India has 200 million households. Sixty million are below the poverty line. Of these 60 million households, 15 million are described as poorest of the poor by the government. For these 60 million households, nothing has changed in the last two hundred years, if not more. This is Bharat, as opposed to India. Above this 60 million is another category of perhaps another 80 million households. Nothing has significantly changed for them either, although this is the segment that will witness the fastest change in the next 10 years.
That leaves the remaining 60 million Indian households, the India component. This is primarily, but not exclusively, located in urban areas. More importantly, the 60 million India component has access to English. The remaining 140 million only has access to vernacular languages. Thatís a crucial distinction.
Urban lifestyles have traditionally meant the six metros ó Chennai, Calcutta, Hyderbad, Mumbai, Bangalore and Delhi. One of the messages of the Nineties is that this identification has broken down. Driven partly by high costs of real estate in the metros, growth has spilled over to around 50 cities. Prosperity is evident in these non-metro cities as well.
There is a clear generation divide in this urban population of 60 million. For simplicity, letís divide them into three groups ó those who were born before 1947, those who were born between 1947 and 1970 and those who were born after 1970. The non-resident Indian community is a different proposition altogether.
The group born before 1947 has either retired or is close to retirement. Born in colonial India, this group is much less confident about liberalization. Economic globalization tends to be identified with imperialism. Unfortunately, policy in India is usually made by those who are more than 65 years of age. Independence and consequent partition of India was possibly the most traumatic event this generation has been through. Consequently, the Kashmir problem will be impossible to solve as long as this group makes policy.
Economically, this generation faces considerable pressures. Historically, the government guaranteed nominal rates of return that were over 12 per cent on government borrowings. To match these government guaranteed returns, banks had to offer high returns on fixed deposits. Reforms, competition and lower rates of inflation have now led to nominal rates of return of around 6 per cent. Liberalization has also led to lower rates of return on gold and real estate, traditional savings avenues. Stock markets are not attractive because of higher risk and corporate mis-governance. This uncertainty is spliced with breakdowns in joint families and accompanying old-age care. Simultaneously, life expectancy has increased.
The group born between 1947 and 1970 identified with the non-aligned movement and the Cold War. Quite often, it was a generation educated in Britain rather than the United States of America. It identified with Vietnam-type protests and almost tautologically, is against the US government, though not necessarily anti-American. Leftist, though not necessarily communist, leanings are strong in this group. It is also a generation that identifies strongly with the public sector, developed in the Fifties and the Sixties. The government employs 20 million people, 6 million in the public sector. This is nothing compared to the total labour force of 400 million. However, this 6 million usually works in urban areas and there are 60 million urban households. Therefore, roughly one out of every three urban households makes its living from the government.
This is a political economy point that is often missed. This segment is the group threatened most by liberalization. Some downsizing and voluntary retirement schemes have happened in the government and in the private sector. This group identified with the idea of working for one particular organization until one retired at the age of 60 or 65. Employment security was therefore synonymous with job security in the same organization. Losing oneís job in the mid-40s was a devastating experience. Having not upgraded oneís skills, someone thus fired finds it impossible to be re-employed.
There is also a geographical element to this. Most sick public sector units are in eastern India and it is there that employment growth has been the least in the Nineties. This generation was also the main support base for trade union membership in India. Trade union membership, identified with conventional manufacturing, has not just plateaued out, it is actually shrinking. In any case, trade unions are pertinent for the organized labour market and most recent job growth has been in the unorganized sector.
This leaves the group born after 1970, representing the most interesting transition that is taking place in urban India.
First, this generation grew up or entered the labour force in the Nineties. The Eighties were when the print media exploded, the Nineties brought an explosion in satellite television and later, the internet. Liberalization brought an exposure to global brands. Second, quite often, this generation was educated in the US rather than Britain. This makes it intrinsically closer to the US and not just in terms of blue jeans or McDonaldís, although it is true that CNN rather than BBC is the most likely channel to be watched.
Third, this is a post-Cold War generation, identifying not with the non-aligned movement but with economic prosperity. The preamble to the Indian Constitution proclaims that India is a socialist republic. But this generation no longer identifies with socialism. Issues like Kashmir are historical baggage. Letís settle with the line of control as an international boundary and get on with life. Thatís the kind of argument. Fourth, pre-1991, industrial policy and licensing tried to ensure balanced regional development. The model therefore was one of taking jobs to people. Reforms ended licensing and the model switched to one of taking people to jobs.
Hence, there has been a remarkable increase in inter-state cum inter-regional migration. Such migration has tended to diminish sub-national identities. For example, earlier generations were likely to describe themselves as Bengalis or Punjabis or Gujaratis. This generation is much more likely to describe itself as Indian. Inter-regional marriages have also become much more common. Fifth, this generation is nationalistic in a different kind of way. National identities have a correlation with language. India doesnít have a single national language. Earlier attempts to coercively push Hindi down the throat of every Indian didnít succeed. Now, thanks to Bollywood films, Hindi is spoken by every Indian. This may have reinforced this national identity, and this generation may not make a fetish out of Independence Day on August 15 or Republic Day on January 26, but readily identifies with nationalist sentiments through nuclear tests, religious manifestations or even lunar missions.
This generation is also extremely comfortable with English as a language. So was the earlier generation, that born between 1947 and 1970. But for that earlier generation, English was a foreign language. For this generation, English is an Indian language and there is thus an increasing propensity to mix English freely with Hindi.
Sixth, this generation has higher spending propensities, as opposed to savings. Witness the explosion in credit cards. The earlier generation used credit cards as debit cards or charge cards. It is the generation born after 1970 that uses credit cards as credit cards. Seventh, this generation is much more confident and therefore, much more amenable to the prospect of handling job uncertainty.
Policy is made by those who were born before 1947. But do they understand what those born after 1970 want' It is the generation born after 1970 that will bear the consequences of the policy thus formulated.