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’.

They provided ample confirmation that the pain of liberalisation is being borne by one set of people and the pleasures by another. One newspaper article talked of how brainy youth from South India are much in demand in Silicon Valley, and special legislation was brought about in the US in 98-99 to enable more of them to work there. Another article reported the NSS findings that there was marginal change in employment levels since reforms began in 1991, and proportion of the urban workforce unemployed was about 50%.

There doesn’t seem to be much hope of all this changing in the next decade. Swaminathan Aiyer, once said that the only way to change all this is by providing social justice achieved through good governance. This does seem like a long haul. Narender Pani in his article, “The challenge of software led growth” warned that as India embraces software led growth, a lot of her population will be rendered irrelevant. They will not be equipped to participate, even as providers of everyday services to those who will be centre stage in this new economy. The frequent official statements that many subsidies will have to go further suggests that a lot of “just about haves” may in effect end up being “have nots”.

How is all this ‘state of the nation’ stuff connected with markets and consumers, and with developing business strategy? Well, all too often, people in business tend to think about their market space in narrow and blinkered terms – as a space comprising “buyers of televisions or antiseptic liquids or computers or home loans”. The only concession to the idea that markets are made up of people, comes from demographic or purchase behaviour profiling of buyers of products! The reality is that markets are made up of human beings and human beings exist in a social and national context. Business opportunities and threats come from changing consumer purchase behaviour, driven by changing needs, desires and aspirations, in turn determined by what change is happening in the larger context of their lives. Listening to all this talk of “two Indias’, a phrase that has remained fashionable through the ages, it is tempting to conclude “plus ca change, plus ca le meme chose” – the more things change the more they seem to remain the same. On the surface the only thing that seems to be changing is the degree of ‘having’ or ‘or not having’ and the prescription for helping the ‘not haves’. But dig a little deeper and with the “morphing change” spectacles that I had talked about in an earlier column, and we do see a great deal of change indeed, leading to a more fragmented India, with new opportunities and threats lurking around. A far more complex market than the “two Indias” ever was. In this article, I want to discuss just two of the changes, and their implications for businesses interested in the Indian consumer market.

First, the changing and fragmenting occupation profile of the country is going to be a key driver of consumer change. Earlier, the only two distinctive and major occupation groups were farmers and salaried employees. One was larger but the other was richer and more ‘advanced’. Today we are seeing the emergence of several good-sized occupation groups with distinctive purchase behaviour drivers.

The rising group of self-employed individuals is one such, and even within it, there are distinctive segments. 42% of employed urban males are self employed and market research shows that more and more sons of medium farmers return home after their education, can’t find suitable jobs in government or private sector, don’t want to stay with farming and start a business of some kind, usually in trading. In urban areas, among the well educated, the gold rush of the dot com and the corporate environment that is willing to pay for external knowledge is driving more and more people to set up on their own. Clearly the needs, the self-image, the spending priorities, the key triggers of consumption, and the purchase behaviour will be very different for self-employeds versus salaried people; and very different for the trader, the cybercafe operator and the professional. At a broader level, as the self-employeds increase in weight, the fragility of consumer confidence will be greater and we will see more rapid and more sudden cycles of spending and not spending, especially on high value durables. Let’s take another example of occupational change driving consumer change: The worldwide recognition of Indian intellectual talent has lead to more porous work geographies, and the internationalisation of the middle class has begun, not just among the individuals who travel but on their families back home. The stereotypical middle-aged mami from Madras may be a disappearing breed!

The second big change that I see and fear is the fact that we are providing a whole lot of people with the aspiration to consume but not the opportunity. What will this result in? Apocalypse? I used to believe that social tension between the haves and the have nots would never happen in India, because the situation of some having more than the others is as old as the hills and peaceful co-existence has happened. However, some things have changed. First, the wealthy used to be mostly urban and the poor mostly rural, with poor infrastructure separating the two. All that has changed. Secondly the change in national ideology, the low tax rates and the increased choices available has made wealth earlier confined to homes (and furtively spent) come out onto the open – be it in cars or restaurants or designer clothes or houses. I fear that this will drive a lot more social tension, especially among the liberalisation generation, who have grown up in the ‘to get rich is glorious’ ideology, but may not be able to find jobs or avenues of self-employment when they are old enough to enter the work force in 2010. Are we sitting on a time bomb? Or perhaps this will make people strive to earn more, especially the “near haves” or ‘have somes” ? Is this high aspiration, low ability to consume, but huge numbers of people, an opportunity for consumer goods manufacturers? Another facet of this is the disparate rates of economic, social and infrastructure development across different states, leading to several Indias, in different stages of evolution. Clearly the self-image, needs and market opportunity offered by the Tamil Nadu resident will be very different from that of Bihar. But equally, will we, as a country have to face more tension between “have states’ and ‘have not states’? Perhaps the prevalent practice of treating India as a single business planning unit for the purposes of developing business strategy needs to be re-examined.