Policy Perspective Archives - RAMA BIJAPURKAR

Modi’s LPG reform was different. It helped the poor immediately, no trickle-down timeline

admin — Sat, 17 Jul 2021 09:52:00 +0000

As we celebrate India’s 1991 economic reforms, it is also important to know the success stories of recent campaigns. None stand out like LPG.

Representational image | LPG cylinders | Bloomberg

In 2014, to get a gas connection for my domestic worker, I needed to go all the way to the chairperson of a PSU oil company and ask for a special dispensation because the beneficiary was from a lower income group and lived in a chawl in Mumbai with no rent agreement or proof of residence. “It’s a subsidised commodity so we can’t change the rules,” was the reason the oil company gave us for being so hidebound on KYC documents for address proof. She needed LPG, not just for convenience, but for earning more. She needed it to make chapatis for her entire family’s lunch dabbas and then show up for work on time before her office-going women employers left for the day. They paid more than those who were okay with 11 am housework.

In 2019, another domestic worker of mine in Mumbai wanted a gas connection. In addition to working in my house, she ran a food service business for her neighbouring street vendors – she cooked and her husband delivered the food. This time, after five rounds to her gas agent and some coaching from me on asserting her rights, she got her connection and two cylinders.

In 2021, a farm labourer wanted a gas connection in a remote village. I downloaded the forms online and filled them for him; he made one trip to the agency with photographs, Aadhaar card and bank passbook as residence proof (almost all Indian households have bank accounts now). It took three days end-to-end for him to get the gas cylinder at home.

While we are commemorating and celebrating three decades of economic reforms in India, we should also be evaluating, remembering important reform moves that have taken place in the recent past, especially one that actually helped the poor almost immediately and didn’t wait for the trickle-down timeline.

Why LPG worked

All my extended family’s domestic workers across India’s big and small towns have LPG connections now, as do 90 per cent of urban and 59 per cent of rural households (ICE360 survey data). Today, I have great difficulty obtaining even a small bottle of kerosene in Mumbai.

An even more gratifying sign of progress is that money for the LPG subsidy is now coming directly into people’s bank accounts. In 2014, when my domestic worker found that the money had actually come into her account, I remember the excitement, both hers and mine! It was the first broad-based Direct Benefit Transfer scheme in India (and the world’s largest). We had never seen money flow directly into our bank account no questions asked, and no middlemen to be nice to.

Getting a gas refill was a big pain not too long ago. Call the gas agency, get endless ‘engaged’ ringtones, then promises of delivery, and finally, no delivery. The service you got was totally dependent on who you were. Today, my worker orders LPG gas on her cellphone using Marathi IVR. She is not literate, has a gas cylinder picture on her contact list, and gets her cylinder in the same wait time as me, even though I tip the delivery man more than she can afford to.

Then came the ‘Give It Up’ campaign in 2015, where one crore people responded to PM Narendra Modi’s call to give up their LPG subsidy.

I remember a meeting at an oil major many years ago where the topic of selective subsidies had come up for discussion. “Why should Shah Rukh Khan and my driver get the same subsidy,” one of the attendees asked. The answer was that it was too complicated administratively to let some get subsidies and some not. Call me a ‘bhakt’ if you will, but the PM’s idea to ‘Give It Up’ through giveitup.in was sheer genius. It appears that the number of people giving up subsidy has gone down now, but with sustained promotion and an easier user interface, it can grow again.

How Consumer India works

The idea of providing gas connections to low-income households was never considered in the past. “Too expensive to transport” was the refrain. LPG is one thing that cannot be sachet-ised because there is no way to economically make smaller cylinders.

Hindustan Petroleum started an initiative called ‘Rasoi Ghar’ around 2004 — community kitchens with LPG, which was a pay-for-what-you-use facility. But that received lukewarm consumer response because taking your food elsewhere to cook it with others was not everyone’s idea of a great idea. Then came various versions of smokeless chulhas, but none of them was obviously as good as the real thing — LPG. Now, as part of our welfare State, we have given 83 million women below the poverty line access to LPG through Ujjwala Yojana.

Critics say, “Oh, giving connections is easy, but they can’t afford to buy LPG regularly, so what’s the point?”

A report in Hindu Business Line in September 2019 said that the Modi government was “stumped” by the fact that connections had increased but consumption of LPG had not in proportion. Why anyone who knows Consumer India should be “stumped” by this is itself stumping.

We need to explain to the critics that having access to an amenity is itself a huge benefit — one that can be used when you need to. Consumer India has always had, even at middle-income levels, a portfolio of products that are consumed for any purpose, optimising overall benefit and cost. Good detergent powder for office clothes, low-quality detergent for bedsheets and home clothes; two-wheelers for neighbourhood errands and commute to office, and a car to take the family out for social occasions; the list is endless. That’s how Indian families optimise their happiness and balance their budgets. Shampoo sachets, that much-celebrated innovation, now work as regular ‘once-in-a-while’ usage. So, there’s no need to stress about infrequent LPG usage. It’s not like building toilets with no water connection— a kind of deal stopper.

The LPG story of India is remarkable. Let’s celebrate it and push harder for ‘giveitup.in’ so that more low-income households have equality of access. As their incomes grow, they will, by choice, become firewood-free.

Rama Bijapurkar is the author of We Are Like That Only and A Never-before World: Tracking the evolution of Consumer India. Views are personal.

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Growth in income in last three decades: How consumer trends evolved in India

admin — Tue, 13 Jul 2021 05:44:00 +0000

The fact is that pragmatic consumption remains the hallmark of most of Consumer India’s spending.(AP Photo for Representation)

With income growth in the last thirty years and more supply at various price points, and better access to credit, there are a whole class of “have-somes” who are consuming now.

The last three decades have brought consumption front and centre into Indian lives, irrespective of age or income. The major life focus of all Indians is to strive to earn more and save more in order to buy a better quality of life for themselves and their family. The tenet that consumption is wasteful and best done in moderation has been replaced by “it’s OK to want it, now let’s see how we can afford it”. What hasn’t changed, though, is belief that the Almighty needs to lend a hand too. The PayTM sign at the Kedarnath temple high up in Himalayas says it all. The moral purification of consumption is complete.

Pragmatic Consumption

Popular narratives of India’s new consumption as hedonistic and a means of self expression are shaped by interactions with or anecdotes of the richest 10 or 20% of urban India, accounting for less than 10% of Indian households (HHs), and 15 to 20% of HH income (pre-Covid); less than 10% of Indian HHs have people with a regular job and salary, while almost 60% of this group does. The fact is that pragmatic consumption remains the hallmark of most of Consumer India’s spending.

