Archives for The New Rich
If you love speed and you live in India, there’s little you can do on its crowded roads.
So, the rich have found a way around this challenge; they’ve taken to the water. It’s the new craze – zip away from the madding crowd in a glittering yacht, complete with all the luxuries.
This new passion is what makes much-anticipated events like the second International Boat Exhibition, to be held in Mumbai from the 28th of this month, all sold out affairs. It’s a chance for manufacturers of leading brands to showcase their top-of-the line products, which, needless to add, fetch astronomical prices. It’s only the second year for this exhibition, but, apparently, a whopping $100 million has already been spent, between last year and now, by the rich and famous on buying the latest floating objects-of-desire.
The change that’s taken place is interesting. Yachts were once seen as playthings meant only for likes of Vijay Mallya - popularly known as India’s Richard Branson – who owns, among others, the Indian Empress, a boat costing over a $100 million. Smaller version of this wonder are now being bought by the “common” people. That’s common, of course, compared to Mr. Mallya, but still filthy rich. To reach as many customers as possible, the boat exhibition offerings start at a few thousand dollars, going up to millions.
This is why yacht clubs are said to be the next big thing in India. The country, being a peninsula, has over four thousand miles of coastline just waiting to be explored by avid holiday goers – well-off Indians who are looking for new ways to de-stress, live it up, and spend their money.
To add to this, this year the Volvo Ocean Race (once known as the Whitbread Round the World race and co-sponsored by the British Royal Navy Sailing Association) has included Kochi – a pretty city in the picturesque South Indian state of Kerala – as one of its stopovers. It’s considered a matter of pride, since this high-profile race, held every four years, is popularly seen as the one of the ultimate sailing events. And its stop in India – a first – is bound to fuel further interest in Indian sailing.
What is needed now is infrastructure, particularly marinas. Right now you could own a million dollar boat, but you’d still have to hop your way to it. As with much of the country, finding a place to put things – cars, people, houses – is an issue. It may be a recent craze but there are already too many boats and not enough parking spaces, especially in Mumbai.
That will change soon, as a number of marinas are slated to be built over the next few years.
So, while the roads are too crowded to zip about – even for those who own Audis or Porches- Indian waters are still largely unexplored. For now.
Posted by Gopika Kaul at 1:22 AM | Permalink
India is changing fast, and changing with it, is also its perception and image around the world. It’s a change happening so quickly, it’s hard for many – outside India – to keep up.
Take, for instance, the latest bid by Ratan Tata – chairman of one of India’s largest conglomerates, the Tata Group – to buy Ford’s Jaguar and Land Rover, that went up for sale in Britain last year. Tata is prepared to spend $2 billion for the purchase.
India Inc. – as the loose affiliation of Delhi- and Mumbai-based multi-national corporations is known – has been on such a buying spree that news about this proposed acquisition was received with a jaded oh-yet-another-global-takeover kind of response, nothing extraordinary about that.
Except, if you stop and think about it, it is quite extraordinary. Here is a as-British-as-it-can-get brand that has been associated with luxury and lavishness as well as colonial exploration for the better part of this century. It’s being bought by a company owned by a man born when India was still ruled by the British, who now marches around Europe waving his billions and buying the ex-colonizer’s iconic brands. What’s more, he’s replacing the American firm – an auto company whose history is almost part and parcel of American history – as the owner of the British brand. Everything is extraordinary about that.
Also, this is not the first, and from the looks of it, certainly not the last of Tata’s global acquisitions. Last year, his company acquired Corus, formerly British Steel, for an impressive sum of $12 billion, something that figured in Time Magazine’s Top Ten Best Business Deals.
But it’s not all love and kisses. Late last year, Tata was the news over an unfortunate incident with Orient-Express Hotels Ltd – a hotel chain not as familiar with the East and the changes it’s undergoing as the name implies. One of Tata’s many subsidiaries is ‘The Indian Hotels Company’, which owns the luxury hotels chain The Taj, in India and around the world. In the past few years, they’ve acquired New York’s famed Pierre and the and The Taj Boston (once a Ritz-Carlton).
