NEW DELHI - In a free
market, the consumer is king. If one wishes to witness a
demonstration of such a phenomenon, one could step into India to watch
it as it happens. For the residents here, it is
perhaps the first real flush of the benefits of choice flowing
out of the economic reforms process initiated over a
decade back by Prime Minister Manmohan Singh, who
was then finance minister. Nobody's complaining,
although as always, every silver lining has its dark
cloud.
Reading the daily newspapers makes for a
good beginning. In a huge advertising splash, Air
Deccan, a private Indian carrier, is selling tickets for
the Delhi-Mumbai and Delhi-Bangalore routes at less than
US$15; the usual price for the former route is $100 and
the latter $160. The offer comes with a caveat - the
tickets have to be purchased 90 days in advance over the
Internet, with a heavy penalty for cancellation, but the
fact of the matter is that such rates are within the
realms of the possible.
The current rates are the culmination of a price
war that has been raging in the civil-aviation
sector among private players Sahara and Jet Airways
and government-owned Indian Airlines. The airlines earlier
targeted first-class rail travelers by pegging prices of air travel
at the same level; former United Airlines boss Rono
Dutta took over Sahara a few months back and undercut even
more by pegging air fares at the AC-two tier
level (second class). At current Air Deccan rates, a cab
to the airport from most locations in New Delhi could
cost more than the air travel. In any case, as things
stand the majority of first class travelers are
railway officers commuting free; a similar situation is developing
at the two-tier level; now the second-class travelers are in
for a liftoff. Just a few years earlier there were no
private airlines to speak of and sluggish Indian
Airlines commanded the highest price at the lowest
possible level of service.
Aviation is just one of the many sectors
consumers are benefiting from - electronic
goods, computers, mobile phones, insurance,
hospitality, travel, banking, automobiles, garments, credit cards, telecom … the list goes
on. As a matter of fact, the situation is confusing
in that it is difficult to time a purchase or wait for
the best offer, or decide whether one is buying
for the attached benefits. An example is
LG Electronics, the Korean electronics company that has been
leading the frills march this summer. Upon the purchase
of an air-conditioner valued at less than $400, LG offered
a holiday package worth $100 along with food and beverage
discounts to the best destinations in India and Southeast
Asia by tying up with a reputable hotel chain, gift
vouchers valued at $100, an electric kettle/flask/juicer priced
at $20 and entrance into a lucky draw.
LG air-conditioner sales have rocketed this summer though power
supply remains a major issue in this country. Holiday
packages are the flavor of the season, with Bharti
Touchtel, the cellular and broadband operator, ABN Amro
bank and Nokia, offering similar offers through
tie-ups with hotel chains as well as hefty discounts in
food and beverages. The customer is laughing all the way to
the hotels - and the bank.
There are reports of hordes of youngsters
opening and then closing Citibank accounts to avail themselves
of Shoppers Stop (a garment retailer) vouchers, a pearl
pendant, a Timex watch and medical and life insurance. Mobile
and land-line telephone rates have crashed by 50-75% over
the past couple of years since the entry of
private players Reliance and Bhart, putting pressure on
the public-sector MTNL and BSNL; India's cellular base has grown
by more than 150% over the past year, with China's
largest handset manufacturer Bird becoming the latest
entrant into the fertile market. In the heyday of
government control over telecom, a landline connection could take
years of political and bureaucratic lobbying for an
installation.
Indeed, now
it is competition all the way. Benetton has been running
a 50% sale through the summer to match
competitors such as Tommy Hilfiger, which is now also selling at half-price, with
several retailers located at the popular malls in Gurgaon,
the outsourcing suburb of Delhi. Auto manufacturers
offer free car insurance, loyalty bonuses, gold coins,
gift vouchers and car accessories, while Hyundai,
Maruti, General Motors and Ford clash. As with a telephone, buying
a car too was a matter of pulling many strings a while
ago when the government was big brother to all.
Acer is leading the market in crashing laptop prices for
the first time to under $750 and multimedia desktops to
below $400, with web cameras, compact discs (CDs), carry
bags, computer table and chair being thrown in as
regular add-ons. Compaq-Hewlett Packard, IBM, Toshiba,
Zenith and HCL are trying to do the same. Newspaper or
magazine subscriptions come free with Reebok shoes,
T-shirts and even a television from the India Today
Group. One cannot decide whether one is subscribing for
the magazine or the perk of acquiring a pair of Reeboks.
New insurance players
such as Tata-AIG, Aviva and Max New Life offer
customized and flexible products that have added a new churn to
government-owned Life Insurance Corp, long used to having
a monopoly. Home loans are down to 7%, the lowest
ever with several private banks such as HDFC, HSBC and
ICICI more than eager to dole out the funds; while
property rates continue to be the same or fall in the wake
of frenetic construction of high rises across the
country. It only gets better on the Internet, with portals
such as rediff.com and indiatimes.com as well as
auction sites such as Bazee-ebay offering even further
discounts on virtual purchases. The entire gamut of products,
from music CDs to Arrow shirts to Nokia phones to airline
tickets can be bought cheaper, with discounts ranging
from 10-50%.
One could go on, but the crux of the
matter is, for all those who have the money to buy, it
has never been better, and it is going to get even
healthier as the forces of competition clash further.
However, lest we get carried away, words of caution too.
The Global Trust Bank recently crashed because of an
accumulation of non-performing assets due to
overreaching on the interest rates offered to
depositors. India's inflation rate is on the way
up because of an increase in the price of
agriculture products in the wake of supply chains
snapping due to floods. A majority of the Indian
population still subsists by tilling land. A few years
back the Delhi government was voted out of
power because of the rising prices of onions.
India has a new prime minister as the previous incumbent
was accused of ignoring the lot of the large pool left
out of the benefits of economic reforms. The aim should
be to rope in everybody to the discount party that only
one section of the Indian population currently enjoys.
Siddharth Srivastava is a New Delhi-based
journalist.
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