Sunday, April 5, 2009

Murugan Idli Shop & the Indian Economy

Murugan Idli Shop ( picture below of their outlet on Elliots Beach Road ) is a chain in Chennai. It is now 1920 hrs on the 5th April, 2009. There are about 200 diners inside and 50 on the wait list outside - and its not even dinner time, yet.

Murugan Idli Shop - Elliots Road, Chennai

Walk into Bhima's jewellery on Dickenson Road, Bangalore - you'll have to jostle for space like to do at Big Bazaar.Ditto at Sri Krishna's jewellery on Commercial Street, Bangalore.

About a decade back, the then Chairman of State Bank of India (SBI) is reported to have said that banks like Citibank had a great advantage because Citibank did not have to invest in branches. They were growing their business with just expanding their ATM network.Today, SBI has the largest network of branches as well as the largest network of ATM's.Citibank can, perhaps, never hope to equal SBI's business in India. The network of branches which was earlier viewed as a liability by SBI is now a great asset.For SBI, it was easier to expand their ATM network and setup an online banking system than is was/is for Citibank to expand either their branch or ATM network.

India's population which was earlier viewed as a liability, is now a valuable consuming class powering India's growth in the face of a global slow-down. All the gloom and doom that you read in the pink papers is undoubtedly true - but not as true and all pervasive as they make it out to be.

If about 55% of India's population is dependant on agriculture then this 55% of population is at least maintaining status quo in terms of their income. Food prices have not come down though inflation is under 0.5%. Secondly, a large part of the salaried population is employed with government companies,government and quasi government organizations. This segment of population has only seen its disposable income go up on account of salary hikes recommended by the Sixth Pay Commission. Young urban India may be feeling the heat on account of the slowdown or slow pace of growth in the BPO/KPO/IT sectors and the difficulties is getting the coveted H1-B visa.However, note that within months of the new restrictions on the H1-B visa US companies are lobbying with their government to take off the restrictions as it is affecting the competitiveness of US companies. Jack Welch is reported to have formulated this 70:70:70 rule more than a decade back. That is, 70% of the work that GE does must be outsourced. 70% of this 70% must be outsourced out of the USA. 70% of what is outsourced out of USA must be outsourced to India!

Business Newspapers are concerned with only a small section of the population employed with a segment of the industry which is affected by the downturn of the economy.When this small segment of the industry gets a disproportionate amount of mileage the situation appears to be gloomier than what it actually is.

If you feel depressed reading the daily newspaper - take an evening walk. Walk to the closest mall or a high street. Feel the energy on the streets and in its shops. The power of India may not be apparent in corporate boardrooms - it is on its streets. It is this power, which has to travel to the boardrooms.

Be that conduit.

India's time has come!

1 comment:

Anonymous said...

Recession is the side effect of Globalisation - at least to the extent that we are all scared today to hear about this word, which is more on display at other parts of the world. Consequent to this so called globalisation; and more so due to our blind following of western ways of living, we have given too much importance to media, which most of the times sells their product (with attractive sub-titles such as developing sotry, breaking news, etc), only to improve their TRPs and their advertising income. We are all becoming victims of this so called blind following of western culture.

One of the very important characterstic of Indians (and also of Indian economy) is to conserve resources, live within the means, which is fast changing due to this globalisation. Today's recession et all is the bye product of this blind following of western culture, the spendthrift nature, consumerism and fear phsyco.

As you rightly point out, instead of seeing these sob stories on TV or to be associated with the people who talk recession, better take a stroll outside; and be confident that there are opportunities even in this so called recession.

Good article. Keep it up !!!