Quality of life improvement is about getting a better house, be it a first-time bathroom or a second home; more water than the municipality supplies, brought in tankers to posh buildings or bastis alike; getting 24×7 electricity whether through inverters or Chinese rechargeable torches; better health care in America or from a private doctor or nursing homes (even in underdeveloped rural districts and in the poorest 20% of Indian households, 50-60% seek private health care).

Child-centric spending is huge but its focus is mostly about giving children a better shot at the future — education abroad, capitation fees, private colleges and even among the poor, private non-government schools, and tuition and coaching of all shades. Even modest income HHs will stretch to buy a timeshare resorts subscription because their children can have exposure to swimming pools and sophisticated augmented reality games a few weeks every year. They will buy a bike for the child to get to coaching class on time and fresh.

Two-wheeler purchases are mostly pragmatic productivity tools for the self-employed and smart phones have the utility of cheap entertainment, though good looks are a must.

Don’t Indians believe in spending for emotional not utilitarian payoffs and to get fun? First, pragmatic consumption, while appearing utilitarian, has strong status and emotional payoffs. Secondly, “affordable indulgences”, whether food, fashion, travel or entertainment are definitely seen as part of better living. As adman Santosh Desai puts it, for Indians now, life is not a condition to be endured but a product to be experienced. And Indians are excitedly seeking experience, provided the price fits the pocket.

There is mass market demand for everything, provided affordable supply exists. Whenever it does, demand explodes, as we have seen with air travel after Indigo or data consumption after Jio or apparel after Myntra or temple tourism in the Himalayas.

Borrowing to consume has also been morally purified. The cultural label of debt has changed from “irresponsible living beyond your means” to “responsible ways of achieving your goals of a better quality life”. Consumer India has mostly proved to be a responsible borrower with consumer durable and housing loans forming a large part of retail credit and debit cards outnumbering credit cards and by not borrowing when the future seems uncertain. After credit scores and CIBIL, they are even more cautious.

More volatility in Consumption

Today consumption is a lot more volatile than in 1991, despite economic growth. Earlier, there were only the haves and the have-nots, and it was mostly the “haves”, typically quite secure in their employment, who consumed, such consumption being further smoothened by controlled supply. With income growth in the last thirty years and more supply at various price points, and better access to credit, there are a whole class of “have-somes” who are consuming now.

But these “have-somes” have stayed small-time self-employed, in a more volatile economy with low resilience to income shocks (60% of India has less than 5-6% surplus income after all their expenditure and account for 50% to India’s household consumption).

Despite their optimism, they fall off various compartments of the consumption bandwagon frequently and get back on it when they can.

A more complex consumer khichdi

Earlier consumer categorisation was simple and binary. Today as exposure and experiences have increased, leading to more choices of how to live, it is a continuum with many shades of modern-traditional , westernised-Indian, rural-urban etc.

A rich land-owning joint family living in the village with children studying abroad or in the city, with cars and modern appliances, but still steeped in traditional ritual celebrations is one example that defies simple stereotyping, and there are hundreds more.

Food is a great metaphor for this. We commonly see vegetarian Mexican and Italian, “100% Belgian Waffles but no egg”, many shades of where and how non-vegetarian, north Indian homes now easily make dosas and south Indian eat Amritsari Chole (use a mix or just heat and eat or learn it on YouTube).

This fluidity compared to the rigidity of 30 years ago makes marketing more complex but provides far more opportunities to capture value.

But Consumer India is a spoilt brat who loves “and” doesn’t like “or” , so all permutations of physical and digital are here to stay.(Hindustan Times)

Blurring urban-rural divide

This blurring of boundaries is most evident in the rural-urban divide. Roads, the internet, TV, cars, cell phones have collapsed distances and provide a quantum jump in urban-like exposure to a lot of rural India. The diversification of rural India’s occupation away from agriculture provides better income increases and along with that, amorphous entities called census towns have morphed into something best called “rurban”. The most interesting thing about this blurring of the urban-rural divide in income and exposure is the creation at last of a singular mass market that straddles both (See Chart 3 –mass market at last).

Digital Moksha is here

The education deficit has still not been fixed in these last 30 years, but digital literacy has stepped in, providing knowledge, information, ability of various kinds hitherto not possible. Digital environments now provide status-blind service for those lower in the social hierarchy (humans discriminate, IVRs and chatbots don’t).

Middle Consumer India’s confidence is on the rise. A lot has been written about how digital ability creates livelihoods so I won’t repeat any of that. But in an everyday sense it helps too.

A vernacular medium person with middle school knowledge of English alphabets who doesn’t speak English now confidently communicates via text with customers and employers in Roman Hindi. WhatsApp helps you project who you are (check out your tailor or subziwala’s DP), improves social bonding, allows easy assertion of decreased social distance (see who is sending you good morning messages or festival greetings) and easy e-commerce without spending on a website. When temples, government services, train ticketing and mobile recharges have gone online, when you can find everyday information or get an SMS that saves you a trip and money, when 57% of the poorest 20% of households have a smart phone, Cyber Consumer India is well and truly entrenched.

But Consumer India is a spoilt brat who loves “and” doesn’t like “or” , so all permutations of physical and digital are here to stay.

The cookie toughens

Consumer India has seen prices come down and quality go up of a lot of things (think airlines, telecom durables) and seen inconvenience turn into convenience; e-commerce and China have done their bit too by dropping price-performance points, upping convenience and variety and providing better service at no extra cost and the new sharing economy says pay only for what you need to use. Amazon and Instagram have made “unorganised” or “boutique” suppliers mainstream and weakened the draw of big brands and reduced switching costs or costs of trying and experimenting. So, the “value conscious” Indian Consumer has become “value expecting and demanding” and loyalty has given way to promiscuity in purchaser choices.

The spirit is willing, the flesh, weak

Consumer India is very keen to consume more, but its income and income growth are the constraint.

The good news is that Consumer India’s income has grown substantially these last three decades. The bad news is that we are, and will be for a long time to come, a large economy with lots of modest-income consumers, a fact that we don’t honestly enough acknowledge. The good news is that income growth has happened across the board, geographically and by income classes, which makes for more and more robust consumer economy.

In the past thirty years, at an accelerating pace, Consumer India has grabbed all opportunities that have come its way to evolve both as a consumer and as a person.

The supply side has not kept pace and embraced the new Consumer India, focusing instead on operational efficiency improvement and scale building simplicity.