Indian Hotels is also one of the largest shareholders of the super luxury hotel brand – The Orient Express, headquartered in Burmuda. Late last year the Indian group asked to create a more public alliance with the chain, which includes well-known hotels in the U.S., Italy and Asia, suggesting the two brands join forces in marketing and other business related activities.
What ensued, however, was an unpleasant exchange. Orient Express CEO Paul White rejected this offer and responded with a somewhat unfortunately worded letter that got the goat of the Indian company, not to mention the media. Indians in general minced no words in condemning, what they perceived, as White’s racist remarks. He was certainly direct: “Any association of our luxury brands and properties with your brands and properties would result in a reduction of the value of our brands and our business,” White wrote Tata.
It’s good evidence of how far India’s image in the world has come and how much change is still before this country. Indian companies like the Tatas have come a long way, and as time goes by they are getting more and more powerful in the international arena as India’s economy grows and stabilizes. The new Indian company is not bashful about belonging to a developing nation, instead, it is using that to its advantage as it sweeps up prominent brands while eying other prospective ones.
Orient Express may not relent, but that only makes it an exception that definitely does not prove the rule.
Posted by Gopika Kaul at 5:22 AM | Permalink
On December 11th, two grade eight students in India made history, but for the wrong reasons. They shot and killed, in cold blood, a fellow classmate in an elite school, located in Gurgaon – an Information technology hub on the outskirts of New Delhi, home to multinationals, call centers and million dollar penthouses. It was the first ever school shooting in India.
Ever since, the country has been heatedly debating, and ruing, the fact that the Indian society is becoming increasingly violent with the arrival of, what is being feared as a dreaded gun culture. The commonly-held, shocked view has been, that such things happen in gun-ridden societies like America, not in culturally-rich and peaceful ones like India – so how did this happen?
Newspapers, radio stations and television channels have called in child psychologists and experts to debate the matter to death. Anxious parents are tuning in to learn how to avoid such situations and discourage violence in children in this fast-changing Indian society, which is seeing the flip side of money, development and so-called westernization.
The main area of concern, predictably, has been the rising violence and finding ways to curb it. The culprits are many – from gun-toys, movies and even cartoons that glamorize violence, to uncaring and busy parents, who find little time for their children and their troubles. In the case of this particular shooting, the unremorseful killers claimed that they were being bullied by the victim for a few months and finally reached a point where they could not take it anymore, so they decided to take revenge.
The question that the country is asking, is that had the parents known about their feelings and the extent to which they were willing to go to end the harassment, then could they have avoided such an incident? In retrospect, could they have been a little more involved in their children’s lives?
The answers are not simple. It’s not always easy, argue some, to communicate with teenage children and get them to talk about their life and feelings. That said, however, people in India are realizing the fact that in this day and age of nuclear families and time pressed parents, it is important to strike that balance between work and life to be there for the children, specially for vulnerable teenagers who fall easy prey to the negative influences in society.
The other thing to point out here is that, unlike in the US, in India people rarely admit to their domestic problems or seek professional help. It is quite rare, for instance, to take a child to a psychologist, since, with supposedly strong family bonds, it is seen as fairly needless, if not shameful. Thus, in many cases, when the parents are unaware of their children’s woes, the troubles only increase with time and the situations get out of hand.
In this case, one of the boys smuggled his father’s gun into the school, which had been carelessly left in an unlocked television cabinet in his home – something that is being seen as a major mistake on the part of the family. Not only that, his father has now been arrested because it has recently been revealed that he had actually taught his son how to use a gun.
In the new India, where one segment of society is reaping enormous benefits of India’s growth, guns are, unfortunately, becoming increasingly common, as they are often perceived as a symbol of prosperity. Gun related crime, thus, has been on the rise, specially in cities like Delhi and Mumbai.
