Moving Up in Mumbai
January 9th, 2008
Submitted By: Simeon Trieu
Although India is often seen as the world’s IT and services resource, the fact is that much of India’s population still lives in poverty.
According to a study from Deloitte Research (commented on in the article: China or India?…And Follow Up Questions?), only roughly 7% of India’s population aged 18 to 23 is enrolled in higher education. In addition, 75% of India’s children leave school before finishing 8th grade (Kalish 6-7).
In the article, Mr. Shaikh comments that “once you start looking for money, you stop thinking about education.” While the poverty figures may not decrease, even after India obtains a large share of the world services market, there is still hope for many uneducated people living in poor conditions, at least in Mumbai.
At a retail store, Pantaloon, three men from poor families applied and got jobs to work as retail associates. Some of these men make less than $50 a month to sustain them and their families. Often times, it is not enough, and the families end up hungry. So, why work at Pantaloon? Their wages are roughly $1600 a year plus the prospect of regular raises and promotions, all of this being double the average salary in India. Since the Indian population is largely uneducated, there are plenty of wealth creating opportunities for both foreign investment and local Indian labor. Much of the new wealth resulting from IT and services goes largely to college educated computer programmers, consultants and call-center workers. All this totals up to a whopping 0.2% of India’s 1.1 billion population, which leaves the rest with the same conditions before all this began… or does it?
What does the new wealth given to India’s college educated change in India? It creates a middle class with needs for consumption. This is exactly what provides the poor city dwellers in their 20s and 30s with: jobs to service the middle class. In other words, India’s growth is being led by a sharp rise in domestic consumption. It is predicted by the Images Group, a research and consulting group in India, that the retail sector alone will create 2.5 million new jobs within the country. This is good news to the poor living there! Although, this mostly affects the city areas that are more metropolitan, where brand name goods and services will attract the new free-spending consumers.
In addition to providing opportunities for new wealth for the impoverished people, it also offers them a chance to learn new skills such as developing rapport, confidence, fashion-sense and even better hygiene. Through talking to people much richer than themselves, especially with the hierarchical levels of respect built into Indian society, the associates learn better communication skills while developing confidence in themselves.
And lastly, one reason this particular article touched me was that it offered the people hope, something they are in short supply on. Mr. Gundeti’s father is very cautious about what to expect in life. “Every time we have a little hope, something bad happens.” But with these new positions teaching their children how to properly communicate and work a steady job, they can improve both personally, as well as financially. One particular sales associate even said, “I try to teach my friends to end their vulgar language and behavior. They don’t change, so I don’t spend time with them anymore.” The workplace develops into a community of sales associates that spend time with each other, even outside of work. The jobs given to the poor have an even greater effect than just the money: they find hope and confidence in their futures. It’s very easy to look at this issue analytically and forget that we’re dealing with people. As an MBA student, it is my dream to have this kind of lasting, uplifting effect on people in any business I do. While the jobs are very humble and often derided by many Americans, those same humble jobs are producing the positive changes that India desperately needs.
Entry Filed under: China, India, Mumbai, Pre-Departure
12 Comments Add your own
1. Simeon Trieu | January 19th, 2008 at 1:18 pm
A related article, India’s Surging Economy Lifts Hopes and Ambitions, also details the growth of India and their perspectives of the world, both young and old. The old want their children to have better lives in business. The young are passionate and have a positive outlook on their future. Indians now have the philosophy of the “American Dream”, you can do anything you want with good faith and hard effort. We should call it the “Indian Dream” now. The only thing they lack now is more respected universities and a diverse culture from around the world contributing to their economy.
2. Alex Thornton | December 15th, 2009 at 4:26 pm
From the WSJ article:
“In contrast to China, where wealth spread as rural labor moved from farming to manufacturing, India’s growth is being led by a sharp rise in domestic consumption.”
It sounds like India is becoming more like us, transforming into a consumption based economy. This could actually be advantageous to India as they can observe the United States and see the consequences of taking on too much debt (both personal and government debt).