Rama Bijapurkar is co-founder of People Research on India’s Consumer Economy (PRICE). All data in this article is from ICE360 pan Indian surveys of PRICE

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PM Modi must push for a self-confident Bharat, not a self-reliant one

admin — Wed, 20 Jan 2021 08:58:00 +0000

PM Modi should use his considerable pivoting skills and turn Atmanirbhar to Atma Vishwasi Bharat (AVB) or self-confident Bharat.

Prime Minister Narendra Modi

The Prime Minister usually hits bull’s eye with the branding and messaging of his ideas. But he has had a miss with “Atmanirbhar Bharat”, stepping into the culturally loaded minefield of “self-reliance” —a noble word turned ignoble after 1991. Instead, he should have given a clarion call for “Atma Vishwasi Bharat”. His colleagues and acolytes would not have had such a hard time, splitting hairs, reinterpreting Atmanirbhar to mean self-sufficiency not self-reliance and arguing that the old xenophobic meaning of the word is consistent with the idea of globalisation.

He should use his considerable pivoting skills and turn Atmanirbhar to Atma Vishwasi Bharat (AVB) or self-confident Bharat. Signalling “yes we can” will work well with those sections of society eager to claw their way up the social status and income ladder (euphemistically called “aspiring India”) and with businesses and young Indians who strive to be global citizens in a world that, as all of us Indians know, is not inclusive, has never really liked us very much and gives us our due with great reluctance.

So far, our under-confident discourse has been all about “Can we really?” It has a parallel track: “Look at us, see how wonderful our heritage is”. But the latter is more of a defensive justification than a statement of intrinsic belief in ourselves. The pre-liberalisation Indian, still the ruling age cohort, has some degree of diffidence with respect to the rest of the world. Liberalisation’s children do better, many of them especially in the upper class have had student or work-related contact overseas and have had a chance to benchmark themselves. The generation born after 2000 has a lot less baggage, but all of them will go much further in the world with the tailwind of atmavishwas.

In AVB, “Make in India” would translate into not feeling paralysed that China dominates manufacturing for the world, but in believing that we can get our own small share of the pie, and working towards it by setting our own targets, devising our own strategy and making it happen our own way.

Instead of atmavishwas about being the pharma factory to the world and building it even bigger, we spook ourselves by saying we are hollow, we source active ingredients from China. The fact is that we used to make them ourselves until Chinese undercut us. We have the know-how and the manufacturing capacity to do it again, so we have the power to make or buy as needed. We enviously note that western countries are already giving the vaccine and stockpiling it, but when it comes to our own vaccine availability, we comment on approvals with not enough data, instead of giving it a mighty push. People who interact with the government for business approvals say that atmavishwas has to start with the executive establishment, whose first comment is: “Do we trust your data? How did you manage to do it?”

Unlike most countries, including China, we have a totally interoperable digital payments system that removes the power of closed loop groups and is a public utility with the capability to handle enormous volume at a very low price. We have created an IT services hub for the world, but we still say “Oh why do we not have products?” AVB would invest to create real global brands, not be content with exporting products around the world with name labels sold to faceless dealers, without visibility of actual user demand. In AVB, SMEs would force banks to find more appropriate methods to credit appraise them instead of saying “you have nothing to collateralise” and offering high risk pricing. AVB would make an effort to capture its own domestic demand instead of trying to sell the idea of our demand to lure reluctant FDI or let China dump in our markets because we say we can’t compete. AVB would celebrate that we have Indianised Amazon and our small producers are getting market access. AVB would also rap MNCs for violation of rules, when necessary, and not be swayed by cries of “If you do this, no one will invest in us”. AVB would use the worlds’ businesses to further its own cause, not complain about globalisation making us vulnerable. As a layperson, I believe that AVB is what we are seeing, at last, in our foreign policy.

Large swathes of India’s elite, including political parties, do not prefer an AVB. It will decrease the power distance between the masses and the classes; it may jeopardise their hard-earned positions on the global stage to be spokespersons for India.

AVB will solve India’s problems with (to borrow from C K Prahalad) “next practice” (new and better, leading the world) not “best practice” and will not dismiss the considerable Indian innovation in this direction as jugaad until foreigners bless it. AVB business schools will focus on creating a new body of management experience and research emanating from India that makes the world take note (and we have plenty to show there), and not focus on doing less relevant research that Western peer-reviewed journals will publish.

Yes, the line between self-confidence and smoking your own dope is thin, but we have so much to show already. Forget Atmanirbharta. Let’s take it up several notches.

This article first appeared in the print edition on January 20, 2021, under the title “Yes, India can”. The writer is a market strategy consultant

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‘Migrant’ has become a label that declares someone a perpetual outsider

admin — Fri, 05 Jun 2020 09:19:00 +0000

Passengers wait for their train at New Delhi Railway Station.

Before the COVID-19 pandemic, “migrant” and “migration” were emotionally-neutral words used to describe Indians who have moved their residence from one part of the country to another, temporarily or permanently. Now, with due respect to the media and to the wise people who speak on behalf of them, the word “migrant” has acquired an emotional charge, value judgement and social stereotyping, and a new slice of society called “the migrants” has been consecrated.

“The migrants” is now shorthand for a people who are poor, homeless, hungry, neglected by the states and Centre, usually from two or three of the poorest states and, most of all, who do not qualify for belonging to the city where they work. No one thinks of software folks who come from all over the country to the electronic city in Bengaluru in search of work as migrants, even though they too qualify for the “migrant” label. By the way, what do we call an upper-class person who visits parents and siblings in Andhra Pradesh for a few months of the year, lives mostly in Maharashtra and goes to Gujarat for work at certain times of the year? That’s me, but no one has referred to me as “one of the migrants”.

In today’s context, “migrant” has become a label that declares someone as a perpetual outsider, despite having crossed no national boundaries, and despite Indians having the right to live wherever they want without any need for any permission or registration. The government of Kerala, in a move much lauded by many, has called them “guest workers”. Guests are those who come to my house and will stay or go at my pleasure and enjoy privileges based on my levels of hospitality. How can an Indian state government classify Indians from other states as guests?

Some of us may remember the ugliness of the 1960s and ’70s when the Shiv Sena said that South Indians didn’t belong in Maharashtra. With our new, thoughtless use of the collective noun, “the migrants”, to describe people who leave Mumbai — when in trouble — to return to their immediate or extended families, we are rekindling that same flame again: The risky “insider-outsider” narrative for Indians within India.

Of course, many of us have a “home state”. It defines, often not always, my ethnic and cultural identity (not the same as my national identity), what I eat, what my mother tongue is, how I drape my sari, my religious and social customs. But it does not define my limits of belonging to any part of the country I choose.