India is experiencing tremendous growth and is on the fast track to development, but incidents such as this recent shoot shooting are an indication of the fact that India needs to seriously look at and deal with the flip side of its economic growth and prosperity.
Posted by Gopika Kaul at 1:02 AM | Permalink
India has many superlatives to its name, and recently, it added another one – it is home, for the time being at least, to the world’s richest man, Mukesh Ambani, thanks to a recent, sharp surge in the Indian stock market. Mr. Ambani – who owns India’s largest private company, Reliance Industries – is now richer, by about half a billion dollars, than Bill Gates, a fact that has made quite a few headlines in the past week.
What has also been in the news lately, is Mr. Ambani’s billion dollar house, which is still under construction. Once finished, it will be a bit like the opulent mansion Gates built for himself – only with the rooms and features stacked, not sprawling along the shores of Lake Washington. Ambani’s home will rise to a height of sixty floors into the Mumbai skyline – although only twenty-seven floors are supposed to be livable.
Named Antila, some guess after the mythical Atlantic island, it has been designed by Chicago-based architecture firm, Perkins + Will and apart from the usual helipads, swimming pools and health clubs, it will have six floors of parking, enough it is believed, for some hundred and sixty-eight cars; an entertainment center with a mini-theatre; and six hundred full time staff to take care of it.
The building is said said to be square, in keeping with the Indian concept of Vaastu – something like Chinese Feng Shui – that many Indians believe in and follow religiously when they build houses. The mansion has, not surprisingly, been a subject of much debate in India. Many argue that in a country where eighty percent of the country lives on half dollar a day, such ostentatious luxury is something of a sin.
Yesterday, however, Mr. Ambani gave the media yet another topic to talk about – he gifted his wife a sixty million dollar jet for her forty-fourth birthday. The luxury airbus comes custom fitted with everything from a master bedroom, entertainment rooms, and bathrooms with mood lighting, to state-of-the art music systems, satellite television and wireless communication.
Mr. Ambani is the older son of the late Dhirubhai Ambani, who started his business career as a clerk in Yemen and is said to have earned his first small fortune by cornering the market on Yemeni currency. He returned to India to become the most celebrated rags-to-riches stories in the country ever, founding its biggest industrial empire. Today Reliance is a sprawling group of companies managed by Mukesh or his brother Anil (the two have separate interests and businesses) and includes petroleum and food retailing, as well as telecommunications and textiles outfits among its subsidiaries.
Most Indians, the house and jet notwithstanding, respect Mr. Mukesh Ambani, who may have inherited his father’s empire, but he is responsible for taking it to new heights and applying world-class standards to the company and has helped India enter the world stage.
India, as I have pointed out before, is a land of utter dichotomies and this is yet another example of it. Mumbai, where Mr. Ambani’s castle in the air, as its being called, is being constructed, is India’s financial capital, but it is also home to Dharavi, Asia’s biggest slum, where more than a million people live in make-shift shacks in unhygienic conditions without running water or the basics of indoor plumbing.
But that too is India, an India that Mr.Ambani would probably be able to see from his glittering glass castle window.
Posted by Gopika Kaul at 10:34 PM | Permalink
I was over at a friend’s place the other day in Delhi, and noticed a stunning new painting on her living room wall. When I complimented her on her taste, she candidly revealed that it was something her art adviser had recommended, but, she added casually, she didn’t like to get too attached to the art on her walls, since it was mostly bought for investment. The moment this painting would fetch a reasonable sum, she’d sell it and buy another one, by a better-known artist. She’d do this, she told me, till she could buy a Husain, the artist often described as the “Picasso of India”.
I was impressed, not so much because this friend of mine, who, in college, couldn’t tell a photograph from a painting, had finally learnt something about art, but because she’d thought about her investment wisely, with a specific goal in mind and was working towards it. It struck me as an example of how much India had changed in the past decade. Art investment was not really a concept even as recently as five years ago.
