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Batting Blind: The Case of Household Income
The Economic Times - October 2001

This article is further to Mythili Bhusnurmath's article "Batting Blind can never get you anywhere", lamenting the lack of credible statistics about the economy, and the consequent 'batting blind' on policy decisions. Now that someone has declared that the emperor has no clothes (the GDP growth number for last year changed three times, and we aren't sure whether to worry about the fiscal deficit as a percentage to GDP), perhaps it is also a good time to admit that we are quite clueless about what the income of Indian households really, truly is.

A Consumer Centric Analysis of Market Growth
The Economic Times - May 2001

The consumer goods slowdown has been a major topic of discussion, as corporate results have rolled out. It is now official. The waiting list on the Telco truck, once seen as a lead indicator of the state of the economy, has now been replaced by Hindustan Lever's top line growth.

In a previous column in this paper, I had suggested that what was more likely to upset our economy was, companies failing due to bankers' reluctance to lend, than evaporating consumer demand. I had, perhaps naively, suggested that instead of the government spending good money to bail out consumer demand, they should spend it to incentivize banks to lend to those companies, which are otherwise fundamentally healthy, but suffering from a severe hangover, due to excessive expansion in boom time. This has elicited a sharp response from bankers who say they are not in the 'bailing out' business, and must evaluate lending risk even more stringently now than they did in the past.

After the last edition of this column about the human face of the economy, and its implications for economic policy, someone asked why a consumer markets person was writing about the economy now. That is exactly the point that was attempted to be made in my last column and re iterated again here – that The Economy is not just about invisible macro forces or numbers like exchange rates and indices of industrial or agricultural production; but that it is also about how different people or groups of people actually get affected, how they think about their situation, and the spending / saving / investment choices they make as a result of that.

The confusing part about the Indian market is that the issues affecting its health and wealth shift suddenly, and we are often caught unawares. From the beginning of liberalization, consumer demand has been the number 1 problem issue for us. Not enough of it, not for the price - product configurations that the rest of the world buys, truant monsoon dependant rural demand, flighty urban demand because new categories emerged faster than income growths and a premature hype about the middle class leading to exaggerated expectations and over creation of capacity.

CONSUMER window data on markets is exceedingly useful, since it analyses markets as a collection of people who buy products, and not as a collection of products sold by a set of competitors. Unfortunately, such data is also difficult to come by. So, when such data comes along that is recent, nationally representative, low-priced and high-quality, my advice is to snap it up immediately! The Guide to Indian Markets 2006, by Hansa Research and Media Research Users Council is one such report, based on the Indian Readership Survey (IRS) of 2000 and 2005, an all-India study, with a large and rigorously designed and selected sample of about 1,65,000 households in urban India and about 75,000 in rural India.

The recently held CII Conference on Rural India was a wonderful stock taking on where Rural India stands as we speak. There was unanimity of opinion that it was far more advanced on most counts than is the general impression of it, in our minds. Even the development sector folk at the conference agreed that there was a new rural India that had a URAL - urbanized rural mind set (Dileep Ranjekar, Azim Premji Foundation) and was as avid consumer of microfinance for entrepreneurial ventures (Annie Dufflo, Micro Finance Institute).

I have had an epiphany. The other day, we were at lunch - a senior Indian business leader, an erudite foreigner who advises CEOs all over the world on globalization, and yours truly. The debate was about the size of the Indian market. 50 million? 200 million? What income level qualifies people to be consumers? Black money, wrong income reporting, and data denial was on the menu. And that was just the starters. I had a feeling of deja vu.

Everyone who has been on 'marketing India' road shows, especially in the West, cannot but help notice that while 'India interest' in the eyes of the world is increasing, India skepticism is not declining. Also familiar is that India gets less than its due, when balancing the good news and the bad news about it; while China gets more.

There is no dearth of empirically valid, statistically sound and anecdotally familiar sales and survey data on what characteristics different types of markets in the country have, and how they have been behaving in terms of what and how they buy. Contradictions and counter intuitive findings abound, which we cannot explain away as data errors. "Tier two towns hold lots of potential - do you know that in Valparai, we sell more X YZ than in Hyderabad? And by the way Hyderabad is visibly wealthy". "UP may be poor but we actually sell as much there as in Gujarat ". "Delhi is actually richer than Bombay, but Bombay has a different character", "Bangalore and Hyderabad are both very happening markets, but frankly, I would place my bets on Hyderabad ; actually maybe on Bangalore; they are different but I can't place my finger on it"; Bangalore is a better quality market than Bombay, though not as big" "Somehow the South and West are easy markets (read: more uniform and predictable in their response to market activity), than the North, which is a bit of a lottery".

The FMCG sector slowdown that everyone is talking about needs to be viewed in perspective. Is it really a slowdown caused by a deteriorating economic condition, or is it merely the morning-after, after a particularly good night before? I think it is the latter - what we are seeing is the concluding chapter of phase 1 demand, dying gasp and all. The fundamentals of Consumer India seem fine. In fact, it seems like urban India, at least, is definitely headed for consumption 'take off' in the next five years. However there are corrections that are happening now which are tough. As one CEO said recently, there is no doubt that the long term looks good. The short term is the difficult bit. One thing is clear - the golden days of runaway growth are over and slower growth rates are a fact of life. We need to re adjust our performance benchmarks.

Is the Future Market Happening?
The Economic Times - September 2000

The marketing of India as an investment destination is moving into high gear again. 'Indian market opportunity ' has been a traditional pillar of our sales pitch, and over the years, we have moved from hype to hope and now, with eight years of post liberalisation market understanding, it's time for review and realism.

Is the Future Happening?
The Economic Times - September 2000

The marketing of India as an investment destination is moving into high gear again. 'Indian market opportunity ' has been a traditional pillar of our sales pitch, and over the years, we have moved from hype to hope and now, with eight years of post liberalisation market understanding, it's time for review and realism.

Consumer demand in India has been behaving in a fairly capricious manner - or so it seems when viewed at an aggregate level. Every few years, and of late every year, the composition of who is buying, and what they are buying changes quite significantly, a bit like a kaleidoscope where with every shake, the resultant picture has totally changed. The usual explanations of bad monsoon, stock market sluggishness, saturation of larger markets, low consumer confidence don't seem to apply across the board to all products! In a period of economic slowdown and depressed consumer sentiment, television sets sales increase handsomely, and despite poor agricultural performance, motorcycle sales in rural areas have runaway growth.

Newspapers during the Republic Day week reminded me of the opening lines in A Tale of Two Cities. The spring of hope and the winter of despair, the best of times and the worst of times etc. etc.. They described an India in which live a few world respected dollar billionaires, many more who are speeding (or trudging) along the 'three way fast lane' towards prosperity, and a vast majority waiting on the side for a 'safe pedestrian crossing', with the mounting 'fury of the patient and the long suffering'.

It is perhaps time to take stock of all that we have learnt in these past six or seven years about the nature of the Indian market, now that it has emerged from its shackles of socialism, monopolies and hardly visible income growths.

Consumer Durables In The Villages: Who's Buying?
The Economic Times - August 1999

Rural India's recently discovered predilection to enthusiastically consume everything from shampoo to motorcycles has been the subject of much discussion. However the dominant view of the market is as seen through the product window (i.e. from the perspective of "how much of what is being bought").