The creation of a new class called the migrants makes us forget that they are people and all rules that apply to people, apply to them as well. Many ask, “Why are the migrants leaving? Why can’t they be persuaded to stay? Surely, they would stay if food was actually being provided?” and so on. The fact is, they are going to their other home for pretty much the same reason many upper-class kids are back from their colleges abroad to be with their families, or, why company executives may choose to relocate to their parents’ homes if they lose their jobs in Mumbai or Delhi and find the rents prohibitive. Because life at the other home may be safer and better than in a city where work has dried up, the living conditions are abysmal, and the risk of dying high.

So let’s replace the label starting now. “Casual-wage-labour” or “multi-state residents” would be a less dangerous, more specific label — a category, rather than a class or caste. Diaspora is a better collective noun than migrants.

But Hindi serves the purpose so much better — shramik means workers, labour or “the working class”. While this categorisation does signal socioeconomic-occupational hierarchy, it doesn’t signal “insider-outsider”. If we must use the migration word, “pravasi” is better: It has been infused with dignity and glory thanks to “pravasi bharatiya divas”. Or, even OCI (other state citizen of India) will do.

This article first appeared in print edition on June 5 under the title “Names And Labels”. Bijapurkar is the author of We Are Like That Only and A Never-before World: Tracking the evolution of Consumer India.

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Wider cost-benefit analysis will determine if WFH is a success

admin — Mon, 04 May 2020 10:22:00 +0000

The current narrative around WFH does not accommodate diverse income groups and women workers.

The bandwagon of opinion that work-from-home is the amrit (nectar of immortality) that the covid manthan (churning) has yielded is growing and speeding down an implementation path that is long on profit-and-loss benefit and short on people-centricity. Corporates love the cost savings, but a fuller analysis will show that it is a double-edged sword to be handled with care, quickly accruing quantifiable savings for companies, but risking slowly accumulating costs for employees and organizations, perhaps not quantifiable early on but not un-measurable. Implement work from home (WFH) by all means, but after data-driven weighing of costs and benefits all around. We would like to see an equivalent level of discussion on the people dimension as we are seeing on cost savings.

Decision-makers, likely older, with older children, better paid, hence living in larger houses with better quality household help, are deciding on WFH from their own contexts, oblivious of employee contexts of smaller homes shared by more family members now also having to double as work spaces, small children demanding attention when they see a parent, and lower quality household help. As for it being a working woman’s dream, ask them and you will find not all women can manage expected productivity and WFH — disturbing her is the default option if she is at home (surprising how problems resolve themselves when you are at the office!)

People-centricity requires data from the other side and acceptance that there are segments and, so, a one-size policy doesn’t fit all. Implicitly assuming that something is workable because it works for the five people who said it to me, or for the mancom, or even worse, that if it has worked in crisis times, it must work all the time, is irresponsible.

So, before jumping to the “WFH saves rental cost and delights employees” conclusion and rushing to implement, we suggest a pause to get data on people’s home environments, family demographics, the pain points of WFH and, even more simply, an anonymous employee vote on the matter. Also needed is for HR to develop sound conceptual models on what improves or hampers WFH productivity based on the nature of work of employees in different grades and in different roles and to devise a whole new way of managing productivity.

Neuroscience shows that the chemical balance of the brain shifts when in isolation leading to lower feelings of psychological safety, affecting creativity and openness to change. Social interactions have more to them than video meeting the way they are currently done. Neuroscience theory of “mirror neurons” suggests positive benefits of social interaction for teamwork, another holy grail of business leaders (The Star Factor, William Seidman et al and The Tell Tale Brain, V.S. Ramachandran).

Finally, it is also a business leader’s responsibility to think about the implicit contract that employers have with employees – to provide a “work place” that is geared to “work needs” (where you do not do meetings with your spouse, mother-in-law or toddler in attendance ). Also, “work identity” is a very strong builder of self esteem and social standing, especially in India. That’s why money was spent in the first place on well-designed offices in specific locations that people feel proud to go to. WFH takes these away. Signalling caring for employees cannot be done while ignoring what WFH of the chief wage-earner does to the very structure of the family dynamics.

Rama Bijapurkar is an independent market strategy consultant, and Smita Affinwalla is founder of Illuminos HR Consulting.

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Only half of India’s household consumption will come through post covid

admin — Mon, 20 Apr 2020 00:31:00 +0000

The so-called middle class, which is actually India’s richest 20% of households, accounts for 36% of consumption expenditure.

India’s household consumer demand is vulnerable and skittish because of dismal occupation demographics, lowly paid and uncertain livelihoods for most
Low food inflation and protection of urban salaried jobs may make it better, a spoilt agricultural season may make it worse

The ongoing discussion on the prognosis for consumer demand is currently based on extrapolations from supply-side data and macro-economic variables. This column aims to supplement it by providing household-level data on consumption, a “people-view” of those who cause this demand to happen.

India’s household consumer demand, the jewel in its gross domestic product (GDP) crown, is vulnerable and skittish because of dismal occupation demographics, lowly paid and uncertain livelihoods for most; and because most Indian households have very little “surplus income”, money remaining after covering their routine expenditure, leave alone their non-routine requirements and emergencies. Consumer demand commentators have been generally reluctant to link the dismal occupation demographics to consumer demand, beyond monsoon-dependent agriculture and, after demonetization, small business owners and their employees.

The covid-19 pandemic has forced us to acknowledge the universe of migrant—daily-wage workers—individual service providers who hunt for their daily bread, 32% of Indian households who contribute about 24% to India’s household expenditure. By contrast, the so-called middle class, which is actually India’s richest 20% of households, accounts for 36% of consumption expenditure.

The accompanying tables provide a map of consumption expenditure based on the share of household consumption expenditure contributed by different occupation groups further divided into the income level they belong to. Some occupation categories with similar earning vulnerabilities due to the present problems have been clubbed. The income levels have been so defined because our data shows that the bottom 40% of households have virtually no surplus income, the top 20% of households are discontinuously better earners and spenders (actually they are the so-called middle class that dominates our discourse on consumption) and the 40% in the middle are what we call the aspirational Indians in terms of consumption behaviour—spending more in good times and hunkering down in bad. The data comes from pan-Indian ICE 360° India household surveys (2014, 2016) and thinsamples of 2018, on how Indian households earn, spend, save, live, think and access public goods, done by our think tank and fact tank People Research on India’s Consumer Economy. Our aim here is to provide a people-based frame by which to construct reasonable risk maps for consumer demand, adjusted as policy initiatives unfold and depending on a business’s consumer profile. First, a look at rural India’s consumer demand risk map. Rural households account for 57% of all India household consumption expenditure (and 54% of India’s household income).

