The Rural Loot Begins — modern Mahmud Ghaznis eyeing the villages

About 15 years back, I spent a few months in the infamous Kalahandi belt of Orissa researching for my book In the Famine Trap. As I traveled from one village to another, I came across several stories, many of which found space in my book, but some I still can’t forget. I remember visiting a poverty-stricken village in Bolangir district. Someone took me to a dilapidated hut, the owner of which I was told had a new technological gadget that the village was proud of. I was naturally very curious.

The poor inhabitant of that mud-plastered hut, living in extreme poverty, showed me a torch. He switched it on, and I could see his face lit with excitement. He had never seen a torch, and was thrilled to own it. He directed the beam to every nook in the dark corners of his house, and asked me repeatdly if I also had one. I didn’t want to disappoint him, and told him yes I owned one and how lucky I was. I then asked him who gave it to him and how much did it cost.

I was told that some people had come to his house, they said they belonged to an NGO, and showed him the torch. Seeing his excitement, they offered to give it cheap to him. They gave him the torch, and in exchange walked away with two bags of rice.

Two bags of rice would have sustained his family for a year.

Why I am telling you this story, and that too now? Well, I see an army of businessmen, traders and corporate honchos descending on rural India. Every other day I read in the media how rural India is going to be the next engine of growth. How the approximately 600,000 villages are going to drive the Indian economy. The more I read such reports, the more I am reminded of the Bolangir incident.

Is there any difference between that particular NGO which bartered a torch with two bags of grains, and the big companies (as well as the smaller ones) waiting to market television sets, two-wheelers, cars, consumer durables, cell phones, laptops and computer hardware, and you name it? I don’t think so. The only difference being that those who managed to sell the torch for two bags of grains were ruffians and cheats. Those who are seeing the emerging opportunities and are developing strategies for rural marketing are skilled in the art of extracting money from your pockets, and can stoop to the lowest level to extract their pound of flesh. They are the modern day Shylocks.

This skilled manpower, mostly coming from expensive private and public-sector B-Schools, is in no way different from those cheats. The only difference is that they hold a degree in management.

You thought Mahmud Ghazni is part of history. No, the spirit is alive and kicking. Mahmud Ghazni, for those of you who have forgotten history, was the founder of Ghaznavid empire, and lived from Nov 2, 971 to April 30, 1030. Wikipedia tells us that he turned the former provincial city of Ghazni (now in Afghanistan) into a wealthy capital. His empire eventually extended into Iran, covered most of Pakistan and northwest India. Mahmud focused on India, and learning that Indian temples were great repositories of wealth, he vowed to raid them again and again.

He first conquered the kingdoms of Nagarkot, Thanesar, Kannauj, Gwaliar and Ujjain. And later
directed his invasions to temple towns and walked away with cash, golden idols, diamonds and jewellery from Varanasi, Ujjain, Jawalamukhi, Maheshwar and Dwarka.

Mahmud Ghazni’s of modern India are now invading rural India. We are now told by Rahul Patwardhan, vice-chairman of Indiaco Ventures (see ET, April 9, 2009) that the purchasing power of rural families has grown rapidly over the last years. 23 million households are slated to receive electricity by 2009 (meaning the potential for selling electric gadgets is likely to increase). Television sales in rural areas are expected to double from 50 million in a decade. Income from non-farm sector is likely to touch 66 per cent of net rural income by 2020. The market size would thus nearly double as people earning upto $ 5 a day could grow from 35 per cent in 2005 to 65 per cent in 2025. Average rural spending would grow overall six times from current levels in 20 years.

This is supported be a stream of articles and cover stories appearing in numerous magazines and papers. And you are left wondering whether this is a mere coincidence or part of an orchestrated campaign to make this nation believe that the companies are into some sort of philantrophy. The latest issue of Outlook weekly for instance has a cover story on the Shining Rural India (almost), and of course several other publications are now focusing on the emerging rural markets. The last Sunday (April 4) issue of Brunch publication that comes free with The Hindustan Times had a cover story on greener pastures. There may be a slowdown in urban retail, but ‘bharat’ is still shining for retailers, says another report in The Times of India (April 8, 2009). And so on.

Suddenly, it seems the face of rural India — aptly called Bharat — has changed. Poverty has disappeared by a stroke of magic, and there is a new found prosperity waiting to explode. Marketing promos, disguised as studies are also appearing by a dime a dozen. The Right to Rise: Making India’s Labour Market Inclusive by India’s largest staffing company — TeamLease Services is one such report that has hit the market.

I wonder what has economist Arjun Sengupta to say on this explosion in rural markets. He is the chairman of the National Commission on Enterprise in Unorganised Sector. It’s latest report has not been discussed extensively by the media and for obvious reasons. This report says that 77 per cent of India, some 836 million people, are able to spend not more than Rs 20 a day. In other words, 836 million people can’t even afford two-square meals a day.

After all, you will agree that in Rs 20 you can’t buy food for a day.

What these companies therefore are aiming at is to take away even Rs 20 from the pocket of the poor inhabitants. The poor definitely would feel excited holding a nokia cell phone in their hand, and I can imagine the thrill on their faces to log onto internet on their newly purchased laptops. The more the poor wll buy these consumer durables, mostly unwanted, the more the GDP will grow. This in essence will be a true driver of India’s growth at times of a global economic meltdown.

In layman terms, GDP is the amount of money that exchanges hands. When the poor are made to shell out their meagre savings, and thereby cut-back on food, the profits of the companies will grow. But at the same time, money has exchanged hands and therefore gets reflected in GDP. The country’s GDP will also grow. The economists and planners will therefore be happy, and so would be the CEOs of giants like Hindustan Unilever, ITC, Reliance, Tata, Coke, Pepsi, LG, HDFC, ICICI, Citibank, Robobank, Bharti Telecom, Nokia, Infosys, Wipro, Dell, HCL, and hordes of educational and healthcare companies, not to forget the insurance companies.

No wonder, you see the economists and CEOs working hand-in-glove, and always in tandem. They speak the same language, and share the same aspirations (and monetary benefits).

And you always thought Mahmud Ghazni was dead and gone.

To Top