On top of this, it appears that attitudes about money are becoming less conservative as India grows more prosperous; just like the United States. Simeon, you mention that “Mr. Gundeti’s father is very cautious about what to expect in life,” much like my grandfather and his generation. This conservative attitude is being replaced with more lofty desires: “On weekends after work, they would hang outside dance clubs, anxious to see the clubbers’ outfits. “I will spend money like them someday,” said Mr. Bhatade.” The fact that Indians are falling into the same physiological cycles that Americans have is a stronger indicator to me than productivity or GDP numbers.
3. Jason Silver | January 19th, 2010 at 10:40 am
It is remarkable to see how the country of India is pulling itself up out of the poverty it is faced with. More jobs to service the middle class is a clear indicator that India is growing economically. The ability for poverty stricken people to work their way into a better life is very similar to “The American Dream”. This “Indian Dream” includes multitudes of poor families finding jobs sustaining the lifestyles of India’s emerging middle class.
The poor work to feed and provide the best living situation possible for their families. At this point in India’s economic development, India’s poor class can really take advantage of this opportunity.
Aspirations of leading a better life is no longer considered wishful thinking, but an actual reality. In Mumbai, with an estimated population of close to 13.7 million people, getting entry level jobs with a steady paycheck, will certainly turn around the fortunes of many poor families and will in turn boost the Indian economy even further.
4. Erika Bylund | January 25th, 2010 at 4:17 pm
I’m right now in the middle of reading “The Elephant and the Dragon” by Robyn Meredith. I’m learning a lot from the book because the author goes into the history of India, including the early twentieth century. She traces the political, social, and economic history of the country to the current times, illustrating how the country has evolved to its current economic potential.
In India, with this emerging opportunity to be “middle-class,” there is a better life to which the poor can aspire and feasibly hope to attain. This will be a power driving force for India’s move toward becoming a developed nation because there is incentive. Poverty is one thing; but ABJECT poverty is a whole different story.
At one point, almost every country has experienced “depression” periods, and I think it is easy to take our opportunities for granted because we (and the last two generations) here in the U.S. have not really experienced being limited in our options. There has been very little struggle to have opportunities available because our country had the luxury of being founded with those opportunities “built in” as a right from the country’s founding. The other differentiating factor is that we have a government and a body of constituents that recognize the authority of our Constitution and Bill of Rights. With the exception of the Civil War, our country has not had lasting debilitating problems with dissention, government corruption, or property rights. These freedoms we have are what give us seemingly limitless opportunity, and it is in this opportunity that we have hope. It is what drives us to achieve, do, be, and have because we can and we have very few barriers.
5. Michael Minasian | March 10th, 2010 at 8:50 am
This is an interesting look at how to get out of a poverty situation. I definitely agree with Simeon’s assessment of the best way to try to move people out of poverty. It seems as though there may be some way to increase the pace of the development. It seems that the government should be doing something to stimulate growth of consumption by incentivizing businesses who serve the middle class to grow and to open. This will perpetuate the domino effect that Simeon talks about.
6. Jordan Wente | March 12th, 2010 at 3:35 pm
You have to start somewhere. India is just recently reforming its economy and progress is slow but steady. We can’t expect poverty to disappear overnight but as the middle class continues to grow more and more opportunities will trickle down to the poor living in the cities and eventually through out the country. Based on this post, the trickle down effect is already occurring and providing hope to many impoverished people. In my opinion this hope for a brighter future will become a major influence on many people allowing a shift to occur which will place more importance on education. The confidence, communication and other skills developed through new employment opportunities will be valuable to an individual’s decision to seek further education.
The quote about looking for money can be true of any society, even here in the United States. Once you start thinking about survival, education becomes an unrealistic option for most people. Now that the country is experiencing economic success it might be time for the government to place a greater importance on educating its population. India’s large population is one of its greatest assets. I think that now is the time to heavily invest in this asset, placing importance not only on higher education but also on primary education. This will allow the economy to see continued growth and development.
I agree with Michael that India should stimulate the growth of consumption. I think that in order to do this they need to build a bigger consumer base. Since most of the new wealth is given to individuals with an education, it make sense that investing in education will also result in increased consumption.