Table 1 shows the share of rural household expenditure (number in each square) contributed by households in each occupation x income category, and our reading of risk levels of each one’s expenditure holding in this environment.

Since our hopes are riding on a good harvest, a bit more detail on agriculture dependence of rural households: 22% of rural households are dependent entirely on agricultural business income, another 5% on agricultural labour income; 28% are dependent mainly on agricultural business income (all those in Row 1, Table 1) and 9% on agricultural labour. We have combined the last one with all casual labour (Row 5, Table 1). Another 30 %of rural households (some parts of those in Row 2,3,5,Table 1) have some dependence on farm income but since it is a minor component of their income and of total farm income, we have not segregated them.

A good harvest safeguards 30% of rural expenditure (Row 1, Table 1). Given lockdowns and their after-effects on the large spending segment of casual labour and on the micro businesses, and the drying up of remittance from urban Indian migrants, about 34% of rural expenditure will be severely stressed ( Row 4,5, Table 1). The salaried in rural India (Row 3, Table 1) are safer than the salaried in urban India because they are relatively more formally employed, so another 18% of rural expenditure is ‘safe’. Overall, we believe about 62% of rural spends will come through if agricultural activity can get done on time (‘safe’ expenditure plus half of the partially at risk expenditure). The hope also is that some part of the 29% of expenditure contributed by casual labour may be salvaged as it also gets used for agriculture.

Turning now to urban consumption, which accounts for 43% of total consumption, and is more lucrative because of higher income salaried households, but very geographically scattered. We expect that for the largest chunk of urban consumption—the salaried class—job security will be an issue, especially since urban salaried occupations unlike rural tend to be of all kinds, and less formal. Twenty percent of urban expenditure accounted for by the high-income salaried group is totally safe (Row 1, Table 2). This segment has surplus income, is also the darling of banks, and is not only earning during the lockdown, but has also been abstaining from consumption this last month—no beauty parlour visits, no eating out, no conveyance expenditure, no shopping sprees, a condition that is likely to last for quite some time. They can and will spend if suppliers who can address them make an effort at persuasion. For the rest of the salaried class (we expect job losses and restructuring and we expect only 8-9% of the 23% of consumption they account for to remain,

Of the small businessmen, micro entrepreneurs and solo service providers (Row 2, Table 2), we expect half of their consumption worth to materialize —15% of urban consumption lost or at high risk. Even if they do have surplus income from the past, the present jerk on their revenues will make them very cautious spenders; besides, all of them carry debt.

Another 9% of safe consumption is from agriculture income dependent families and those who live off investments, pensions, rent and remittances (Row 4,5 Table 2). So totally, we expect about 52% of urban consumption to hold (safe expenditure plus half of partially stressed expenditure).

Taken together, we assess that 58% household consumption will come through, contributed 61% by rural and 39% by urban India. Low food inflation and protection of urban salaried jobs may make it better, a spoilt agricultural season may make it worse. We would also like to point out that the salvaged potential expenditure, even after removing half of it, is still by far larger than the top lines of most large consumer companies—so this is not the time to give up and say the tide has gone out, but to continue to grow with targeted strategies to grab a share of the wallet.

Rama Bijapurkar and Dr Rajesh Shukla are co-founders of think tank People Research on India’s Consumer Economy

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Loss of income; ground-up assessment of recovery support to households

admin — Sun, 12 Apr 2020 15:02:00 +0000

Based on household-level data on occupation and income, a calculation for helping citizens get to their feet

A labourer carries vegetables in sacks at a vegetables market during the nationwide lockdown imposed to contain the spread of the COVID-19, in Chennai, Monday, April 6, 2020. (PTI Photo)

This column offers a ‘people view’ — household-level data — of Indian households to feed into the ongoing macro-level discussion about the right level of financial support needed to help citizens get to their feet following the loss of income caused by the lockdown, and where it should be deployed..

Presented here is a ground-up calculation based on what categories of jobs and job arrangements mainly contribute to the income of households, and what that actual income level is.

Macro-level discussions are based on a broadbrush understanding of occupation — large swathes of informality, agriculture dependence and migrants. We base our assessment on a more specific map of occupation and income level by town class for urban, and district development level for rural areas.

The data comes from our pan-Indian study, the ICE 360 database, 2016 and 2018, on how Indian households earn, spend, save, live, and access public goods.

Occupations & vulnerability

In the accompanying table, occupation categories are described and arranged in decreasing order of vulnerability based on the nature of work and income level; the table shows how large, how dominant, and how vulnerable or “at risk” each occupation category is, separately for urban and rural India.

We measure vulnerability by what percentage of households in each category fall into the bottom 40% of income earners, separately for urban/rural.

We chose 40% to define the vulnerable instead of the conventional definition of bottom 20% because our work shows that this entire group has very little cushion between income and expenditure even in good times; it’s always touch-and-go for them.

The poorest 20% don’t manage to meet even their routine expenditure required for day-to-day living, while the 20% above them have a slim margin in good times often destroyed by health or social emergencies or inflation.

Row 1 of the table shows the most vulnerable group by far of 91 million households, dependent on casual labour, a quarter of all urban Indian and a third of all rural Indian households, largely low-income.

Two months of income support at the lower end of the group’s earning level of Rs 10,000 in tier 3 and tier 4 towns, and Rs 8,500 in the less developed districts of rural, adds up to Rs 1.62 lakh crore – 0.85% of GDP.

Next most vulnerable are petty trader (hawkers, street vendors) households (row 2 of table), for whom one month’s income support can also fund inventory, which they can start rotating.

This group earns about as much or as little as casual labour with no U-R difference, and will require Rs 10,500 crore.

Next are the individual service provider households (row 3 of table) who are reasonably well off. Many have the skills for which pent-up demand already exists (beauticians and electricians for instance).

There is, however, a 30% segment within this occupation category that classifies as low-income, earns only slightly more than labour or petty traders, and needs support. One month of income support to them needs Rs 5,000 crore.

The support bill

The total support bill of Rs 1.78 lakh crore for this core vulnerable group of 10.6 crore households is about 0.92% of GDP. This group is only about one fourth of the Jan Dhan household base of 38.3 crore. There is another large group of 45 million salaried work-dependent households, mostly in the informal sector (row 4 of the table), but attached to an employer of sorts.

If the Prime Minister could repeat his plea to the employers of this group to please share and pay full salaries through the lockdown period, it would secure this group – the “India 2” that shapes our cities, and is a big enabler of “India 1”.

