I have an early childhood memory of my mother not letting me drink milk in a kaanch ka glass (glass tumbler) standing out on our small balcony in a middle-class Delhi apartment complex. “It attracts attention,” she’d say. To what, the 10-year-old me wondered. To consume or display any sign of wealth in public was to attract the envy of others less fortunate was the final distillate of the long lecture that my grandmother jumped in to deliver. Cut to 2010. The same mum now sits happily in a glass-fronted café to sip a cappuccino. Granny, rest her soul, watches indulgently from elsewhere, wishing, I’m sure, that she were here too. That Death by Chocolate looks so good.
Perceptions of wealth: A woman tries out a gold necklace at a showroom on the outskirts of New Delhi. This was the decade that urban middle-class India began to slowly step out of the protection of government-assured returns into the world of market-linked products. Bloomberg
The last decade of the 20th century retained traces of the old traditionalist attitude to money. Shrugging off the decade that still carried traces of our colonial past in the first two digits, and entering the 21st century seemed to free many of us from the past.
And the most visible sign of this is in the way our relationship with money changed. We saw what a transition from a gross domestic product (GDP) of 4.4% that we began the decade with to double that halfway through the decade could mean for us. We realized that from mere middle class, we were morphing into something called the mass affluent. Suddenly debt became a good four-letter word—home loans grew at an average 21% a year to Rs3.15 trillion in 2010. Credit card use streaked ahead at 17% a year, and by 2010, kids were buying Levi’s on EMI (equated monthly instalments) to look cool on a budget.
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This new ease with debt has deep linkages with how people view their future. Long-term debt is a statement of confidence in the ability to go on leveraging your own human capital—it will not get diseased or die (life expectancy in India at nearly 70, is up from about 55 just 25 years ago) or lose the job—for the duration of the loan and the confidence that incomes will only go up year after year.
It was the decade that urban middle-class India began to slowly step out of the protection of government-assured returns into the world of market-linked products. A new list of acronyms joined the list of LIC (Life Insurance Corporation of India), UTI (Unit Trust of India), SBI (State Bank of India), PPF (Public Provident Fund), NSC (National Savings Certificates)—names heavy with the safety of government ownership. The upstarts called ELSS (equity-linked saving scheme), Ulip (unit-linked insurance plan) and SIP (systematic investment plan) came from companies that sounded like banks or had a glitzy Wall Street-like feel to them. They came with their swanky sales team and promises of untold riches. Along with the Reserve Bank of India and the Securities and Exchange Board of India, new regulators called Irda (Insurance Regulatory Development Authority) and PFRDA (Pension Fund Regulatory and Development Authority) were called upon to patrol money street.
Halfway through the past decade, the reality of our future struck home and one of the biggest booms in real estate turned sleepy middle-class residential blocks into a hotbed of builder activity. Soon, Mumbai became more expensive than Manhattan, with one-tenth the amenities.
It was the decade that we began having belief in our new place in the world. When travelling abroad, our gadgets were as good or better than the erstwhile rich, our eyes widened less (and then not at all) at the acres of malls on display, and our money now stretched well to cover converted spends, even in dollars and pounds. This was a decade when the green backed disciples of Ayn Rand ruled the world and brought it close to tipping over. We saw countries go bankrupt. We saw market fundamentalists run to the government seeking help to clean out the mess created by the greed of banks that grew too big to fail. And it was the decade where the pious preaching of the US and Europe to developing countries on good governance looked ridiculous.
The decade had a Bollywood-like end, throwing into focus structural problems in the way Wall Street was running the world. It was the decade where, from the shelter of a half-open economy, we watched the erstwhile leaders falter under the twin forces of greed and politics. Images of Lehman Brothers Holdings Inc.’s Dick Fuld defending his actions, that of his firm and Wall Street’s greed for bonuses at any cost and that of auto chief executives flying to Washington in their private jets to ask for alms from the government became iconic. If greed was out of control, so were large acts of generosity. Bill Gates and Warren Buffett set precedents in sensible and sustained giving.
Meanwhile, in India, an intense drama played out towards the end of the decade, when simmering tensions between two regulators spilled out into the open, and the insurance and capital market regulators were locked in a never-seen-before public brawl. If one was looking after investor interest, the other was clearly influenced by corporate fat cats. India saw the amazing spectacle of the finance ministry using a cannon ball to settle the dispute, when a rap on the knuckles would have done equally well. Though the ruling was in favour of the errant regulator, investors were eventually the winners. Tough changes in insurance rules made the virulent insurance product, the Ulip, lose its sting (and its allure).
On the stock market front, domestic market crashes began to be caused by global events and not just Indian events such as the Ketan Parekh scam or the Communist parties’ alliance with the Congress after the 2004 elections. Indian markets crashed due to 9/11 and in 2008. But, though the world came close to ending several times, India managed to pull through—recently freed aspirations swept aside any roadblock to growth.
And through all this chaos, the tortoise walked a bit further each month. Whatever the market. Whatever the scam. Whatever the politics. Economics. Religion. Nothing stopped him from putting it away. Whatever happened, his SIP kicked in. He put away Rs10,000 a month in the Nifty on the 10th of each month starting 2000. And on 1 January 2011, he has a pot of Rs42 lakh. And growing. He’s still got 20 years to retirement. He leaves event chasing to others. He knows that India’s coming-out party is still on and will be for another two decades.
Graphic by Ahmed Raza Khan/Mint