- 3 years ago
n October, Outlook Business puts the spotlight on India's shrinking middle class. Suchetana Ray, Editor, Outlook Business and Sunny Sen, CEO, ConsCent discuss the crisis the middle class is facing and other stories that make the issue power-packed.
Read the issue here: https://www.outlookbusiness.com/categ...
For more insights, log on to wwww.outlookbusiness.com
#Business #OutlookBusiness #OutlookMagazine #OutlookGroup
Read the issue here: https://www.outlookbusiness.com/categ...
For more insights, log on to wwww.outlookbusiness.com
#Business #OutlookBusiness #OutlookMagazine #OutlookGroup
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NewsTranscript
00:00 Hi, hi Swati.
00:02 Hi Sunny.
00:06 Hi, how are you?
00:08 I'm good Sunny. Should we begin on a very formal note instead of saying hi to each other?
00:13 Yes. Hello and welcome to Consent's first Instagram live.
00:18 Today I have Suchetra Ray, the editor of Outlook Business with us.
00:24 This is for a very interesting subject. It is about Outlook's recent cover, India's Shrinking Middle Class.
00:33 Suchetra, before we jump into a list of questions which I have prepared on my mobile phone,
00:40 there are many of them. I just wanted to ask you, why did you, this is a very scary topic, India's shrinking middle class.
00:50 Being a journalist before starting Consent, these were things that we were really worried about, right?
00:57 Yes.
00:58 Why did you choose this subject and is it really that scary?
01:01 And what does it mean that India's middle class is shrinking?
01:04 Does it shrink the economy as well? Does it reduce the ability of people buying goods?
01:11 Let me give you a very honest answer, Sunny. Let me give you a very honest answer.
01:15 Why I chose the topic is very, very personal.
01:17 I have been thinking of buying my second house and I was thinking whether I should make the decision now or not.
01:23 I looked at my bank balance and I realized that this is perhaps not the great time.
01:27 And then when I looked at my life in the last one decade, I realized that there is something amiss.
01:33 And that is what got me thinking.
01:35 Then friends and colleagues, they led me to a research by Pew Institute.
01:40 That's an American survey and research agency.
01:43 And I found the data very interesting. In fact, about a year back around this time, Outlook India, which is the main magazine from the group,
01:50 they had done a story about people being pushed into poverty by the pandemic.
01:55 What I wanted to know is that is the pandemic the real devil here or did the entire problem of India,
02:01 which is downturn, which is also the fact that we're not growing at the pace at which we should grow,
02:06 at the pace at which our policymakers promised us to.
02:10 Is it the pandemic, the problem here or it began much earlier?
02:14 So that is where we all started. That is where me and my colleague Neeraj Thakur was written the cover story here.
02:20 I also pulled out the magazine. So that's where our probing began.
02:24 And we have the cover. So before we get into those, that nitty gritty, can you tell me
02:36 middle class that we are talking about right now? Can you define the middle class for us?
02:42 OK, then you want to know whether you're middle class or not. I'll make that very easy for you.
02:45 So as far as Pew Research is concerned or even the data of the various data agencies that you have here,
02:52 they define anybody to be in the middle class who's earning between and I have all the data in front of me as I talk to you,
02:58 between $10 to $20 a day, which roughly translates to about 22,000 to a little bit more than 44,000 a month.
03:08 So by that strict definition, maybe you are not a middle class.
03:11 But as the founder editor of Outlook would say, you are upwardly mobile.
03:17 Right. Great. OK, interesting. So what is happening? Is the middle class shrinking?
03:22 And why is this? Why is the middle class shrinking? And what is the bearing on the entire country's economy on this?
03:29 Sure. So from here on, I'm going to paint a doomsday picture and you might like the one which was proposed in 2012, which never happened.
03:43 Yes, something like that. Yes. But the thing is that, you know, many, many people ask me that why?
03:49 Why is the middle class shrinking? So let me tell you first why.
03:52 And then let us talk about what is the hope for India, really?
03:55 Why is it so important for the Indian middle class to sustain itself, in fact, grow is because India's growth story is largely consumption led.
