Penny-pinching 2012 is upon us. Paralysed policy makers who have taken to dishing out the bad news are saying what middle-class India has known for a while: with wage freezes, rising interest rates and fuel hikes, the ill wind blowing from the West was bound to send shivers down India’s spine.
A professional couple in their early 30s I recently met – a civil engineer married to an architect, with two small children – were frantically cobbling together resources to buy their first home in the suburbs. “I am wagering my career on the EMIs,” said the husband. “I thought I would have to work till 60, now I can’t retire till 65.” His wife was planning to work double shifts to help pay back the loans.
Overseas Indians who flock to India for the holiday season are equally straitened. Where they sought the fleshpots of Goa, Kerala or the sandy splendours of Rajasthan, they now request spare beds and hot meals from family and friends. The news from tourist destinations confirms the slackening; inbound tours demand tougher discounts, and there are plenty of free rooms going. Indian tourism is not having a great year with cash-strapped foreigners opting for better bargains in Thailand, Malaysia and Indonesia.
The rupee’s falling value should make India attractive — except that its metropolitan cities and resorts are expensive. In the last couple of months, I have heard complaints from well-off visitors that Indian restaurants and shopping, once considered great value for money, can be on a par with high-street prices in London and New York. In the new year, I took three visiting friends to a popular inexpensive hang-out in south Delhi and was surprised at the bill. Two rounds of vodkas and small eats came to nearly Rs 7,000. But the place was packed with a 20-something crowd, with standing room only in corners.
At the recent Delhi launch of a famous Mumbai bar that has built its reputation on providing a range of international live music, the vast spaces thronged with a thousand guests. There were bouncers, security checks and hand tags; yet the queues and line-up of posh cars looked like a celebrity nightclub opening in Berlin or New York. Admittedly, it was freebie night, by invitation only, but such a scene was virtually unseen in India a decade ago. When an extravagant showman like the actor-producer Raj Kapoor hosted a premiere night party at a posh hotel, there were a couple of hundred guests, most of them attending for the flowing foreign liquor, not the stars.
Swathes of urban India are moving to a culture of high spending and consumption, abetted chiefly by credit cards and easy borrowing — exactly the sort of habit-forming recklessness that plagues the personal wallets and national economies of the West. Up until the 90s, the expenditure ethic of educated middle-class Indians was dictated by a hangover of Gandhian self-denial and the real shortages of a socialist economy. Even if you had the money, it was bad form to flaunt it. Foreign liquor was bootlegged, clothing retail was dominated by tailors and a few home-grown brands, and very little was thrown away: from old cars to curtains, most things were recycled. We were a penny-pinching race.
Most Indians remain attached to the saving habit but it is a habit under threat. In hard times, old habits are the safest bet. If the urban middle class was raised on making do with less, it might be the only diet to sustain us in the future.