model of its kind, a regulatory agency that saw its role as facilitating the growth of the business it was regulating, rather than stifling it with rules and restrictions.