Consumerism in India

There is a lot being said and written on the consumerism boom that has been witnessed in India since the economy was opened up in 1991. I would like to add my two cents (or paise, in this case) to the Indian consumerism debate.

I have classified the Indian consumer into four broad categories, based on age. The people of each category have been shaped by the time they grew up in. Their experiences in life up to the point they become young adults explain a lot about their behavior, their attitude to society and even their spending habits. It goes without saying that the attitudes overlap to some extent over the group, and that there will be exceptions depending on the exact environment one is raised in. This is also my opinionated subjective classification based on my observation and I can only offer personal experience as a validation to my arguments. Here goes:

The first group is those born before independence. The members of this group have seen a lot of pain, struggle and scarcity. In their childhood, they remember India going through the pains of partition, and struggling to find its feet as a young nation. They struggle to accept consumerism as being something that is ‘okay’ to do. For example, my grandfather always tries to appear as if he never ‘wants’ anything. He loves ice cream, but he will never accept the fact. He would be more likely to say, “If there is any ice cream left over, give me some. Don’t go downstairs to buy some just for me.” Sometimes I think he probably feels guilty in regularly consuming something that was considered a luxury when he was growing up.

The second group is those born between 1947 and 1965. The members of this group would have seen India coming to terms with its independence. The days of the green revolution, the corruption of Indira’s term, the artificial scarcities and hoarding mentality brought in by the license Raj are all part of the memories of this group’s young days. One will never see them wasting anything. Everything is saved or recycled. These habits are reflected in almost every Indian home. People my age (early twenties) who have parents in this demographic are used to seeing jam jars being used to store pickles, newspapers being used to line bottoms of desk drawers. This group has seen times when it took ten years to get a telephone line, so when they get something; they take it even though they may not have immediate need for it, thinking they will use it later. On numerous occasions I have seen people on flights who take a soda even if they don’t want one and put it right into their bag or purse for later consumption.

The third group is people born from 1965 to 1988. They form the bulk of India’s working population. When India opened up its economy in 1991, they were old enough to see the rapid change in the social and economic environment of the country. However, they also remember the days of scarcity and are ideally placed to appreciate the striking contrasts of pre- and post-1991 India. This group was the first to start migrating to other countries on a large scale for work and education. Unlike the two groups preceding them, they have had significant first-hand experience of the way the developed world lives. They generally believe in working hard and spending hard, and are responsible for the current boom in consumerism. They have no qualms about borrowing and spending money, showing it off or bring materialistic. For instance, people from the first or second group would not be as comfortable driving an expensive car. They might feel guilty about showing off their wealth, feel scared that the government might come after them, or simply believe that one should save and not spend. But someone from the third group will have no problems buying one, showing it off and working harder to buy another one. You can stand on a sidewalk at Malabar Hill (one of Mumbai’s most exclusive neighborhoods) for five minutes on any given evening, and the number of BMWs, Audis, Bentleys, Range Rovers and Porsches you will see will prove my point.

The last group is those born after 1988. This group has always lived in a time of relative prosperity and consumerism. They can’t imagine waiting for than a day for a phone connection, or when an entire nation had nothing to do but listen to Binaca Geetmala on the radio for entertainment. They are confident of themselves and their capacity to earn money, and they spend a lot of it. They will soon outpace the third group in spending power, and take to credit on a much larger scale as well. On the contrary, the first two groups are still not comfortable using taking loans from people other than family and friends or having outstanding credit balances on their credit card accounts. They consider themselves culturally closer to the developed world and unfortunately will spend like them too once they start earning money in the next three to five years. For instance, most urban kids play less cricket and more video games then the third group. They have tremendous choice in what they want to eat, wear, play with and study. They have add-on credit cards that their parents give them. One regularly sees high-school kids spend a thousand rupees on “a night out” in expensive nightclubs in Mumbai.

This broad classification provides clarity on why people spend money they way to do and what one can expect in the next few years as far as consumer spending in India is concerned. I see a boom in organized retail, consumer lending and luxury goods sales. These groups also tell a lot about people’s attitudes towards society, relationships and the government. But that is another article for another day.