Archive for April, 2012

Poverty Line Estimates Blurred?

In our last post we spoke about how India is trading up. In contrast to that, this week we will look at the absolute low end of the income pyramid – the low poverty line threshold (and the controversy surrounding it) has also been extensively in the news recently.

Late last year the Planning Commission submitted provisional figures of Rs. 32 per day in urban areas and Rs. 26 per day for rural areas as the poverty line threshold. The revised and final numbers suggest an even lower figure – a poverty line that averages Rs.859.60 per month (Rs.28.65 per day) in urban areas and Rs.672.80 per month (Rs.22.43 per day) in rural areas in 2009-10. The poverty line thresholds from the previous five-year plans are in the table below:
Despite the poverty line having moved up from the 2004-05 levels, the question still remains whether this increase is sufficient – whether it takes into account the inflation and increasing prices of essentials. This seems especially low given that the common international poverty threshold has been $1/day which got revised in 2008 to $1.25/ day.

The earlier calculation (i.e. up to 2004-05) of India’s poverty was based on daily calorie intake, according to which 27.5% of people were living below the poverty line in 2005. The Tendulkar Committee, in 2009, recommended including expenditure on clothing& footwear, utilities, education and health, in addition to food, for the calculation of the poverty line. Applying the new methodology for estimating poverty levels and using data from NSSO expenditure survey in 2005, the BPL proportion for 2005 was re-calculated to 37.2%.

Given the updated poverty line threshold for 2010 using the Tendulkar Committee methodology, all-India BPL proportion declined from 37.2% in 2005 to 29.8% in 2010 (where rural India experienced a greater decline in BPL proportion as compared to urban areas). This implies that the BPL population in India has declined from 40.72 crore in 2004-05 to 34.47 crore in 2009-10. However, the poverty picture is extremely patchy – some states saw sharp reductions in the proportion of people living below the poverty line, while many others saw little or no change and others saw an increase in the poverty levels.

The poverty lines threshold figures are important as it’s those below the poverty line that get to avail of numerous subsidies from the government. Erroneously redrawing the poverty line would leave out many households that need government assistance. Therefore the question arises – Are these figures really practical? Can people really survive on such a low sum per day?

Rather than just discuss and debate the issue, a young duo, Matthew Cherian & Tushar Vashisht, decided to put this to test by experiencing this income level themselves, through a month long experiment. Matthew Cherian is a graduate of MIT (Massachusetts Institute of Technology) and Tushar Vashisht is a graduate of UPenn (University of Pennsylvania) and an Investment Banker in the US. Both decided to move back to India and joined the Bangalore-based UIDAI (Unique Identification Authority of India) where they met and became close friends. They’ve documented their day-to-day experiences in their blog-Rs.100aday & through their Facebook page  – it makes for a very interesting read.

As the initial part of this month long experiment, they lived on Rs.100 a day (after discounting 30% for rent) for 3 weeks in Bangalore. They moved into their housemaid’s room and just a few days into their new life, they suffered the effects of malnutrition and exhaustion. Their diet had to be carbohydrate-loaded as proteins were too expensive. Meeting the target of 2500 calories per day for healthy living for men was impossible to achieve. They also discovered that life had to be conducted within a five mile radius – which explains why so many of the extremely poor typically end up living in pathetic conditions just so they can live close to their place of work. Public transportation was not affordable, so walking or cycling were the only viable options to get anywhere. Any additions like unexpected medical expense or drinking, smoking would just throw the budget off-track.

For the last week of the experiment, they decided to move to Matthew’s ancestral village in Kerala and decided to live on Rs.32 per day. Not having to spend on rent, education, healthcare, clothes, etc., which account for Rs.7 in the budget set by the Planning Commission, they were left with Rs.25 a day of which they spent Rs.17 on food, leaving them with Rs.8 for other expenses such as toiletries, gas, electricity, transportation, etc. They ate parboiled rice, a tuber, banana and Parle-G biscuits and drank black tea: a balanced diet was impossible within this budget. They typically ended up walking long distances, shared bathing soap, saved money even on soap to wash their clothes, minimized their mobile phone expenses, could not afford internet at all and it would have been disastrous if they fell ill.  As we’ve seen earlier, from other sources of information, even those just above the poverty line typically fall below it when an unexpected health-related emergency occurs.

This just shows that the current poverty threshold does not include adequate provisions for basic amenities and emergency expenses, leaving out many that need government assistance.

 

Sources: Secondary research, News articles, Planning Commission 5-year plans

 

By,

Roshni Jhaveri.

April 26, 2012 at 7:59 am 2 comments

India Trades Up!

