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Upper middle class seceding from India

September 21, 2004

Back in the late 1980s, the young proprietor of India's largest newspaper was fond of saying that the rich had "seceded" from India. What he meant was that the rich had turned their back on India, in the sense that they did not look to it any longer to meet their needs.

Since none of us was rich, the insight meant little.

Much has happened in India since then. Politically, we have entered a period of entropy. There has therefore been a consequential weakening of the systems and institutions of governance, if not yet democracy. But in a curious paradox, economically we have become hugely stronger than ever before.

The combined effect of these two developments on our society has been dramatic. The economic strength has meant the enlargement of the middle classes and the controlled political chaos has meant their gradual disengagement from the political process. The voter turnout is a quick indicator of the underlying attitude.

Or, to use the young proprietor's metaphor, the upper middle classes have now begun to secede. Increasingly, as the Engels curve begins to operate, they are beginning to stop looking to India to meet their needs.

The most dramatic manifestation of this is the manner in which they have begun to export their children straight from school. A less dramatic manifestation is the way they look to foreign destinations for tourism. They also do some of their shopping abroad.

But most importantly, their frames of reference have now turned firmly outwards. They are simply not involved in India in the way the middle classes used to be even a decade earlier. For this the politics of the 1990s is squarely responsible.

Where the export of children is concerned, in 1990, only a handful of students with very rich parents went abroad for undergraduate degrees. Now over 10,000, with indubitably middle class parents, do.

I am one of those who have sent off one son and am wondering if I may have to send off the other fellow as well. I don't want to, but I am fearful that I may have no choice.

Many of my friends and colleagues are in the same boat. Inevitably, we exchange notes. And it turns out that most of us send the kids with great reluctance.

The reluctance is not because of the cost, which, with a loan and some belt-tightening, is not unaffordable. It causes no more financial stress than buying a house does. There is a severe impact on cash-in-hand but it is accompanied by the comforting thought that it is money well spent.

The alternative, undergraduate education here, is infinitely worse. Barring a few islands of excellence, Indian under-graduate education has all but collapsed.

This collapse is extraordinary for two reasons. One is that high school education in India, despite all its warts, is still excellent. Though the width and breadth of the syllabi and the pressure to perform put everyone under severe stress, it is a worthwhile exercise eventually. And at the post-graduate level we are still doing fine.

But the three middle years have somehow fallen through the crack. Except, literally, in a handful of institutions, undergraduate education in India has become a complete waste of time.

Just when the young brains are hungry for knowledge and guidance, our system provides them with neither. As a result, it also induces wholly negative effects. It kills off hope and idealism. It is, pure and simple, a quality issue.

So those who can, and their numbers are increasing with each passing year, send off their children abroad. Most of them don't return. They have no friends here.

In leisure activities, also, something like this can be seen. Even domestic tourism in India, for example, is hugely expensive and troublesome. But more importantly, what you get in return for the trouble and expense is often not worth either. So, people are asking, why not spend a little more and travel abroad: the Maldives, Singapore, Malaysia, Hong Kong? Here, too, it is quality that is the issue.

Indeed, it is probably a matter of time, as health insurance becomes more pervasive and so cheaper, that middle classes will start going abroad for their major medical needs as well. The rich started 30 years ago and the upper middle classes can be expected to follow suit in a few years.

Three issues, large and major, emerge from these trends: one political, one economic, and one social.

The political issue is whether a country with a disengaged middle class can look after its institutions of democracy and governance. These institutions require a high level of commitment, and the fact that this commitment is being eroded is evident in the decline of our institutions.

This is not a case of post hoc ergo propter hoc. The causal link is clear.

The economic issue is equally worrisome. The middle classes constitute a huge market for certain types of services that need to be delivered in situ. But this market is slowly leaking away to foreigners.

This makes no economic sense at all, especially when India is supposed to be an international provider of services. We should be importing students, tourists, patients, and what have you. Instead, we are exporting them.

The social issue is of what might be called "gating". Just as the rich did between the 1970s and the 1990s when the Congress was having a go at them, the middle classes are now gating themselves--be it in malls, multiplexes, condos, elite schools, expensive hospitals, etc. Exclusion through pricing is providing it with much-needed comfort.

Many people will say that all this is because of income disparities. But that is only partially true. It would have been fully true when branding alone mattered; today, it is underlying quality, or the lack of it, that is driving middle class Indians abroad for their needs.

What needs to be done is clear enough--increase supply of course, but altogether more importantly, improve quality. Indeed, if this is self-evident for goods, why is not so for services?

How do you improve quality? The ministries dealing with the services in question should be focusing on this issue. The task is not easy because it requires, first, attention to detail, which our ministers are incapable of, and second, a mechanism of instilling discipline, which our political system is incapable of.

Neither is engaging the attention of the government, which is busy scratching its big, well, head.

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Number of User Comments: 2

Sub: agree on most aspects

While it's true that some sort of gating or compartmentalisation is happening with the upper middle class, some points may not be necessarily true.Foreign tourist ...

Posted by vinod

Sub: UG education

though i cannot fully subscribe to the authors view point,he does make a valid point about the undergraduate education or rater the lack of it ...

Posted by rajesh


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