We are like that only: Understanding the Logic of Consumer India By Rama Bijapurkar, Penguin, Rs 495

From the time when she worked for a foreign management consultancy, Rama Bijapurkar has met a procession of foreigners who think that India is just a poor country, and that it will become more and more like Europe and America as it gets richer. This book is a detailed refutation of that view; it goes about detailing how and in how many ways India is different. But it is not just the product of a bee in a bonnet. It describes an approach to analysing Indian markets — evidently a successful one, since it has made Rama a sought-after marketing consultant.

Consumers show enormous variations that are relevant to what they buy and how much of it; Rama rings these variations in a number of dimensions. To begin with, she takes the population and slices it into quintiles by income. According to her, the poorest fifth live a hand-to-mouth existence and are insignificant as consumers. The next fifth, the aspirants, acquire the most basic consumer durables — bicycles, fans and radios — and learn to aspire for more. The third group, the climbers, are hooked, but find that their desires far outrun their income, so they buy the cheapest goods. The fourth group, whom she calls the consuming class (aren’t the others?), are inveterate buyers; they weigh the price against what they get for it. The top fifth are the rich; they buy the best without looking at the price. Over time, the income of each group would rise, some members of each group would rise into the next, and their objectives would change. The rate at which all these changes take place shapes, in a complex way, the expansion and contraction of demand for various consumer goods. The income elasticities that emerge from these changes would be different from those historically observed in other countries; and it is in this sense that India is unique. Rama is not wedded to quintiles; she also tries out 7, 8 and 10 income classes. But the idea is the same: that income levels determine consumption behaviour and aspirations, and a consumer’s place in the income hierarchy determines his objectives and calculations. Rama similarly slices the population on the basis of values, industry, occupation, education, age and location (rural or urban).

In Rama’s view, Indians can be divided into a number of generations: those born before Independence, the products of post-Independence socialist India, and those who grew up after liberalization. Each has a different mindset and approach to consumption. As time passes, each generation will pass into history, and new generations will arise. Their changing outlook has an influence on consumption patterns. Rama covers other variables more briefly, such as gender, culture and psychology. All this is interspersed with jokes and anecdotes. Rama has many friends, and gives talks to corporate managers; both provide material for much merriment.

While this book conveys much knowledge in an easily digestible form, it is not a do-it-yourself guide to market analysis. It does not contain formulae one can use to work out how to sell, say, iPods in India. For that one would have to call in Rama. The Indian market is a cranky machine that only she knows how to start.

This is because Rama has no explicit model. An economist would approach the problem by assuming a demand function for every consumption good, in which income, price, age, occupation and so on would appear as independent variables; he would look for a function that best fits the data. For instance, using the National Council of Applied Economic Research data Rama uses, I once found a good fit between the proportion of an income class possessing a consumer durable and the ratio of income to price. It was a promising beginning; one could add other variables to the equation until one got an acceptable fit. Rama should try out this kind of simple econometrics, for her own amusement if for nothing better.

An important force that misses being considered by Rama is changes in technology. The biggest difference I see between the world I was born in, before World War II, and now is the enormous reduction in physical work. Such a huge volume of goods used to be transported in hand trolleys; so much agricultural work was manual work; almost all the goods on trains and at ports were loaded and unloaded by hand. I remember rice being unloaded from a train in Patna during the Bihar famine of 1966. We would not let the porters steal any. So they used to stick a hook into a gunny bag to get a grip on it. As rice spilled out of the hole, they would take it and eat it raw.

If mechanization of such tasks had been suggested 50 years ago, people would have been shocked; they would have thought that the bulk of the population would lose their jobs. Surely this decline in physical labour must have affected consumption patterns. An obvious impact can be seen in the decline in per capita foodgrain consumption; now that people are burning fewer calories, they need to eat less. But there must be other effects. It would be interesting to see where the application of Rama’s quirky mind to this question might lead.

Now that Rama is prospering, she should wander around the world. She will find that everywhere, people are like that only —in many different ways. Her roving eye would capture many idiosyncrasies; they would make an even more interesting book. Meanwhile, this one may be an important contribution to management literature, but it is not serious, let alone ponderous.