Most of them are fairly well off in large towns and rural areas, but with a small lower income segment equally distributed between small town urban and less developed rural. One month’s income support to this segment at the casual labour rate amounts to Rs 8,250 crore.

In our assessment, all told, the total one-time income support bill, assuming lifting of the lockdown as planned, amounts to about Rs 1.86 lakh crore, or about 1% of GDP.

What of small shop and micro business owners (row 5 of the table), who are hurting with no revenue, and who have fixed expenses?

They are better aided through business concessions or directed small ticket ‘working capital’ lending at rates far lower than what NBFCs would charge for unsecured lending. As rows 6 and 7 of the table show, the secure formally employed salaried group are very small relative to the others and financially well off, more secure, and have a savings cushion. Yet, they get a larger than warranted share of concern as all the talk of job losses and layoffs shows! Perhaps a change in our vocabulary to replace the word ‘jobs’ with ‘livelihoods’ would help us be more in tune with the reality of India.

(Rama Bijapurkar and Dr Rajesh Shukla areco-founders of think tank and fact tank People Research on India’s Consumer Economy)

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The brands of politics

admin — Mon, 19 Aug 2019 10:42:00 +0000

If brand-speak represents popular culture, we have less to worry about than some of us might think.

Image credit: Siddhant Jumde

The good news is that Indian brands unequivocally live in the world of customers and the people of India, and not in the world of politicians. They speak to people, mindful of commercial good sense, by tapping into popular culture; adding to the good news is that they still see popular culture as being quite far removed from the patriotic jingoism of today’s politics.

Every Independence Day and Republic Day, brands in India do special campaigns—citizen brands talking to citizen consumers—and the conversation is quite revealing of the way business thinks about the state of the nation.

We haven’t yet seen what the brand-speak for Independence Day 2019 will be, but it is a very safe bet, based on recent trends, that most will neither echo nor argue against the present political discourse on patriotism.

The politics of patriotism that we saw during the recent elections was distressingly centre stage, and has been carried over into the post-election political space too. The BJP portrayed itself as standing for a very muscular and authoritarian patriotism, with aggressive images of military and disciplinarian force.

It chastised those who asked questions or expressed dissent, with labels of ‘disrespectful to the country’, ‘anti-national’, ‘pessimist’ and more. There has been no alternative sketch of patriotism offered by any other contestant in the political space, except for noisy quibbles about the use of military images in political campaigns and questioning the officially declared numbers of casualties during the cross-border surgical strikes conducted on terrorist camps.

Media brands quickly dove in to take positions on the level of patriotism of those referred to in the election campaign as the ‘tukde tukde gang’, the ‘Khan Market gang’ and the ‘JNU gang’, and also on the patriotism—or lack of it—of the ‘kitne aadmi thhe (how many men were there)?’ question, straight out of the movie Sholay, some political parties had asked.

In this fraught atmosphere, non-media brands have thankfully decided to stay out of this arena and this tonality.

No commercial brand can be authoritarian and survive in this new age of customer power, liberalisation and female empowerment. But is there no payoff for commercial brands that take a stand on societal and political issues? Recent research in more developed markets shows that customers want brands that share their beliefs.

Are there any brands in India that are taking a stand and pushing back against this version of patriotism?

Among the established brands that made a clear statement pushing back against the new politics of patriotism was one of the big four of India’s business conglomerates.

Last year, for Independence Day, it ran a campaign showing India through the eyes of truck drivers. After talking of the varied sights, sounds and foods that they came across in their travels, one of the drivers says, “yeh jo ghar mein baithe television mein dikhate hain, usse bilkul alag hai mera desh (my country is different from what they show on TV).”

Another truck driver, from the northeast, says, “Kabhi kabhi bataana padta hai ki main yahaan ka hoon, par chalta hai, jaan boojh ke nahin poochhte hain (sometimes I have to tell people that I am from India, but that’s ok, they aren’t asking to offend).”

Yet another declares that “kuchh log ke chhote soch se desh chhota nahin hota (the small-mindedness of a few people doesn’t make the country small)”. The ad ends celebrating the truck drivers’ perspective, and suggests that we emulate their way of thinking.

Change in India comes slowly, one drop at a time, until the tipping point of a pushback against the prevailing political discourse is reached. Recently, a food service delivery publicly denounced a customer’s request for a Hindu delivery boy—there has also been a similar request and a not-so-public pushback from a cab service.

Perhaps this will give courage to younger, millennial andGen Z brands to stand up and say “we disagree with and disapprove of such talk”.

How do Indian brands express patriotism, and how has this changed over time?

The safe, popular and uncomplicated space that many have chosen includes admiration for the country’s achievements, recaps of past and recent milestones and salutes to the great scientists (while staying away from politically charged figures). An evergreen theme that many brands use to signal their identification with, and love for, the country is that of celebrating and recognising her unity in diversity.

Varieties of food, customs, traditions, festivals, sights, attire and musical instruments have been used compellingly. Interestingly, this used to be the official political discourse as well till not long ago, best captured in the wonderful, heart-warming, government-sponsored Doordarshan film Mile sur mera tumhaara (1988), involving leading musicians from around the country all singing differently but in harmony.

The film’s predecessor, Spread the Light of Freedom, made around the same time, had sportsmen and women from across the country carrying a torch in relay-again, meant to celebrate diversity and honour achievement in sports.

There haven’t been similar campaigns from the government since 1991, when the focus shifted from building society to building the nation’s economy. ‘Jai Jawan (hail the soldier)’, saluting the armed forces is another popular theme that still prevails, perhaps the only area where political discourse and brand discourse overlap.

Post 1991, for the next two decades, as India went from strength to strength, the theme of ‘nation building’ became a favourite. Electrical brands, food brands, bank brands, business conglomerates and large companies all vied with each other to present their nation-building credentials.

The very old companies chronicled their contribution from Independence onward, while the new ones talked of their scope and scale and their recent achievements. Market leaders in every category tried to make themselves synonymous with India and to suggest that they fuelled the flame of India’s diversity—’the taste of India’, ‘banker to every Indian’, ‘the nation’s history is our history’ and of course the most beloved ‘buland Bharat ki buland tasveer (a bold image of bold India)’.

With the generational shift in companies and communicators, how does young India think about such things? Are we seeing changes in the way brands approach patriotism, their role as Indian citizens, or their Independence and Republic Day ads?