04:04 To break it down, this is what we broadly call the demographic dividend of India.
04:09 That is, it is for people like you and me, the purchases that we make, that foreign companies come to India, they invest and they stay invested.
04:17 Simply that is India's growth story. Now, in this growth story, suddenly what was noticed and this is data that we have independently sourced, sliced, diced and presented to you in this cover is that if you look at data from 2009 onwards, the great financial crisis of 2008 happened.
04:35 India, a misnomer there, did not get it, wasn't very badly hit.
04:39 But 2010 onwards, if you look, the consumption story, you and I were still buying our first cars at that time.
04:45 We're still looking at making a lot of purchases, but that was not led by the increase in our salaries, actually, because we were used to a certain lifestyle.
04:55 We were making those purchases. Those consumptions came out of our bank balance.
04:59 That's what data showed us, that while the middle class continued to purchase things, the consumption story remained somewhat intact.
05:06 It was not backed by increase in your salary or increase in your income.
05:10 That is what is perhaps a warning bell for any economy which aspires to grow at a double digit.
05:17 Right. And what is happening now?
05:20 So, first, the problem began, perhaps, as I said, in 2010, the high inflation years, the Manmohan years, more than a decade ago, the high inflation years of Manmohan years actually made it worse.
05:33 Even if you were getting an increment, Sunny, the thing is that the inflation was not, your salary increment was not keeping pace with the inflation rate at that time.
05:42 Things started looking up, but demonetization really came in in 2016.
05:48 And that has been a huge factor as far as the middle class is concerned.
05:53 The middle class, the problem here is that there is a certain growth at which poorer people aspire and they become a part of the Indian middle class.
06:02 The rate at which this growth has to happen for India to remain the sweet spot, as they say, is not happening.
06:09 So while Indians are very aspirational, the rate at which people should migrate from a lower income level to a middle income strata, that rate somewhere has got very badly jeopardized.
06:20 And what is jeopardized is the first generation, because it's medium and small scale industries of India.
06:26 They are the main source of GST. GST hit them very badly.
06:30 And now you have the pandemic. So overall, it has rather been a double whammy or a triple whammy for the Indian economy.
06:37 Right, right. So, so, so the crisis is for real.
06:44 Yes, the crisis is very much for real, unless we actually come across some sort of a policy decision from the government, where we perhaps save the rest of this decade.
06:56 Right. So is, is that, do you also, do you also think that apart from the policy, there are, there are other ways to come out of this?
07:05 Because India has been the consumption economy of the entire world, right?
07:09 So whether it is for manufacturing companies globally or FMCG companies globally or anybody else.
07:15 So everybody looks at India as a place where there is a huge population who will buy products.
07:21 So are there other ways to come out of this apart from just good policymaking?
07:26 But because that doesn't seem to happen so soon.
07:29 First, policymaking and also the second issue would be to identify the problem that we are going through.
07:36 You've been an ace auto correspondent and auto reporter while you were a journalist.
07:41 And you will notice the number of foreign automakers who've exited the country.
07:46 Right. Ford, for instance, they tried really hard. We all know that.
07:50 There were certain models that they had, which were actually game changers.
07:53 What went wrong? You know, Sunny, what went wrong is that they realized that perhaps in the next decade,
07:58 you and I will not buy for you the third car, for me the second car.
08:02 And even if we buy, it might not be Ford. So that is what is changing decisions of a lot, large number of automakers.
08:09 Apple, for instance, they have had plans on India.
08:13 Why aren't they really setting up a center here with a manufacturer in India?
08:17 Perhaps they're not very sure that you and I and many others will buy their products to make the manufacturing center here a viable option.
08:26 So therefore, we have to create more people coming into the middle class and also upwardly mobile, more people moving into higher, higher income zone.
08:37 That is what we have to do. The problem lies with perhaps us realizing what the problem is.
08:42 And when I say us, I mean policymakers, as I mentioned, MSMEs, a big chunk of jobs come from there.
08:48 So perhaps that is where the government should look at to boost that big companies.
08:53 The government has been doing lots to push big companies to invest in India, but they aren't.
