The Hindu Business Line : A reality check on the `feel good'

THE BJP-led coalition at the Centre has decided to go in for early elections because, among other things, of something called "the feel-good factor" which it believes will work in its favour. The mass media in the country too has taken to using this term with great gusto although nobody is quite certain as to who is feeling good about what.

It is possible — in fact, certain — that those who own or work for the advertising agencies and other `communication' intermediaries charged with the dissemination of the government's bizarre "Shining India" promotional campaign (paid for by the tax-payer but of benefit solely to the ruling coalition) may be feeling very good indeed about the crores of rupees flowing their way. So, probably, are those who have made a killing in the stock market bull run and some sundry businessmen who have had a good year. But they can hardly be said to be representative of the country as a whole.

So, we are back to the question: Who is feeling good and about what?

Let us study some basic data at our disposal and see whether we can elicit from them the answer to this question.

According to the Union Government's first estimates of economic growth between July and September 2003, the Gross Domestic Product (GDP) had grown by 8.4 per cent in the second quarter of the current fiscal, making India one of the fastest growing economies in the world. Government statistics are not very reliable, especially when the country is headed for the hustings, but let us stipulate, for the purpose of this article, that they have some relationship to reality. The problem here is that the GDP growth rate is an artifact created by comparison with the figure for the preceding figure which was abysmally low because of the drought conditions prevailing in most parts of the country. As a high rate of GDP growth in one quarter alone is not sufficient to translate into "the feel-good factor," we will have to wait and see whether good monsoons will recur and keep farm output up. And then again, we will have to see whether the manufacturing and services sectors can keep the economy powering ahead even if the monsoons fail and the economy falters because of a fall in rural demand consequent to a drop in farm output.

Let us now examine a factoid, as it were: Young people constitute the majority of the Indian population as of now, with 54 per cent of the population being under 25 years. According to the management consultancy, KSA Technopak, the annual spending power of the young in India is $10.5 billion — and increasing at the rate of 12 per cent a year. Others point out that the average age of a call centre employee is now 23 years and that the average age of a Citibank mortgage holder has fallen from 41 years five years ago to 28 now. Could these young people be feeling very good about their emergence as a major consumer bloc?

How could they not, with the whole world at their designer-shoe-clad feet? Well, a few of them may be feeling extremely good — as they always have done. But the plain truth of the matter is that although young people now constitute the majority in population terms, the affluent young people who have spending power running into billions of dollars are still very much part of an exceedingly small minority. The vast majority has very little to feel good about with economists pointing out that the Planning Commission's claims regarding the creation of 84 lakh jobs annually has turned out to be hollow and predicting that approximately 20 million will join the 35 million unemployed in the next four years.

While we are on the subject of jobs, we are informed by Hewitt Associates, the human resources consultants, that average salaries will grow by 12.27 per cent in 2004. What we seem to be looking at is an economy in which young people dominate and in which a tiny minority of these young people who are employed and have a rising income are spending up a storm while the vast majority continues to face unemployment.

In effect, we are looking at two economies, which the politicians in power do not differentiate between for political reasons and which the media, the values of which can be deduced from the fact that they pay more attention to the launch of a new car model than to suicide by a debt-ridden farmer, also report as a unified entity for commercial reasons. Viewed in this context, "the feel-good factor" seems either propagandist or purely anecdotal, and synonymous with consumerism.

There is nothing wrong with consumerism as a way of feeling good, is there?

It is, perhaps, a sign of the times that even those sensitive souls who have a distaste for the crassness of consumerism feel compelled to concede that it is essentially a personal choice issue in as much as it does no harm to anybody.

They could not be more wrong. Consumerism can be, and often is, toxic.

The WorldWatch Institute, in its annual report, State of the World 2004, states unequivocally that the world is consuming goods and services at an unsustainable pace, with serious consequences for the well-being of the people and the planet.

Approximately 1.7 billion people worldwide — more than a quarter of humanity — have entered the `consumer class', adopting the diets, transportation systems, and lifestyles that were limited to the rich nations of Europe, and North America, and Japan for much of the last century. In China alone, 240 million people have joined the ranks of consumers, a number that will soon surpass that in the United States.

Mr Christopher Flavin, President of WorldWatch Institute, points out: "Rising consumption has helped meet basic needs and create jobs. But as we enter a new century, this unprecedented consumer appetite is undermining the natural systems we all depend on, and making it even harder for the world's poor to meet their basic needs."

Consumption among the world's wealthy elites, and increasingly among the middle-class, has in recent decades gone beyond satiating needs or fulfilling dreams to become an end in its own right, according to State of the World 2004 project directors Lisa Mastny and Brian Halweil.

At the same time, consumption is rising rapidly in the developing world, as globalisation has introduced millions of people to consumer goods, while providing the technology and capital to produce and disseminate them. "Nearly half of all global consumers now live in the developing world," says Mastny. "While the average Chinese or Indian consumes much less than the average North American or European, China and India alone now boast a combined consumer class larger than that in all of Western Europe." Halweil adds that consumption is not in itself a bad thing. "The almost three billion people worldwide who barely survive on less than $2 per day will need to ramp up their consumption in order to satisfy basic needs for food, clean water, and sanitation. And in China, the rush to meet surging consumer demand is stimulating the economy, creating jobs, and attracting foreign investment."

Halweil has a point; but, in the case of India, it is necessary to add the caveat that no attention at all has been paid here to the supply of items of mass consumption — food, water and so on — and that resources have been funnelled into luxury items and services the supply of which has not generated down-stream economic benefits such as the creation of jobs.cFew people realise that consumption has costs which are, as matters stand, not paid by the consumers but by society.

Thus, WorldWatch Institute reports that "this rising consumption in the US, other rich nations, and many developing ones is more than the planet can bear." Forests, wetlands, and other natural places are shrinking to make way for people and their homes, farms, malls, and factories. Despite the existence of alternative sources, more than 90 per cent of paper still comes from trees, eating up about one fifth of the total wood harvest worldwide. An estimated 75 percent of global fish stocks are now fished at or beyond their sustainable limit. And even though technology allows for greater fuel efficiency than ever before, cars and other forms of transportation account for nearly 30 per cent of world energy use and 95 per cent of global oil consumption."

That is the bad news. The good news is that the rich usually do not turn out to vote and that the poor, who wind up picking up the bills of the rich, do.