Introduction Picture this situation, with the metropolis of Chennai as an example. As one who roams the city for days on end, I can safely say that the business class, that is, the owners of shops and establishments making a profit of more than ten hundred thousand rupees per annum, would be around forty thousand. There will be another forty thousand who own the smaller shops and establishments, and they will also earn anywhere between three hundred to five hundred thousand rupees per annum, after all expenses. Their profit would flow into the education of children, entertainment and so on. However, their loans from banks would either meet working capital needs or the expansion plans.
The agricultural class is not in the city. They are quite active at distances that exceed one hundred kilometers in any direction. So, who contributes maximum to the growth of personal loans, jewel loans, educational loans and also to the good business of organized retailers of all kinds? It is a vast salaried class. Take the Murugappa, TVS and the Simpon group, all of which are headquartered in Chennai. Between them, they would support the direct employment of thirty thousand people who get regular monthly salaries. They would also support indirect employment to the tune of some six lakh people that also includes the suppliers. Add to this number the salaried class of banks, the LIC, quasi-government organizations, the salaried class of the State and Central Government bureaucracy, the school teachers of good private schools, teachers of at least six deemed Universities, the IT companies, the auto giants like Ford, Hyundai, Renault Nissan and the like. The combined salaried class would easily exceed fifteen hundred thousand people at the bare minimum.
So, we do have the actual picture. The agricultural class also makes money. They regularly pack their goods and send them to the city. For example, when the marriage season is at its peak, the flow of vegetables and fruits from the villages would also contribute to the growth of the respective villages or semi-urban areas but not directly to the Chennai economy. However, this is not a regular feature as the marriages do not take place every single day.
Be that as it may, the salaried class a) Supports the banking sector b) Supports the private sector school and college education c) Fuels the aspirations of others d) Provides the baseline for the economic growth and e) Also promotes the growth of desires.
Supports the banking sector Let us come back to Chennai. The growth of the credit card culture goes along with housing loans. The rich IT class has lapped up all luxury projects. Apartments and flats that cost upwards of three crore rupees find takers. Querries with bankers and builders reveals that the cream of the IT sector, who earn more than eighty lakh rupees per annum, live in the flats and repay the loan through the EMI.
The same IT sector has also contributed to the growth of the real estate sector, particularly on the OMR and the ECR road areas. Everything is done through loans. The big corporate houses have a tie-up with the private sector banks for bulk personal loans and the amount goes directly to the bank from the employer, as the EMI amounts are deducted from the employees, month after month. Hence, the banking sector stands to gain through the loans availed by the salaried class.
Supports the private sector school and college education The salaried class also has ambitions for the education of children. For a LIKG seat in a famous school of a leading group of Chennai, for example, the donation is said to be 1.75 lakh rupees. This is taken as a given. If they need a personal loan, just one phone call is enough. The cycle goes on and on. The Deemed University education at the famous VIT and SRM does not come cheap. The entire amount is financed through educational loans. The salaried class will always find a way to educate their children in the best of schools. This is a pan-India practice and is not restricted to Chennai alone. The salaried class hence supports the decent salaries and perks of the deemed university teachers.
Fuels the aspirations of others This true incident happened some six months ago at Coimbatore. It was a wedding, and some women had a good amount of jewelry on them. They would not give much attention to those who did not wear much jewelry and tended to socialize with "people like us". I was aghast to find one family discussing how to buy at least fifty percent of such jewelry. The son, seemingly employed in a leading IT company, proudly said that he was willing to take a personal loan for eight lakhs. The conservative father argued that the EMI burden would weigh him down. The mother chipped in saying that if they went on postponing the purchase, they can never buy gold. The sister of the young man immediately agreed to call the bank representative home that same evening!!
This is the crux of the issue. The salaried class often fuels aspirations in others. Even if they cannot afford the risk, most take it. The aspirations keep on multiplying. Of course, in the present context of a slowdown, a little of the aspirations may be put into cold storage. However, the other manifestations occur as a routine. For example, to desire to travel by the Shatabdi or the Tejas express trains is increasing day after day.
Provides the baseline for economic growth At a recent wedding in Chennai, the father of the girl was a Vice-President working with the biggest IT exporter of India. The glitz and glamour had to be seen to be believed. The rent per day for the venue was reported at five hundred thousand rupees. This is just one example. The salaried class spends a lot of money on special occasions and would withdraw their entire PF savings for such purposes. Only the rich business class and the agriculturists with at least fifty acres of land can match such spending.
The salaried class has made KFC, Domino Pizza and all the online service providers rich. They shop in the big shopping malls and fill all the theaters in the multiplexes. They take off to foreign locations by fully utilizing their leave travel concession. This trend is noticed in the dual-income families with monthly take-home salaries of over one hundred thousand rupees per month. The salaried class often make "lifestyle statements" of their new economic freedom. The beauty parlors multiply every day. Grooming is one essential expenditure for the IT sector employees in particular. This is spreading to the B class and even C class cities.
Also promotes the growth of desires Homes in cities like Chennai are energy guzzlers during the summertime. No wonder. Go to any gated community. Even the small houses have the air-conditioner. The EMI schemes have made that much easier. The growth of desires has literally made the difference between needs and wants so thin. For example, every house would have a designer kitchen. There are so many players in the market and they come out with customized solutions that fit the budgets of any household. The most important point is that the economy keeps on going without any let-up.
Here comes the next important question: what is the role of the irregular income earners? The construction workers, electricians, plumbers, motor mechanics, the vegetable and fruit vendors, servant maids and the like who would constitute the lower middle class, but not the absolute poor, in the big metro city like Chennai? Yes, they also support an economy that also keeps growing. Just go to a place called Renganathan Steet. The informal economy that is there on the streets is said to be worth at least four hundred thousand rupees per day ( local estimates). And then comes the small hotels offering food items at cheap prices. However, the slightly better off salaried class would not so much support the informal sector.
What is true of Chennai, would as well be true of any other city. The salaried class is the firmly entrenched class. It is this class that will drive economic growth in urban India, and to a lesser extent elsewhere too.
Conclusion Certain dimensions of how the regular salaried class spends its money have been discussed above. Most of all examples are based on real-world observations. It is this class that will continue to keep the economy growing in India, for all time to come.
A very good analysis from the author and I fully agree with him that the salaried people are the real people who are driving the economy of the country. These days we see even the government employees, who were getting very low salaries earlier, are getting very decent salaries and they are spending a lot and they are paying tax for the last paise they get.
Then coming to the private employees in the IT and manufacturing sector and having very good salaries and they are also paying a good amount towards Income tax. They are spending money and helping the service industry to grow around which is giving employment to many people. That is how they are driving the economy of the country.