One segment of it—a large one—merely sees these ‘special country days’ as a marketing opportunity. A hotel room aggregator exhorts people to take advantage of the long Independence Day weekend and travel to various parts of the country; another lot announces mega sales; yet another segment takes ‘freedom’ and ‘independence’ literally, promising freedom from cuts and scratchy beards and slippery tyres and the like.

If we grant these businesses their perception of consumerism as the highest altar at which to worship, there is still a clear segment of others who are not content with a mere chronicling and celebration of diversity, but are using their brand platform to ‘help build a better India’-taking the nation-building theme to the next level.

If earlier the theme translated into ‘built factories, introduced new products, provided jobs, worked with all segments of society’, it is now beginning to be interpreted as ‘promoting desirable behaviours of a nation with a progressive society’.

There are ads around ‘soch badalna hoga (ways of thinking need to change)’, ‘opportunity for everyone to rise’, ‘what has education done for you’ and so on. Women’s independence, safety and freedom from social restraints is a popular theme; environmental protection (not ‘Swachh Bharat’ slogans) and freedom from plastic is another; inclusion or the general ‘freedom to be’ and equal rights for under-privileged sections is another; and a gentle and positive comment on the move to a ‘no bribery and corruption/fast transactions’ environment from a digital payment brand are all welcome indicators of what we will see more of in the future.

Recent WhatsApp messages doing the rounds talk of ‘swadeshi-videshi (domestic-foreign)’ brands, bemoaning how the behemoths among US and Chinese brands are taking over the Indian market and blaming the government for not enabling the rise of Indian brands.

The Bombay Club of 1991 thinking back again? No, that ship of patriotism has sailed. The new theme around swadeshi-videshi is to get our fair share of our own market by competing fair and square and doing what China is doing—creating local beaters of global champs.

Nirma, and now Patanjali, rose on an anti-MNC platform. However, it is not patriotism but fair pricing that is their proposition. The ‘made in country X or Y’ national branding is now beginning to lose all its previous perceptions as supply chains have gone global. Orders from a website in Asia go to a US address; the shipping is from Europe, while the tag says ‘Made in India’.

If brand-speak represents popular culture, we have less to worry about than some of us might think! The days when brands kowtowed to politicians are over. The days when they push back and take a stand if needed are yet to come, but there are definitely green shoots on the horizon.

Rama Bijapurkar is a leading Indian consultant on market strategy and consumer behaviour

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First, let there be investment

admin — Fri, 12 Jul 2019 11:44:00 +0000

Budget does well to focus on investment and infrastructure rather than propping up consumption to boost the economy.

There are few takers for the notion, despite data, that for most of consumer India, unless incomes grow there is no way consumption can or should grow. (Illustration by Suvajit Dey)

The 2019 Economic Survey’s focus on investment as a key driver of economic growth is very welcome. It changes the alarming paradigm that business and media have been working with — since investment is not happening, in order to bolster slowing economic growth the focus of policymaking should shift to boosting consumption, with cash transfers, reduced excise duties, decreased interest rates on retail loans and so on. Why investment has slowed down and how to revive it has not received even a fraction of the public attention that consumption has.

There are few takers for the notion, despite data, that for most of consumer India, unless incomes grow there is no way consumption can or should grow. Only the richest 20 per cent of Indian households (R20), which incidentally is the so-called middle class (based on most people’s mental models of the middle class) have surplus money (income minus expenditure) to grow their expenditure faster than their incomes. The rest have virtually no surplus even in good times.

Consumption growth when economic activity is slow can only come from more consumption by R20, of the things that they consume, much of which is discretionary. Consumption growth from the rest can’t happen unless their incomes grow. This can’t happen if investment is slow resulting in slow economic activity, and hence lower earning opportunities. This problem is even more pronounced given that the majority of Indians, including R20, are self-employed and don’t get a regular income. It is not prudent to say “let them eat cake” by lowering interest rates and encouraging more people to borrow to consume. Most will be hard pressed to pay their EMIs, even at lower interest rates. Economist friends patiently explain why getting a GDP growth number on the back of an unreal, propped up consumption is a good thing to do. “Think of it like a glucose booster shot for the economy,” they say. But are booster shots the best way to deal with a body weakened by ailments?

From this perspective, it is very reassuring that the Economic Survey and Union Budget have stayed away from administering such booster shots as the mainstay of the economic revival strategy, and have focused instead on addressing the fundamental problem of increasing economic activity. Through the mantra of “investment-led growth”, the Economic Survey puts the highest priority on strengthening the supply side to rev up economic activity. Through the planned massive infrastructure push in the Budget and the focus on what the Economic Survey calls behavioural nudges, the life-foundation of consumer India, the goose that lays the golden egg of consumption is sought to be strengthened.

It is well known that every unit of improvement in living infrastructure and human capital creates a disproportionate and sustainable jump in consumption over time. The Economic Survey does mention stimulating consumer demand but more in the context of better administration of the minimum wage system. It mentions, in passing, the link between the minimum wage for the poorest sections of citizens and strengthening the middle class, but that is a leap as wide as the chasm that exists in income and social distance between them. It, however, stopped well short of suggesting additional money for the purpose of directly stimulating consumption.

It is also time for the media and India Inc. to buy in and shift the narrative around corporate financial performance from what the government should do to make the macro environment less hostile and more supportive, to what individual companies can do by way of strategy, ability and efforts to improve their performance when consumer incomes are growing slowly. The government of India is not India Inc’s marketing director in charge of making top lines grow.

Growing revenue and profits in times of slow consumer income growth can come from competing across categories for a larger share of the enormous household consumption expenditure that already exists, even after removing around half of it for essentials. In tough times, summer holiday travel and new two-wheelers compete, as do premium toiletries and new clothes. Market share growth is another obvious route available. The last quarter of 2018-19 underscored these two points. Even as the media yelled “doomsday, consumption slows down”, there was a wide variation in levels of performance across different product categories and companies.

Slowdowns in consumption are perceived when expectations based on past growth rates are not met. Fundamental changes are afoot in consumer India, which may require an adjustment of expectations.

Consider televisions. Recently, a stock market analyst said that the macroeconomic scenario is really worse than what we thought because of poor television set sales, despite the World Cup. From the consumer point of view, the answer is clear. The 30 per cent of Indians who are yet to own a TV are seriously low income and will buy one as soon as they have a steady income. The replacement and upgrade demand that had fuelled the category in the past is now more discretionary than ever because the quality and features and service levels of existing TVs are pretty good. Many people are choosing to upgrade their mobile phones instead. Home theatres, once a favourite upgrade category for the rich, are not so hot any more because going to England to watch the match (as you can see from the crowd shown on TV) is the new cool thing.