I’m sure many of us in India have been reading articles in newspapers and magazines recently about India trading up.

From the Mint: http://www.livemint.com/2012/03/14001707/India-trades-up-finds-census.html?h=B

From India Today: http://indiatoday.intoday.in/story/upwardly-mobile-india-has-less-loos-more-phones-census-2011/1/177667.html

 

During a recent trip to Chennai for some consumer research, I could not help but notice this phenomenon; especially with this one particular respondent – a 25 year old woman belonging to a SEC C/D household – showing clear signs of trading up, both in household products as well as personal use products.

To give a little background on the Socio-Economic Classification (SEC) commonly used in India – this system classifies the Indian consumer on the basis of two parameters: Occupation and Education of the chief wage earner of the household. SEC C & D are the mid-to-low socio-economic classes in urban India – typically comprise of skilled workers, petty traders, shop owners and salaried employees and majority are educated upto middle-to-high school. A majority of this segment (almost 80%) earns less than Rs.3 lakh annually. (Source: Indicus Analytics)

 

Let’s call our respondent Rehana. Rehana’s house was located in a typical low-income neighborhood – a cluster of 6-8 buildings, 2-3 storeys each, each floor had 2 small flats on either side of a very narrow and often broken staircase. As often observed in such areas, the landing and passage space are used by residents, quite a few of their belongings were kept outside their doors  – like buckets and water drums, folded beds and mattresses, clothes lines running along the stairs, etc.

I visited her house in the afternoon and middle aged women from the building were all hanging out in a group right at the foot of the stairs on the ground floor, since there was a power cut. This is their situation everyday – from 12-3 there is no electricity, so they finish their work accordingly. So while they all hung out – they combed their own or each other’s hair, some chopped vegetables while some just fanned themselves and rested.

Rehana’s home was about 200-250 sq. ft. in area and had three rooms – 1 kitchen, one living-cum-bed room and one dedicated bedroom – with a bathroom in the house. And there came the first surprise, right outside the bathroom, there it was – a washing machine!

We were seated in the bedroom, which in terms of furniture had a proper double bed, a 3 seater sofa, a Godrej almirah and the TV unit (of course!).  She was most conscious that I should not sit on the floor, instead insisted that I sit on the sofa. There was a large Sansui television connected to a Videocon DVD player. The young lady was using the newly launched Samsung Hero mobile phone and was most excited to tell us that this is the same phone that Aamir Khan endorses. (Link to ad here) There was also a water purifier in the bedroom. The water purifier seemed to be their latest purchase (looked brand new) and a proud one, as it held a very specially cleared corner in the bedroom, right next to their Godrej almirah. It was evident in the pride with which she offered us water and looked towards the water purifier suggesting that she was offering not just any water, but water from the purifier!

 

Such a clear example of what we’ve all been reading about lately – about households having more disposable income and trading up. While not everyone has improved their living conditions as much as Rehana’s family has, a lot of families are spending more on low value consumer goods on a regular basis. It is of little wonder now why these lower SEC segments are fast gaining increasing importance with marketers.

 

Best,

Roshni Jhaveri

 

p.s. – We’d earlier written about the limitations of the SEC classification and how only income and education aren’t a good measure of consumer classification. (Click here to read the post) Asset ownership can be a good judge of aspirations, affordability and therefore purchase intent and potential of customers.

April 18, 2012 at 8:33 am 8 comments

Update – Men’s grooming

Last week’s post (link here) described the influence of Bollywood on men’s fashion and grooming trends. This post from last Sunday’s issue of ‘Brunch’ from the Hindustan Times mentions some trends that were started Bollywood heroines.

Those that enjoyed reading the post on men’s grooming (link here) and growth in various categories of products and services, will also enjoy these articles (to read the articles, click here and here).

And to end this update, the latest metrosexual trend from the West, though we aren’t sure whether to believe this article or not – check it out for yourself by clicking on this link.

By,

Escape Velocity Team

April 13, 2012 at 7:54 am 2 comments

Male grooming – Influenced by Bollywood

Even though metrosexuality has been popular for over a decade the world over, it is only recently that men in India have taken to it in hordes. This might be because it is only recently that Bollywood male actors have embraced this phenomenon and started to shave their chest, flaunt wash-board abs and style (or over-style) their hair.

The majority of men aged 18-35 in India look to Bollywood film stars for styling and grooming trends – at times even subconsciously. It is astonishing how much influence films have on men in India. Films like ‘Bobby’ which made every young man in India start wearing bell-bottoms, ‘Dil Chahta Hai’ which made men grow soul-patches and drive down to Goa every chance they got, or more recently ‘Zindagi Na Milegi Dobara’ which has made every young man in India itch to make a trip to Spain with their guy friends.