08:59 You know, if you look at figure, there is no private investment happening in India in the last many, many years.
09:04 It's a problem which began perhaps way back in 2011. The problem continues.
09:09 Is it trust deficit? I don't know. Is it the pandemic? I know for sure it is.
09:14 The faster we come out of the pandemic as far as the growth story is concerned, the better for India.
09:19 Right. So at least I can talk about myself that during the pandemic and thereafter,
09:25 I have been pulling a little bit out of my saving every month to manage things or to buy things.
09:31 And as you said, that even even about a decade ago, people were pulling out of the savings to buy things that they really wanted.
09:40 Right. If this continues, in my case, it's a little different, as you know, Sushetna.
09:45 But but if this continues, then at one point of time, all savings get depleted.
09:50 They won't have savings. And at that time, the quality of life dips. And with that, everything else does. Right.
09:58 And that is what you yeah.
10:02 People pull out of their savings, you know, to lead a good life.
10:05 Why wouldn't they contain themselves in the money they earn? That's why.
10:09 That's because we're aspirational. You watch the film Crazy Rich Asians.
10:13 Yes. You'll get your answer there. Yes, you will get your answer there.
10:16 In the Netflix. It's a film on Netflix. It's called Crazy Rich Asians.
10:20 And it actually very well encapsulates the problem that we face.
10:24 You know, we are an entire generation of aspirational people.
10:28 So I interviewed about three people, three individuals who belong to the middle class for writing this story.
10:35 Their stories are very their life stories are very similar.
10:39 If you look at them, they got their jobs around 2008, around the time when the great financial crisis, GFC, as it's called, was hitting India.
10:48 They were extremely surprised that it did not have a massive impact on them.
10:51 If you remember 2009, Sunny, did it have a massive impact on you? Perhaps not.
10:55 You thought that policymaking had insulated you, but there was an impact.
10:59 What was happening is that private companies were not creating jobs for you.
11:03 So while you had your first job, maybe the shift to the second job wasn't that easy.
11:07 So therefore, your salary wasn't keeping pace with your lifestyle, because if it was your first job around the 2000, around 2006 or 2009, you were used to a certain lifestyle.
11:17 You had your aspirational growth chart really mapped out.
11:21 You didn't want to compromise on that. That's human psychology.
11:24 So if you don't want to compromise on that, what do you do? You pull out of your savings.
11:28 So this is this is the story about the crazy, poor middle class.
11:33 The hopelessly aspirational middle class. Let's make another film.
11:39 But, you know, this is a very, very interesting subject.
11:44 And you just didn't speak to that. It's not just only one story.
11:47 You also speak to the speak to the principal economic advisor, Sanjeev Sanyal.
11:54 What what what were your key takeaways from your conversation with him?
11:59 So he is he's an eternal optimist.
12:04 He's an eternal optimist. In fact, if you meet him, his optimism is optimism can become a
12:08 optimism can be called infectious at one level.
12:11 So he has absolutely great designs.
12:18 Thank you very much. Coming from you. That's a huge compliment, Sunny.
12:21 I know how you how hard you are on me as far as design is concerned.
12:26 So as far as Sanjeev Sanyal is concerned, he says that the policy decisions that began from, say, August 2020 are going to be the game changers.
12:35 So he's going to be the game changer.
12:38 And I think that's what he's going to be doing.
12:40 And I think that's what he's going to be doing.
12:42 And I think that's what he's going to be doing.
12:44 And I think that's what he's going to be doing.
12:46 And I think that's what he's going to be doing.
12:49 And I think that's what he's going to be doing.
12:51 And I think that's what he's going to be doing.
12:53 And I think that's what he's going to be doing.
12:55 And I think that's what he's going to be doing.
12:57 And I think that's what he's going to be doing.
13:02 And I think that's what he's going to be doing.
13:04 And I think that's what he's going to be doing.
13:06 And I think that's what he's going to be doing.
13:08 And I think that's what he's going to be doing.
13:10 And I think that's what he's going to be doing.
13:12 And I think that's what he's going to be doing.
