Move in today, pay over 15 years
The pre-reforms generation bought a house using their savings and provident fund, and by borrowing from friends and family. Reforms brought in private banks and also gave banks greater freedom to set interest rates and lend. As interest rates dropped, the culture of home loans grew. Today, a home loan is the norm to buy a house.
The shift to services
The opening up of the economy to private enterprise found the greatest expression in the services and manufacturing sectors. A visible and continuous shift happened in the employment pattern: from agriculture and allied sectors to manufacturing and services. While the quantum of shift away from agriculture is large, the pace at which non-farm sectors are creating quality employment leaves much to be desired. Also, the number of agricultural workers, in absolute terms, started declining only in the late 2000s. Formal jobs—which offer stability of income, some labour rights and social security benefits—continue to remain a concern.
Grab a car or a computer
In several big-ticket goods, the trickle-down effect of liberalization—opening up of sectors, greater competition and choice, more innovation—has meant an improved price-value offering for consumers. Take cars. In 1992, a Maruti 800, an entry-level car, cost about ₹1.25 lakh. Adjusting for inflation*, ₹100 in 1991 is worth ₹269 in 2020. In other words, that ₹1.25 lakh in 1992 would be worth about ₹3.36 lakh today. For that amount, a consumer can get the entry-level Maruti Alto—an offering that is a significantly superior piece of engineering.
That price-value play is seen in personal computers too. In 1991, an assembled desktop PC cost about ₹20,000. Adjusting for inflation, that’s ₹53,800 today—good for a branded laptop that is generations ahead in performance. Coupled with the fact that incomes have risen, affordability is far greater.
A greater array of choices
A prime thrust area of economic reforms was the reduction in import duties in order to boost trade. In 1991, India had a peak import duty of 150%. Even the average import duty, weighted by share in the product basket, was around 27%. In 2018, this was down to 5%. The drop in import duties, plus a larger domestic economy and higher disposable incomes, have added breadth and depth to the goods that come into India, offering greater choice to consumers and companies alike. However, since 2018, import barriers are nudging upward again, fuelled by global trade wars and India’s own atmanirbhar tilt.
The household portfolio
The presence of private players in banking, mutual funds and insurance, a capital markets regulator, the creation of the National Stock Exchange (NSE) which sidestepped the broker cabal by introducing online trading, and free pricing of capital issues are all fruits of liberalization.
The new freedoms also induced excesses in the capital market, notably in the 1990s, with the stock market getting rocked by a series of scams. But broadly, equities as an investment option has grown. And the investment portfolio of the Indian household has diversified away from physical assets such as gold and real estate to include financial assets like mutual funds and stocks.
From half a day… to immediate
Earlier, accessing one’s own money was a day’s chore. Now, it’s a matter of seconds involving a few clicks. Liberalization paved the way for private banks, whose service orientation compelled government-owned banks to transform. Regulation also strengthened. The 1990s and the first decade of this century were about building infrastructure like bank branches and ATMs in order to bring more people into the financial system. That’s paving the way for the digital leap that is currently under way, with new payment platforms like UPI clocking impressive growth.
Call of the city
Census 2011 recorded that 45 million Indians moved away from their places of birth and were living as domestic migrants within the country. In the 1990s, with few urban areas providing economic opportunities at scale, the primary destination for migrants was other rural areas (marriage being the top reason for movement). However, migration to urban areas has since picked up. The share of people who move for work-related reasons is still low, though, indicating that Indian cities continue to be wary of outsiders. This is contrary to what happened in China, where men, and also some women, moved to economically vibrant cities in large numbers primarily for work.
The satellites come of age
In the 20-year span between 1991 and 2011, the population of Gurugram and Noida increased sixfold. They grew due to the steady influx of a cocktail of new people, industry and real estate—all fed by the scope of possibilities and the sense of aspiration which was unleashed by reforms. In different degrees, it was the same in nearly every major city. In Mumbai, the centre (Mumbai district) had no space to grow. So the periphery (Mumbai Suburban) stretched itself. And it also went and attached itself to new appendages like Thane. The result is that satellite towns like Sonipat (Delhi), Sriperumbudur (Chennai) and Tumkur (Bengaluru) have grown massively and emerged as new economic hubs.
Data and text compiled by howindialives.com
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