Wednesday, March 30, 2016

The Indian Dream

Since the opening of the economy in the early part of 1990’s India has been the poster child of the emerging markets. Albeit China is a close competitor, however owing to the expertise over language, India has managed to channel most of the businesses, that dealt with human interface such as customer support and marketing call centers, towards itself. Due to such investments, the last 15-20 years in the country, has seen unprecedented infrastructural growth that is barely keeping up with the even faster economic and social growth. It has resulted in unrestrained migration from the rural areas to urban centers further adding to the chaos. Finally its biggest contribution is giving rise to a middle class with a consumerist attitude that didn’t exist before. This class of people is now exposed to international standards and now demands the same or similar luxuries in their setting. Obviously many brands across the world have recognized this potential and are actively involved in exploiting this new market. However keeping in mind the still comparatively limited means of a developing economy many brands are embedding themselves in the system by launching affordable lines.

While this is going on politically a new situation is brewing. The current Prime Minister, Narendra Modi, has embarked upon two very required but contrasting programs. The first one is ‘Make in India’ that is urging foreign investors to move their manufacturing to the country. Logically these units will either be built near existing urban centers or new satellite urban centers will have to be developed. The second program aims to reverse the influx of rural dwellers into the city by developing rural centers to the extent that they become self-sustaining. Further as land and resources are limited, due to current state of population, the two programs are bound to clash with each other. The first program will attract further international attention, as this new class of labor will be the next line of consumers for their products. However the second program that is more nationalistic in nature may have mixed results. Either it could potentially dent the affect of the first or establish a completely new market that the many foreign investors have not considered as yet.

The point that this post is trying to make is that the based on the article ‘What happens next’ the first wave of expected changes has already happened. However there are many other dynamics within emerging economies that are not necessarily considered by developed economies. The reason behind this is not necessarily a lack of empathy rather in my opinion a genuine ignorance about the grass root social fabric, which has a very important role in developing economies than it if often given credit for.

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