Today, however, it’s being considered a lucrative option. Though it’s still in the early stages and not everyone thinks of art while investing, but, thanks to the tremendous boom in Indian art, more and more Indians are putting their money into the Indian art market, which is said to have gone up more than four hundred times in the past ten years, and in the past five years, Indian art prices are believed to have risen tenfold.
Though Indians bought and appreciated art before, this trend of buying it for investment has only recently gained popular appeal, especially after Indian works started to fetch unprecedented amounts in markets abroad. In September 2005, Tyeb Mehta’s painting , ‘Mahishasura’, was sold for $1.5 million at a Christie’s auction in New York. It was the first time an Indian painting had crossed the million-dollar mark. Last September, works of some prominent Indian artists were snapped up for record amounts, again, at Christie’s in New York.
Since then Indian art seems to be on a high. In a recent contemporary art sale in London, Bonhams – one of Britain’s biggest auction houses – featured Indian modern and contemporary art in one of its bigger sales. In December this year, France will see the first auction of modern and contemporary Indian art when Paris-based auction house, Artcurial, brings out about eighty Indian works.
Art, till recently in India, was something only the wealthy, or rich NRIs (Non Resident Indians) showed interest in, since the middle class didn’t have the time or the money for such extravagant pursuits. But, with salaries in some sectors rising up to twenty percent in the last few years, that mindset is now changing. Today, art is not only for the super-rich, but India’s middle class too, with its extra spending power, is looking at it not only as an investment, but also as something that can take them a few notches up the social ladder.
To cater to this till-now-niche-but-growing demand, many companies have set up art funds. Some banks even offer loans to those who are keen to buy art but don’t have the money. This interest has, thus, led to a sudden rise in the number of art galleries cities like Delhi and Mumbai, which are doing brisk business and opening international branches in cities like New York. Walk into any half decent art exhibit in a Delhi gallery, even by a not-so-well-known artist, and you’ll see sold signs on most of the works.
Indians, now more so in India than abroad, suddenly seem very eager to buy good art and own, what may become the next Husain. As a result, a lot of young and upcoming artists have seen their work being appreciated like never before, to the extent that they themselves are often surprised by the overwhelming response.
It seems that both the Indian artist and the Indian collector have come of age in the new India. The latter have more money than they know what to do with, and the former are only too happy to fuel this craze.
Posted by Gopika Kaul at 6:43 PM | Permalink
When we returned to Delhi after a long hiatus, there was one thing that I looked forward to, apart from family and spicy food, and that was getting a maid. From a distance it seemed like a wonderful dream – to have a maid to do all your chores around the house – it was reason enough to move back to India.
Only, I didn’t realize how difficult that process would be, it was easier, I was told on arriving in Delhi, to find that high paying job. I got a lot of advise on the matter, and also heard horror stories about maids running away with everything except the kitchen sink – everyone I spoke to had a story to tell. But the one common advice I got from most people, was that once you find the right one, you do all you can to not only keep her, but also keep her happy, so she does not get poached. “A happy maid” a wise friend told me “makes for a happy family”.
India’s upper classes seem to have this one common, perennial woe –finding the right domestic help – someone who can be trusted to run the house and take care of the kids while you are away at work.
There’s no structured way of getting one, though there are agencies that promise to find you the perfect person, but these are, mostly, vague one-man operations that more are more likely to pass on some untrained sixteen year old girl straight from the village who’d run away after a few months, leaving you with nothing but the agent’s mobile number that would’ve long changed by then.
The only other way, and in the end this is really the one that proves fruitful, is to call up everyone you know and “spread the word” – ask friends’ maids to carry the message down their network, and then pray hard. In India one depends on domestic help for everything, from cleaning the house to looking after the kids, and the day your maid decided to walk out, is the day you don’t go to work and make desperate calls everyone in your phonebook. Then you call your mother, and ask her to help you with your kids while you juggle everything else – till you find a decent maid again that is.