Like you pointed out, companies realize this and have started to have young film stars endorse their beauty products. Alternative sub-cultures like emo, grunge and goth have also been around for over a decade but have started to come into mainstream India through films – like Prateik Babbar’s small yet memorable role in ‘Jaane Tu Ya Jaane Na’. I am sure that the focus of the youth will slowly move towards these sub-cultures and away from metrosexuality, more so as movies start embracing them.

By,

RJ

[Editor’s Note : If you do not recognise the alternative sub-cultures mentioned by RJ, fear not, the descriptions below will help.

Emo :

Emo is a style of rock music characterized by melodic musicianship and expressive, often confessional lyrics. It originated in the mid-1980s hardcore punk movement of Washington, D.C., where it was known as “emotional hardcore” or “emocore” and pioneered by bands such as ‘Rites of Spring’ and ‘Embrace’.

Today emo is commonly tied to both music and fashion as well as the emo subculture. Usually among teens, the term “emo” is stereotyped with wearing slim-fit jeans, sometimes in bright colors, and tight T-shirts (usually short-sleeved) which often bear the names of emo bands. Studded belts and black wristbands are common accessories in emo fashion. Some males also wear thick, black horn-rimmed glasses.

The emo fashion is also recognized for its hairstyles. Popular looks include long side-swept bangs, sometimes covering one or both eyes. Also popular is hair that is straightened and dyed black. Bright colors, such as blue, pink, red, or bleached blond, are also typical as highlights in emo hairstyles. Short, choppy layers of hair are also common. In the early 2000s, emo fashion was associated with a clean cut look, but as the style spread to younger teenagers, the style has become darker, with long bangs and emphasis on the color black replacing sweater vests.

Emo has been associated with a stereotype that includes being particularly emotional, sensitive, shy, introverted, or angst-ridden. It has also been associated with depression, self-injury, and suicide.

(Source – Wikipedia )

 

Goth :

Gothic fashion is a clothing style worn by members of the Goth subculture; a dark, sometimes morbid, eroticized fashion and style of dress. Typical Gothic fashion includes dyed black hair, black lips and black clothes. Both male and female goths wear dark eyeliner and dark fingernails. Styles are often borrowed from the Punks, Victorians, and Elizabethans. BDSM imagery and paraphernalia are also common.

The style initially emerged alongside the early 1980s Gothic rock scene.

Researcher Maxim W. Furek noted, “Goth is a revolt against the slick fashions of the 1970’s disco era and a protest against the colorful pastels and extravagance of the 1980’s. Black hair, dark clothing and pale complexions provide the basic look of the Goth Dresser. One can paradoxically argue that the Goth look is one of deliberate overstatement as just a casual look at the heavy emphasis on dark flowing capes, ruffled cuffs, pale makeup and dyed hair demonstrate a modern-day version of late Victorian excess.”

(Source – Wikipedia)

 

Grunge :

Grunge (sometimes referred to as the Seattle sound) is a subgenre of alternative rock that emerged as a fusion of  punk, alternative, and heavy metal during the mid-1980s in the American state of Wahington, particularly in the Seattle area. Inspired by hardcore punk, metal, and indie rock, grunge is generally characterized by heavily distorted electric guitars, contrasting song dynamics, and apathetic or angst-filled lyrics. The grunge aesthetic is stripped-down compared to other forms of rock music, and many grunge musicians were noted for their unkempt appearances and rejection of theatrics.

Grunge concerts were known for being straightforward, high-energy performances. Grunge bands rejected the complex and high budget presentations of many musical genres, including the use of complex light arrays, pyrotechnics, and other visual effects unrelated to playing the music. Stage acting was generally avoided. Instead the bands presented themselves as no different from minor local bands. Jack Endino said in the 1996 documentary Hype! that Seattle bands were inconsistent live performers, since their primary objective was not to be entertainers, but simply to “rock out”.

Clothing commonly worn by grunge musicians in Washington consisted of thrift store items and the typical outdoor clothing (most notably flannel shirts) of the region, as well as a generally unkempt appearance. The style did not evolve out of a conscious attempt to create an appealing fashion; music journalist Charles R. Cross said, “[Nirvana frontman] Kurt Cobain was just too lazy to shampoo,” and Sub Pop’s Jonathan Poneman said, “This [clothing] is cheap, it’s durable, and it’s kind of timeless. It also runs against the grain of the whole flashy aesthetic that existed in the 80s.”

 (Source – Wikipedia )

End of Editor’s note]

April 4, 2012 at 8:45 am 4 comments


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