BW Businessworld

Focus Bharat: New Wave Of Growth

How India’s neo middle class from tier-2/3 cities is carving out a new place for itself in the country’s growth story

There are a few who can match narendra modi in political innovations. As the Gujarat Chief Minister, seeking re-election for the third time, he said his regime had helped spawn a “neo middle class”.

Good governance, he reckoned, had helped large swathes of dalits, tribals, and the poor in the state to come out of the vicious cycle of poverty, but lack of opportunities had prevented them from joining the middle class.

The thrust on the “neo middle class” stood him in good stead, as he fought the Congress in the general elections of 2014.

Three years down the line, a shell-shocked Congress remains in disarray and Modi is already planning his next move for the big test in 2019. He recently told his party colleagues that no idea had changed India as much as the mobile phone had. With mobiles having reached every nook and corner of the country, the entire template for good governance has changed. All governmental interventions will now use the mobile handset as the medium. Indeed, Modi said, that next general election would be fought on the mobile phone.

The mobile phone is a big facilitator in bringing urban services to rural India. Former President A.P.J. Abdul Kalam had a similar vision which he called PURA — providing urban amenities in rural areas. The mobile, technology, digitisation, and, indeed, the neo middle class are urbanising rural India at a rapid pace.

As JNU Associate Professor Himanshu observes in his piece (See: Page 117), “For the first time in Independent history, absolute increase in urban population between 2001 and 2011 census was more than the increase in rural population during the same period. While rural population as a whole increased by 12 per cent between 2001 and 2011, urban population increased by 32 per cent.”

The growth of a neo middle class, and newer urban centres, bring with them their own paradigm of prosperity and opportunities. So, when EY recently came out with their report titled, ‘India’s Growth Story: How Markets Beyond Metros Have Transformed’, they were voicing our thoughts. The EY report notes that urban clusters are driving India’s march forward as the fastest growing major economy, and tier-2/3 cities are emerging as the newer centres of opportunities. “There is a new emerging class of cities, with millions of aspirational consumers who are vying for attention on the national stage. These are India’s ‘new wave’ consumption hubs,” says the report.

This is a new wave of Bharat driving the India growth story. BW Businessworld’s panel of experts endorses this view. Prof. Himanshu quotes a study by Urmila Chatterjee, Rinku Murgai and Martin Rama from the World Bank that “majority of the new jobs are created not in large metropolitan centres but in smaller towns and cities”.

Market strategy consultant Rama Bijapurkar (See: Page 118) writes: “Non-metro towns and a section of rural India that think tank ICE 360° calls ‘developed rural’ have been the direct beneficiaries of the sharp increase in quantity, even quality, of roads built these last 10 years, and both real and psychological distances between big and small towns and villages and urban centres have crashed. Expanded trucking and courier services, increased air services (though that is the next revolution waiting to happen), and the banking touch points and cheap cell phone (and internet) connectivity revolution have made working in the so-called “Bharat” increasingly efficient and costs and quality of living remained far better than those in crowded, bursting-at-the-seams metros”.

Observes rural marketing doyen Pradeep Kashyap (See: Page 116): “These smaller towns and cities are major growth engines. In the last decade, factories have been set up, so the income level has given rise to disposable surplus that drives consumption”.

Brand strategy expert Harish Bijoor (See: Page 114) underlines the predicament of the tier-2 town family. “The tier-2 town family is actually asking the big question: Is it worth moving geography at all? When I can enjoy a better lifestyle being where I am, why should I move?”

BW Businessworld reporters spoke to leading players across sectors such as education, e-commerce, real estate, BFSI, FMCG, auto, telecom and retail — sectors also covered by the EY report for their “untapped potential” — and found that besides a new wave of consumption, newer investments were being made keeping in mind these tier-2/3 cities.

Bharat indeed is driving the India growth story!

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Magazine 15 April 2017 gujarat governance

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