7. Frederick Peemoeller | March 12th, 2010 at 4:37 pm
I can’t believe the wealth of only .2% of the country is enough to increase jobs by 2.5 million! This trickle down effect has an amazing ability to stimulate an economy. With more people finding higher paying retail jobs that teach them communication and business skills, it seems that it could give these people hope to make even more money. That sort of incentive could cause more people to try to get educated or even start their own business. As the country continues to strengthen economically, this sort of trickle down effect will increase, and hopefully a rags to riches mentality can be brought about in the country.
8. Jeff | March 18th, 2010 at 4:49 pm
From researching a blog about the 1st (and only) Wal-Mart in India, it’s apparent to me that new business models like the Best Price Modern Wholesale (Wal-Mart) is giving hope to people, not only those who are employed by them but also those who shop there.
In detailing the experiences of one girl from a nearby village that was positively affected by this new business, an article discussed how she, being the youngest of 3 girls, could have easily followed her sisters footsteps by marrying early, having children, and serving her family. Instead the girl attended the Punjab-Bharti Wal-Mart Training Center, graduated and went to work for the store. She won an internal dance contest where the prize was a free trip to the United States, and now she’s enrolled for an MBA degree from Indira Gandhi National Open University.
Stories like this show that there is progress being made, That India is on the right path…they are making good choices.
Hope springs eternal in the human breast….
9. Michael Harroch | March 18th, 2010 at 5:46 pm
As someone who has recently moved to the Untied States, this phenomenon is reminiscent of this fascinating concept called the “American Dream” (although I say this with a little sarcasm, I think an equivalent lacks in France, and this can be seen in people’s pessimism about economical advancement). Namely, just like in the United States, it seems like there is a now belief among the Indian lower class that anyone can go out and achieve, all it takes is will power and hard work.
Whether true or not, I find that this belief encourages people to take bold initiatives with their careers, which is a good thing for them and for society as a whole.
10. Leslie Mann | March 18th, 2010 at 10:22 pm
Hope does spring eternal. The “American Dream” or what we think of it as has dwindled in our present day and as Simeon pointed out perhaps “Indian Dream” is more appropriate. India’s middle class is growing at a fast pace and with over 2.5 million new jobs created by the retail sector alone, the future of the Indian economy is very hopeful. It is shocking to learn that only 7% of the population is enrolled in higher education, but with this continued growth, the number is sure to rise, hopefully at a rate similar to the middle class. The last paragraph of the article, I think, is one of the most important. Mr. Bahtade was promoted and will now be training others with the skills he has acquired. This is what the “Indian Dream” is all about.
11. Matthew Perez | March 19th, 2010 at 9:45 am
Being living proof of the American Dream, I am very glad that a similar idea is taking root in India. Although the WSJ article provides some details of the increase in consumerism in the country, I think a better indicator of growth in economic benefits in India is the increase corporate presence in India. The Big Three of luxury German automakers (Audi, BMW, and Mercedes Benz) have recently built manufacturing facilities in India specifically to produce cars for their market. Granted, this was done partly to get around the massive tariffs on imports but it demonstrates the viability of the Indian automotive market. Coca-Cola has done a similar thing in their purchase of a local cola manufacture in India to increase their presence in the country. The fact that these companies are no longer outsourcing to India but specifically building product for the Indian market is a testament to the success of many people in India.
12. Yuxiang Gao | March 19th, 2010 at 7:37 pm
As what Alex mentioned in his comment,
“In contrast to China, where wealth spread as rural labor moved from farming to manufacturing, India’s growth is being led by a sharp rise in domestic consumption.”
The India economy system just looks like usa’s.
Chinese government tried so hard to find the new economic growth point based on rise in domestic consumption, but because of culture fator, it doesn.t work at all.
It looks like India doesn’t have this kind problem,
Transforming into a consumption based economy. This could actually be advantageous to India .The attitudes of money are becoming more and more open in India, whcih make it the country grows more prosperous than before.
Leave a Comment
Some HTML allowed:
<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>
Subscribe to the comments via RSS Feed