As a result of this shortage of good, trusted maids and cooks, there has been a huge rise in their salaries, because India’s well off, with their increased earning power, are willing to throw as much money as needed at the problem. Expats and repatriated NRIs (Non Resident Indians) are being blamed for spoiling the market since they are shelling out large sums of money and grabbing the best lot. A full-time maid, who lives with you, could now earn about four to five thousand rupees a month – about hundred dollars – which is still a lot of money in India for the lower classes. And increasingly there are those who pay up to ten thousand rupees a month (about two hundred and fifty dollars) to attract the best people. Then there are, of course, stories about people paying even a thousand dollars a month for the right person – but these are not that common and make for good headlines.
So, when looked at from one angle, the maids have never had it so good or been so much in demand. They dictate their terms of service and have a take-it-or-leave-it attitude. A friend of mine was once asked by her maid who her assistant would be, claiming that she could not work without one. Attend any Delhi party and you’ll hear umpteen stories about high maintenance maids and their demands.
But there are always two sides to any story, and while there are those who are earning more and living a better life, there are also those, mostly young village girls who leave their families to work in the cities, who don’t get paid enough and get ill treated. Often they are girls who run away from home looking for domestic work and get exploited by agents and employers. One such girl even wrote down her story, which got published and became a popular book.
My maid is crucial to my life, I could not be writing this article if she was away. When I say this to my mother she comments that we are the spoilt generation, because she brought up three children and worked without half the kind of help I have, having only one child. I don’t know how she did it.
I guess she’s right, we are spoilt in the new India whose growing economy has benefited people like me. What I pay my maid today is almost the salary my mother retired at after teaching at a reputed school for twenty four years – it tells you something about the times we live in.
Posted by Gopika Kaul at 3:33 AM | Permalink
As a child I used to love meeting my “foreign” aunt. She was nice, of course, but even nicer was her bulging suitcase containing myriad gifts – everything from perfume bottles and handy kitchen accessories, to much coveted little knick-knacks that we could flaunt the next day at school. I specially remember loving the little, pristine white erasers she used to bring for us – smooth and smelling of roses – they were a big improvement over the local ones that made the paper all black. That and a box of Wrigley’s chewing gum, which, more than anything else, had a scarcity value for us as kids, since we got them only when people made trips abroad, which were few and far between.
There were two main reasons why we loved these gifts – one, because we didn’t get those brands here in India (for the longest time I thought the GAP T-shirt and blue jeans store was some exotic designer make!), and the other because some of our local makes were not as great in quality, when compared to the foreign ones.
That, was then. Today, the Indian retail landscape is so different that I when I tell my niece this, she laughs and tells her friends. It’s hard for her to imagine an India without brands like Fischer Price, which has now been around for a little over a decade. And now, when I am the foreign aunt bringing her something from a trip, she does not seem half as happy as we used to be. It’s got nothing to do with her attitude. There just isn’t any novelty value in foreign goods anymore. Anything I bring for her, she could get in India, and probably cheaper. Not only that, the local brands, having been shaken out of their complacency due to international competition, have also pulled up their act and re-launched their products, making them better and more appealing.
India is also being targeted by designer companies who are eager to cash in on the growing and ever-more-prosperous upper-middle and upper classes, which not only have plenty of disposable income – salary scales rose by more than 12 percent last year – but also the willingness to spend it lavishly and live it up.
In India, like in most societies in the world, there are the well-off, and then there are the rich. Around the world, the one sure shot way of making it known how rich you really are, is to carry or wear a designer make – sling a $5,000 bag on your shoulder and right there you’ve announced how high up in the social strata you are. Here, if you wear a Nike shirt – like professional golfer Tiger Woods – you are probably rich. But that shirt, in this economic boom, may or may not set you apart from the millions in the upper middle class – people with good salaries and the willingness to spend them on shirts or golfers’ greens fees.
What you then need is a luxury brand, like a LVMH – which until recently wasn’t easily available in India. That’s when you are in the big league.
