INDIA - PROBLEM OF PLENTY

Does the doomsday theory hold water? With the kind of news that is hitting the newsstand on daily basis, the answer to my mind is - "MAY BE". From a vehement "NO" I have changed my stance to "MAY BE". Due to the World economic turmoil, The lay-off scared employee set are at faceoff with opportunity cost, be it in terms of low or no bonus, which was a important salary component, or be it in terms of no salary hikes inspite of a high inflation.

Consider this Percentage increase in price data compilation from various ministries of government -

Food products: average price increase of 3.43% (in 2007) to 22.55% in January 2010.
Food commodities: 5.60% (in 2007) to 19.42% in January 2010.
Foodgrains: 6.27% (in 2007) to 17.89% in January 2010.
Pulses: 2.14% (in 2007) to 45.62% in 2007 in January 2010.
Dairy products: 6.08% (in 2007) to 12.87% in January 2010.
Eggs, fish and meat: 6.38% (in 2007) to 30.71% in January 2010.
Sugar: (-)14.69% (in 2007) to 58.94% in January 2010.
(source - rediff.com)

Absorb this: Iceland, Greece and Dubai are already walking on razor sharp edges with Greece being told to sell its islands to reduce mounting debt. Sultans are already eyeing the eponymous "Acropolis". Germany is touted to bailout Greece but Germany itself is facing the worst ever recession (post war). As I write, I hear Spain, Italy & Portugal are slated to join the Island selling club. USA's economy playing hide and seek with a "W" level growth & degrowth is not helping either. Google may be surely eyeing buying a part of Venice to set up a Google resort. 10% budget deficits are talk of the town.


And now absorb this - Nick George use to earn 60000 Indian rupees in 2008 with a five Lacs bonus and now in March 2010 still earns the same with 1 Lac bonus. Nick George use to send his child in a SSC board school but due to education competitiveness now sends his child to a ICSE / CBSE board school having 200% more fees. He has a demanding wife and life, both of which he cannot compromise. Weekends still has to be happening to put brain into proper gear for coming week.

Average Weekly Expenses of Nick George -

Child Fees - 800 Rs
800 Cc Car Weekly installments - 800 Rs
Petrol expenses - 1000
Core Food Bill - 1000
Amnesia Night Club Entry - 2000
2 Vodka Shots - 300
2 Beer Pints - 300
Sunday Brunch - 1000
Holly / Bolly Wood blockbuster ticket cost - 1000
Travel Expense extrapolated /week basis - 1500
Shopping Expense extrapolated /week basis - 500

Around 40,000 rupees from salary are already accounted for, in the expenses above. If Nick George happens to be a migrant from a countryside town to a metropolis in India; he will surely contemplate going back to his MOTHERLAND, with around 3000 Rs of weekly installment towards owning a small nest in metropolis. And if Nick George has dependents, he surely will look for rapid job movements to make his salary touch 75000 Rs in hand at least. (IN HAND salary is the right way to talk to employers these days; As much as 50% of the salary can be variable and in these times variable salary is never paid). Nick George's earlier option to find a job abroad is routed out because of the word "W" earlier stated. Even abroad on last country 1,00,00 Indian students went USA to study in the year 2008 and around 30,000 to UK.

The irony is luxury car manufacturers have rolled out considerably higher number of models this year vis-à-vis earlier years. Though Indian Salary levels have increased, but the kind of population base our country carries, we will always be amongst lower strata in the Human Development Index. Even in upper middleclass levels too much education is leading to too much competition and lower salary base. An African returning to his country also can negotiate salary equivalent to the one he /she would get in say a pound dominated country like "United Kingdom", sadly but Indians can't.

Bottom line - For salaries of Indians as a whole group to rise (taking all classes of Indians) and match salaries of European or even other Asian counterparts, a "TAB" on population needs to be put. Population and salary are always on a seesaw and problem of plenty is the pillar. With every inch of land in metros are being carved into residence space, 25 lacs of vehicles in a 50 sq.km space metro cities, Indians will have to reach Moon soon. This problem is paramount for 'India', above all the fiscal deficits issues, above selling its Islands, and also above Growth. Fundamentals have to be tightened first to create a robust platform for long term growth.