Let’s take the case of cars: Creating a more favourable macro environment for car companies to do well isn’t necessary. Car sales are restricted to R20 households (a chunk of whom are in rural areas) and ownership in R20 is still so low that there is plenty of room for growth. There’s plenty of surplus money with these people to buy a car and banks love to lend to them. However, if they are choosing not to buy then stimulating consumption by the government is just tapping into their greed and giving money to the poor will not help. It has to be the car companies who tempt them to buy, making long term-short term trade-offs.

The two-wheeler story is different. Two-wheeler buyers come from all income groups across the board, in both rural and urban India, and in the absence of a humming investment-led economy offering plenty of work, and with rising fuel prices, significant buy, replace or upgrade sales aren’t going to happen even with stimuli. Two-wheeler buyers are the heart of the Indian consumer and revving up the economy will make them immediately upgrade their foremost productivity tool.

Indian consumers are dying to consume more. Consumption growth will follow income growth, which will follow more available work. That’s why the push for investment and public goods in this budget, rather than a push for propping up consumption, is so important.

Bijapurkar is the author of We Are Like That Only and A Never-before World: Tracking the evolution of Consumer India

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Limits of handout politics

admin — Mon, 01 Apr 2019 11:54:00 +0000

Congress may be talking to economists and experts. But is it listening to the voter?

Written by Rama Bijapurkar, Rajesh Shukla

Bijapurkar is the author of We Are Like That Only and A Never-before World: Tracking the evolution of Consumer India.

Congress chief Rahul Gandhi.

Congress president Rahul Gandhi’s plan for a “surgical strike on poverty” is built around some key numbers: Rs 12,000, the target minimum monthly income for a household; 5 crore households (amounting to 20 per cent of all Indian households); Rs 6,000, their average monthly earning; and, therefore, Rs 6,000, the monthly amount required to be transferred to each. Since his political and financial calculations hinge around these numbers, a fact check is useful, more so because neither he nor the eminent people he consulted have told us where these numbers came from.

Official government surveys measure household expenditure, not income. Hardly any robust household income study exists in India, because adopting and administering rigorous internationally prescribed measurement methodology and designing samples that effectively capture the complexity of India are tough and hellishly expensive. We know this from our own experience of doing such studies, the most recent of which was in 2016 (www.ice360.in). It gave us India’s household income distribution (share of income “owned” by every 10 per cent slab of households from the richest to the poorest). Not much has happened to disrupt income distributions since then. So, we were able to estimate today’s income of Indian households by applying our survey income distribution to India’s total household disposable income for 2018-19, a number put out by the government.

Based on our data, the good news for the Congress is Indian households are not as poor as they assume them to be. Only the poorest 10 per cent of Indian households, and not the poorest 20 per cent, earn less than Rs 12,000 per month. Their average income is Rs 9,500, not Rs 6,500 as assumed. The next richest 10 per cent earn about Rs 15,700 a month. Given decreasing family sizes, there are 30 million households in each slab, not 28 million.

To reach the target monthly income of Rs 12,000 per month, only 30 million households need a cash infusion and of only Rs 3,000 per month instead of the planned Rs 6,000. This slashes the money requirement to a quarter of what their plan assumes. Of course, the ability to identify these households, as has been pointed out several times, will need some serious work, but it is not impossible to find a set of household characteristics that act as a proxy for income.

Let us now examine the reasonableness of the minimum income target of Rs 12,000 per month. We have been tracking household surplus (households’ income minus expenditure) since 1990, and find that the poorest 20 per cent have always had to spend more than they earned in order to live, and they invariably are trapped in debt. It is only the next richest 20 per cent of households that manage to have an 8 to 10 per cent surplus — still vulnerable to even slight price shocks, but mostly able to live within their income.

Householders think about their expenditure as “routine” and “non-routine” (for example, one-offs like health emergencies or social ceremonies or capitation fees for college admission in higher income groups). Households who earn Rs 9,500 per month (the average income of the poorest 10 per cent) barely cover even their routine expenditure. Households earning Rs 15,700 per month (the next richest 10 per cent) cover their routine expenditure and manage a surplus of around 10 per cent, but are in debt after their non-routine expenditure. Only the households in the rung above them achieve surpluses even after non-routine expenditure. So, the midway number of Rs 12,000 to Rs 13,000 seems to be a reasonable minimum monthly income target to have.

Elections, however, are not won by spread-sheet arithmetic. So, we looked at the state-wise distribution of the poorest 10 per cent of households who qualify for this cash infusion. The answer is sobering: This scheme will hardly make a dent in many states. The proportion of India’s poorest 10 per cent households present in a state to total households in that state is highest at 21 per cent of Jharkhand followed by 15 to 19 per cent of Bihar, West Bengal, Odisha and Madhya Pradesh, in that order. Surprisingly, it is only 12 per cent of UP, 13 per cent of Chhattisgarh, and 10 per cent of Rajasthan. In Andhra Pradesh, Maharashtra and Gujarat, the proportion is 5 per cent whereas it is 8 per cent of Telangana, 9 per cent of Assam, and even lower elsewhere. So, in non-BJP, non-Congress states like West Bengal, Odisha, where the proportion is higher than 15 per cent, the Congress’s poll proposition of MIG may fragment votes to the BJP’s advantage. Expectedly, 83 per cent of the poorest 10 per cent households live in underdeveloped rural areas, 11 per cent in big towns and adjoining villages.

Beyond these facts, there is the issue of what people in an aspirational society want, something Prime Minister Narendra Modi understands better. Cash transfers are welcome, but what they desire is ways to earn more, for their children to be a part of the higher earning, better life possibilities that they see around them. If we examine the occupation of the chief wage-earner of these households, about half of them are daily-wage labourers, 30 per cent non-agricultural and 16 per cent agricultural. Surely, the Congress remembers what the BJP has forgotten: The real magic of MGNREGA was its ability to boost incomes and bargaining power by serving as a wage benchmark. Another 22 per cent are tiny farmers, and working schemes exist in some states that manage both their financial and aspiration needs. Yet another slab of 22 per cent are households living off remittances from children and rent, typically older people.

The real tragedy is that the highest education level attained by any family member in these poorest 10 per cent households is primary school for 45 per cent and far less for 44 per cent. No party is addressing this. Bundling capability building for social mobility with MIG (minimum income guarantee) will be the winning formula. Having listened to economists and experts, maybe it’s time to also listen to the customer-voter.

The writers are co-founders of fact-tank and think-tank, People Research on India’s Consumer Economy & Citizen Environment .

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