Such biggies in ultra-luxury names have either made their entries into India, or are in the process of doing so – from Chanel, and Louis Vuitton, to Cartier and Hermes they are all coming. So, to cater to the class that will shop in these places, super luxury malls are now being set up, where an afternoon shopping spree is sure to add thousands of dollars to your credit card bill. I am talking, of course, of the affluent class who celebrate the fact that their favorite Gucci bag or shoe can now be bought in India. No more need for that umpteenth trip to Italy; industrialists and their diamond-dripping wives; and other noveau-riche Indians wanting, desperately, to spend their millions can now do so at home.
Today’s gift-bearing foreign aunts have much to rue. Sweet-smelling erasers are not going to cut it anymore. Indian nieces have, unfortunately, seen – and maybe even bought – it all.
Posted by Gopika Kaul at 5:59 PM | Permalink
If I told you that an Indian man recently paid almost $40,000 for a cell phone number- not including the actual phone- and that the town in which this person lives has the maximum number of Mercedes Benz cars per capita in his country, you’d think I was talking about some if-you-have-it-flaunt-it sort of New Yorker. Not quite.
No, this gentleman lives in the city of Ludhiana, India, in the northwestern state of Punjab. Don’t be alarmed if you don’t know where that is – it’s not exactly the name the springs to mind when you think of India. But the gentleman who coughed up that amount lives in this, relatively small, Indian city which houses a large number of millionaires, some of them nouveau riche, who are only too keen to show off their immense wealth.
A leading national daily published a front-page story about this businessman who’d won the cell phone number in auction of VIP numbers (special numbers given out by service providers, usually those that are easy to remember). He proudly declared that obtaining the number had been so important to him that he’d borrowed money from family and friends. His father affirmed the story, casually adding that his son liked to collect VIP numbers, so this was nothing new for him.
Barely had the country digested the idea of such appalling extravagance that the next day another gentleman, not wishing to be outdone, made public his favorite hobby – that of collecting cellular phone numbers. Living in another city in the same state, he claims to have spent a whopping $400,000 on a collection of eighty-six numbers, some of which have been specially bought at auctions, again, for VIP numbers. His aim, however, is to own up to a hundred such phone numbers, something that he hopes will gain him entry into the Guinness Book of World Records.
Indians are getting richer and the rich don’t only live in metropolitan cities like Delhi and Mumbai, but are sprinkled all over the country, living it up in the smaller cities, in their lavish bungalows complete with swimming pools, Jacuzzis and fleets of the latest cars lined up in the driveways. They wear the latest designer clothes, flaunt their snazzy videophones, spend millions on weddings and think nothing of getting on a plane and taking a vacation abroad – a face of the new India where luxury brands are excitedly setting up shop to cater to this class.
As the Indian economy continues its upward surge, the wealth, in what are called second-tier cities like Ludhiana is rising substantially – especially that of entrepreneurs and business families who are benefiting the most from this growth. It’s a spill-over effect as larger cities reach a saturation point. So there’s been a rise in the populations of these smaller cities, spurred on also by state governments who offer incentives for large corporations to set up shop in their small and medium-size cities. The central government too, in an effort to take some pressure off the larger cities, has been encouraging many information technology and outsourcing businesses to move to these cities. This, in turn, has raised real estate prices as conglomerates step in and the demand for land grows.
Take, for instance, the city of Nagpur in the central state of Maharashtra – the state is also home to the harbor and capital city of Mumbai. Nagpur is one of the faster growing smaller towns in India and houses over four hundred billionaires. Just about ten years ago, the city had only a handful.It’s yet another sign of the new, prosperous India where even the smaller towns are seeing exceptional growth and pushing people up the money scale.
But India, after all, is a land of utter disparities. Nagpur lies in the Vidarbha region where villages have been devastated due to crop failure year after year, and where desperate farmers have killed themselves at an alarming rate. But that, sadly, is also India – the ugly side of a soaring economy that has failed to lift millions out of wretched poverty. The wealth has seeped into the smaller cities, but it needs to spread to the lower classes and to the villages.