13:14 And I think that's what he's going to be doing.
13:16 And I think that's what he's going to be doing.
13:18 And I think that's what he's going to be doing.
13:20 [INAUDIBLE]
13:48 Right, right.
13:49 [INAUDIBLE]
13:54 Right, right.
13:56 So apart from the story on the shrinking middle class,
14:02 Sanjeev Sanyal's interview, what are the other interesting stories
14:07 that-- I'm sure that you love all the stories.
14:09 That's why you put it in the magazine.
14:11 But what--
14:12 [INAUDIBLE]
14:14 Right.
14:15 But what are the-- for people who are viewing us,
14:19 what are the other stories that you would suggest they should read,
14:23 and why?
14:24 Sure.
14:26 So as so many of you know, this is the cover.
14:30 The book in yellow.
14:31 This is the cover.
14:32 This has a number of stories.
14:35 So Sanjeev Sanyal's interview is actually
14:37 juxtaposed with Ratnam Roy's interview.
14:39 It's like a debate on paper.
14:42 Apart from that, there's a story about foreign companies
14:45 coming to India, whether they want to stay invested or not.
14:48 So we look at that.
14:49 There are interesting stories on the startup sector.
14:51 We look at Benangtu.
14:52 We look at the profile of that.
14:54 It's a very interesting story where we actually
14:56 do this how.
14:57 We were talking about just shutting down in 2000.
15:01 Imagine there now--
15:02 [INAUDIBLE]
15:05 That is there.
15:06 And another important thing of mine is the NFP story,
15:09 the non-profitable token story.
15:11 You must read that to know where cricket fandom, football
15:16 fandom is taking us.
15:17 NFP is a new concept.
15:19 There's no fundraising aspect.
15:21 This one?
15:22 This one you're talking about?
15:23 Absolutely.
15:24 And the picture that you have, the old monkey,
15:27 that's the patented NFP.
15:31 Oh, really?
15:32 Yes.
15:33 OK.
15:34 We took special permission to print that.
15:36 OK, great.
15:37 And you forgot this amazing story.
15:40 I'm so sorry.
15:41 Yes, I did.
15:42 [LAUGHTER]
15:44 I'm so sorry.
15:45 Yes, that's a fantastic story.
15:47 There's actually a [INAUDIBLE] in the magazine.
15:49 It's called "Future Sets for CEO."
15:51 And the story this time is about Sharmali Kulkarni.
15:55 Most people don't know she's a great-granddaughter
15:57 of Mahatma Gandhi.
15:58 She's also known as the robot queen of India.
16:02 It's a fascinating story where she
16:04 looks at manufacturing in India and where we are headed.
16:08 We also have a great story on IBM and the R&D center there.
16:15 And what that R&D is working on as far as growth
16:19 in the post-pandemic world.
16:23 Right.
16:24 It's a nice, fully-packed magazine, folks.
16:28 And you can choose any of the stories that you want to read.
16:32 You can buy the magazine.
16:33 But online, you can go to outlookbusiness.com.
16:37 Choose any of the stories that you want.
16:39 Pay a tiny amount, which is through consent.
16:43 The cover story is for 20 rupees.
16:45 All the other stories are for 20 rupees.
16:47 And I urge everybody-- yeah.
16:53 So Sushmit says that there are voice echo issues.
16:58 I think--
16:59 Yes, I think you can see that.
17:01 Right.
17:02 Yes.
17:03 But great, Sushetna.
17:05 So all of you folks can just pay for the story that you want.
17:11 You can buy the entire magazine.
17:13 You can unlock all the stories at one go by paying just 75 rupees.
17:18 It's an awesome cover and the remaining-- the cover package to read.
17:24 And it's awesome.
17:25 There are a bunch of stories.
17:26 And you would love it.
17:29 Thank you, Sushetna, for joining us on the first Instagram Live.
17:33 And I wish you a lot of luck with the next cover.
17:40 And I'm hoping to see you once you launch the next cover.
17:43 Absolutely.
17:44 We'll be right back.
17:45 We'll be in place.
17:47 Thank you.
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