Open Forum

New Delhi, 25 March 2014

India’s Dismal Economy

YET, THE RICH GROW RICHER

By Proloy Bagchi

Come election time leaders are past masters at tall talk. Recently, Congress Minister Kapil Sibal bragged to a TV channel that growth seen during the UPA Government’s 10 year rule had never been seen before.

Undeniably, many will take his statement with fistfuls of salt but viewed from another angle it seems true. If one cannot lump it, one might look at the growth the country has witnessed.

Arguably, Mumbai is India’s richest city and has been so for most of the post-Independence years. Yet, the kind of riches Mumbaikers flaunt today was unheard of earlier. Take for instance, a recent screaming headline in a national daily.

Mumbai, literally, is going to have “castles in the air”. Ten such “castles” of 18,000 square feet each are coming up in an ultra high-end apartment complex, costing a cool Rs 100 crores. The complex come with dog parks, crèche, an elevated jogging track and other amenities.

The “uber-luxury” apartments have their own restricted clientele who never seem to have heard the term “slow-down”. Duplex apartments in such complexes come with private pools, sun-decks, multi-level automated parking and five-star clubs  which can cost as much as Rs. 1 lakh a square feet (about Rs 100 crores for 10,000 square feet).

Sold only by invitation, five Signet residences on the 40th floor of Lodha’s World One Tower received overwhelming response and were lapped up for Rs. 75,000 per square feet. Located in Worli it is touted as the world’s tallest residential tower at 442 metres and boasts of interiors by French designer Giorgio Armani and a club and spa by Six Senses among other high-end labels.

Pertinently, plans to build super luxury apartments within peeping distance of Rashtrapati Bhawan have generated another controversy. The project proponent seems to be so powerful as to have had objections raised by various security agencies brushed aside. Shockingly, the proposal continues to be “alive” and it would be interesting to see what eventually transpires.

Notably, residences costing scores of crores are no big deal in Mumbai. India’s richest man tycoon Mukesh Ambani’s house Antilia him $2 billion, over Rs 10,000 crores, making it the world’s costliest house. Not to be outdone, his younger brother Anil built his residence costing slightly less, Rs. 4000 crores.

There are smaller fries like Bollywood star Amitabh Bachchan who bought a new bungalow for Rs 50 crores despite having four already and Bharat Ratna legendary cricketer Sachin Tendulkar who is going to move into his new Rs. 80 crore house. Wherein, paying Rs 10-20 crores for a 3-4 BHK house seems like spending loose change!

Bangalore too boasts of properties that cost multi-crores with a pool or garden in front of each bedroom. Even 3 and 4 tier towns have high-end properties which are worth several crores. Indeed, retired civil servants cannot imagine the way such properties are bought and sold.

This is not all. The country has emerged as the biggest market for business jets in the Asia-Pacific region, surpassing far richer China as many business houses and high net-worth individuals (HNIs) have began acquiring aircrafts. According to a leading manufacturer of business aircrafts, Beechcraft India has a fleet of 254 business aircraft against 213 in China, 192 in Japan, 150 in Hong Kong, 66 in Malaysia and only 53 in Thailand, countries supposedly richer than India.

In fact, according to a report even during the 2008-12 slow-down years Indians purchased 38% more aircrafts than in the preceding five years. Whereby, business aircraft manufacturers are bullish about India and expect a steep rise in the number of HNIs.

Another survey indicates the Indian economy is set to grow “significantly” in the next five years. Consequently, Beechcraft considers India as a very “exciting market” for business aviation and has committed significant investments for registering its presence in the country.

According to global consultancy firm Knight Frank’s Wealth Report the number of indigenous billionaires (in dollar terms) is set to double during the next 10 years. With 60 billionaires already the country ranks sixth among the top 10 countries and by 2023 the number is expected to rise to 119. Thus, only three countries: US, Russia and China will have more billionaires than India. Speaking volumes about the country’s business acumen!

Earlier, during the pre-Independence years, only the erstwhile Maharajas maintained huge garages for their car collections. Remember, Gwalior’s Maharaja was called the Prince of Mercedes owning as many as 75 of them apart from Rolls Royces, Bentleys, Cadillacs, Packards and high-end European cars like Alfa Romeos and Hispano Suizas.

Today, leave alone the business/industry tycoons, even film stars maintain a handsome stable of cars. Amitabh Bachchan has many including a multi-crore Rolls Royce and recently he gifted his son an Rs 2 crore Bentley without batting an eye-lid. An up-and-coming actress too acquired a bespoke Rolls Royce. Likewise, cricketers like Tendulkar and MS Dhoni own a fleet of cars. Dhoni even has a battery of high-end exotic motorbikes. 

Moreover, with money flowing, the rich are now graduating to luxury yachts. Earlier only a few like Vijay Mallya, Gautam Singhania and Anil Ambani had a boat, today every rich fat cat wants one resulting in around150 yachts crowding the sea off Mumbai’s Gateway of India. This itch is fast progressing southwards to Goa and Kerala.

Alongside, the middle class are also doing not too badly wherein luxury apartments in gated complexes are coming up all over the country. Scandalously, today Rs 100,000 is meaningless money instead one must have in several multiples of this to enjoy a middling life.

Mercedes, Audis and Range Rovers are in profusion and so are Hondas that clog the lanes and by-lanes with houses unable to accommodate multiple sedans. Tata’s Nanos are a strict no-no and the Maruti 800 has become extinct.

In sum, notwithstanding that GDP growth has dived to the pits, foreign investments are conspicuous by their absence, moneyed Indian investors have migrated abroad, manufacturing is scraping the bottom with job creation virtually zero taking unemployment to an alarming high and there is persistent high retail inflation, yet Sibal is right!

There has been unprecedented growth during these10 years ---- for tycoons and, of course, politicians many of whom have become crorepaties. The poor can wait; if at all, they can be taken care of later, maybe, during the next 10 years! ----- INFA

(Copyright, India News and Feature Alliance)