India cannot afford to leave out the masses, since such an imbalance is bound to have dangerous repercussions. On the one hand you have people bidding obscene amounts of money for additional cell phone numbers, and on the other, you have farmers selling their kidneys to get out of debt. It’s an unfortunate example of the ultimate Indian dichotomy.
Posted by Gopika Kaul at 2:50 PM | Permalink
India, it seems, is on a merry buying spree. And off late, it appears to have developed a special fondness for European companies, a fondness that was quite unthinkable two decades ago.
The most well known acquisition, of course, is the steel deal carried out by Laxmi Mittal, the world’s third richest man, whose $32.4 billion takeover of Luxembourg’s Arcelor created Arcelor-Mittal, the world’s largest steel producer.
Close on his heels was Ratan Tata’s audacious buyout of Corus, an Anglo-Dutch steel maker, for $12 billion. Barely had this deal been inked came one more – this time by another Indian business house, Aditya Birla Group, which acquired the American aluminum products manufacturer Novelis, for about $6 billion.
Now India’s king of spirits and liquor tycoon, Vijay Mallya - popularly known as the Richard Branson of India – has bought Scottish whiskey maker Whyte & Mackay for about $1.2 billion. Mallya’s United Spirits is India’s largest maker of spirits and the world’s third biggest based on its distribution. And the Taj Hotels chain is snapping up landmark hotels across the U.S. beginning in staid old Boston where it snapped up the Ritz Carlton and New York where it bought the historic Pierre.
If someone had predicted this even as recently as ten years ago, chances are the remark would’ve been met with sardonic amusement, at best. India? The land of dhoti-wearing home-spinning Mahatma Gandhi? Buying whiskey makers, steel manufacturers and posh hotels? Today, however, it seems almost natural. A sign of the times.
And this is only a short list of high-profile transactions. Since the beginning of 2006 Indian companies have made overseas acquisitions worth about $16 billion. More than half of the international acquisitions are in Indian software, outsourcing and health care sectors. The list is endless and the numbers staggering. As a result, India now has the largest number of billionaires in Asia – snatching that title this year from Japan – and they’re doing what men with lots of money do: Buying and selling
To me, however, all this seems a little surreal. True, that India is one of the fastest growing economies of the world and is being hailed as the future economic super-power, so its bold and confident bids for European and American companies should seem normal. After all, India’s gross domestic product – a measure of how much the country is producing and therefore a measure of economic growing – was put at over 8 percent last year, only slight higher than the 2004-05 rate of 7.4 percent. And manufacturing is a key part of that boom showing double-digit growth. That’s undoubtedly why so many of these deals are for hard, manufacturing corporations that provide the things most needed to build a nation: Steel, iron, construction material.
But yet it all seems a little bizarre.
The nation is, after all, still a third world country, a fact that makes the takeovers more commendable. Being a developing nation, the odds – of currency conversion for one – are against it, but Indian businessmen, riding on a buoyant economy, have managed to cross the hurdles.
And it does not stop here. The trend is only going to grow as the nation grow and prospers. Many large Indian companies feel the pressure to make announcements that would mark their arrival on the global stage, something that has almost become a yardstick for performance and growth. It is, of course, in this global economic environment, how we measure success: Buying something. And for an Indian businessman to buy a company in a nation that once held economic sway over his nation – name something more British than Scotch whiskey – the deals must be very satisfying.
But remarkable as that is, there is also this nagging reality that tugs at the heart. It begs you to look at the other side of India, the dark side. About twenty-two percent of its people still live below the poverty line, some forty million people. The dichotomy is striking and hard to ignore.
Growing up in India you learn, mostly, not to let the disparity affect you. But there are times when it’s too stark to ignore. Imagine this: a designer clad woman sits in a cooled chauffeur driven BMW seven series at a traffic light in Delhi, she’s reading a paper whose headlines are celebrating yet another Indian takeover running into billions of dollars. There is a picture of Vijay Mallya bejeweled, as he always is, with gold bracelets and rings, at a Glasgow (Scotland) hotel next to myriad bottles of Scotch whiskey. It’s the middle of the summer and the temperature outside is touching 110 degrees Fahrenheit, the traffic signal is about to change and the rapping on her window is now hard and desperate. A little girl waits for the lady to look up so she can make eye contact and plead a little more. She even performs some acrobatics on the road, bending her emaciated body in the hope of getting some money. But the lady does not look up; because making eye contact is something she has learnt not to do. If she meets the little girl’s eager eyes, it would make her uncomfortable, so she continues to read her paper extolling India’s global successes. The lights change, the girl invokes God, but the car speeds away.
On the one hand there is the global India – confident, strong and rich – on the other there is the desperate India – desolate, weak and deprived. The two live side-by-side, but there are times when things come to a head. And that is real the danger that India faces, of the two colliding hard against each other. If India is to truly become an economic giant, it needs to bridge that gap.
In the international ring, this may be India’s moment with its businessmen milking the opportunity of all it’s worth. But on the domestic front, India needs to address pressing issues of poverty and development, only then can it surge boldly into the next century.
For better or for worse, India as a country is far from having seen the end.
Posted by Gopika Kaul at 6:20 AM | Permalink
“Fools build houses and wise men live in them”. My grandfather, who never tired of repeating this adage, was fervently opposed to owning property because he saw it as blocking too much money into something that would not yield a good return; it was better, he argued, to put it in the bank and receive interest. I can’t help but wonder what he would have thought about this today when the house that he lived in, and ironically did own, is approximately ten thousand times its value than it was in 1950.
The property boom in India is riding on one of its highest waves ever. A recent headline in The Times of India, one of India’s largest newspapers, informed that a house in Delhi’s Amrita Shergill Marg (think Park Avenue) was sold for 137 crore rupees, roughly thirty million dollars – and this is far from the highest bid to have made headlines off late. Today, Mumbai and Delhi are spoken about in the same breath as Tokyo and New York when it comes to real estate prices. A plush 3,500 square feet apartment in Mumbai’s coveted Cuff Parade area (think Upper East Side, New York) could cost you 24 crore rupees, about five million dollars, if you want things like a nice sea view and parking space for at least five cars. If only my grandfather had not sold his property, I’d be sipping Pina Coladas on an exotic beach and writing a travelogue!
The recently moneyed upper-middle class as well as rich NRI’s (Non Resident Indians) are investing huge chunks of their income into the market, which in turn is leading to a rise in prices and prompting still more people to invest. Stories about prices doubling in less than a year have only fuelled this craze, convincing many of this being a sure shot at making quick money. Housing loans, as a result, are being handed out like hot cakes to twenty and thirty-somethings who, in a certain segment of course, are being paid enough to take on such financing.
Builders, obviously, are trying to make the most of this boom. Open any newspaper and you’ll see full-page advertisements that promise to sell you your dream home in a complex equipped with spas, swimming pools, tennis courts et all. In Gurgaon – an IT hub near New-Delhi which hosts companies like Microsoft and GE and where there is a demand for high-class apartments for these employees- one could buy a modest apartment with all amenities (swimming pools, tennis courts, sprawling lawns etc), power and water back up (an important factor to consider in India) for something like a two hundred and fifty thousand dollars, or you could go for a luxurious penthouse overlooking the golf course – supposedly by invitation only- for about a million dollars. If you think you got the green and can just pay your way through, think again- most of these penthouses appear to be sold out! Two years ago these very penthouses were about four hundred thousand dollars and I wondered why anyone would buy them for investment. Common sense told me, and I know now why I could never be in the real estate business, that this was already overpriced and could not possibly rise any higher. Well, so much for my common sense.
Posted by Gopika Kaul at 12:56 AM | Permalink