Sunday, March 21, 2021

Can India reach the average wealth?

India is one of the oldest civilizations, the largest democracy in the world, and the second most populous country on Earth. With 1.35 billion people, it is just a few pips beneath China which stands at the top with its 1.39 billion. But India's population will surpass that of China in a few years and should brag some 1.64 billion around 2050 when it will be the most populous country.

The average IQ of India is said to be 81, well below China's 104, but it changes nothing about the fact that most of the people in my region consider Indians to be our more suntanned cousins, members of the same race. The reasons are particularly obvious if you look at the language: the grand family is called Indo-European (or, in the Greater German realm, Indo-Germanic) for a good reason. Slavic languages end up being particularly close to Sanskrit, an ancient Indian language (but also to Persian), and the overlaps are sometimes so stunning that I would be willing to include Sanskrit among Slavic languages. Check e.g. this video.

I've met numerous wonderful Indian people who were emotionally like us (even when it came to the sense of humor) and some of them could have also been smarter than me. The economic numbers speak very differently, however. The GDP per capita is some $1,900 and $6,300 in the nominal and purchase parity perspectives, respectively. That's some 6 or 3 times lower than China; 12 or 6 times lower than Czechia; and 35 or 10 times lower than Norway, to pick some other examples. Moody's expects a steep 12% GDP rise in India in 2021. The potential for growth surely exists but will it materialize?

The poverty in this "lower-middle income economy" may be seen from many perspectives. According to this table, San Marino has 1.3 cars per capita, Germany or Czechia have a bit below 0.6 cars per capita, but India has 0.07 cars per capita, an order of magnitude lower ratio. (Don't you find it awkward for all these tables, also the Covid ones, to be written per 1,000 or 100,000 or 1,000,000 people? Isn't one person a more natural unit?) A car is a source of pride in India.

The Volkswagen Group (VAG) kickstarted the India 2.0 project in 2018 and it began to invest into some possible massive growth. Škoda Auto, the Czech subsidiary of VAG, enjoys the status of a luxury carmaker in India, almost on par with BMW, something that sounds counterintuitive to many Westerners. Days ago, the final version of a new Škoda SUV, "created by Indians for India", was unmasked. The ordering will begin in June and sales in July. The name is Kushaq which means a king or an emperor in Sanskrit. The size is like Kamiq. Note that K...q is the standard Ansatz for the Škoda petrol SUV names; E...q [so far just Enyaq] is for the electric SUVs; "q" indicating any SUVs is from the Eskimo languages, to match the largest Kodiaq, a bear that lives with many Eskimo folks. Kushaq is the size of Kamiq, the medium in between Kodiaq and Karoq.

You may watch some other ads, reveals, and reviews of Kushaq on YouTube and read some comments underneath the videos. What I find cute is the degree of the excitement of the Indians about the technology. By some Western standards, it is a "cheap" SUV. There are hard (cheap) plastics at many places, a small sunroof, and analog things instead of digital ones. Heating isn't "needed" but a ventillation system for the seats was important. Even the simply clever umbrella in the door seems to be missing. These details were basically decided by the Indian folks working for Škoda. The Indian-language name isn't just a trick (that will probably resonate); it really reflects the fact that this time, Indians had some power to decide and they could help to build a car "by the Indians for the Indians". Despite the cheap character of the car (teased as the Škoda Vision IN concept), most buyers of the car are expected to have their personal drivers.

I do think it is right for Indians to actually make some decisions "what the cars should be like" and to be employed as designers because many of them have lots to say and lots of skills. Such autonomous decisions could lead to cars and other products that could be naturally attractive in India as well as other less wealthy markets.

I am fascinated by these narrators' constant switching between Hindu and English.

My understanding is that most of my close Indian colleagues whom I knew in India were members of the higher classes (or castes?) in India; and they tended to prefer right-wing Indian parties according to the normal standards. Most of them would end up supporting the U.S. Democrats in the U.S., however (and "of course", we might add). India – whose total GDP is 1/2 of the German one nominally or 2 German ones by purchase parity – could become an important market and surely has enough capacity to do highly nontrivial things. The distribution of skills etc. must be much wider than in the black Africa which is why you can find IQ 150+ people in a country with the average at 81. But they differ from most Western countries, too. I wonder how it really feels to be an Indian who is much smarter than the average Westerner but who was born into a huge land which is so (materially) poor.

Can the system be optimized so that India will reach at least the living standards of Europe of the 1960s in a few decades? Is it a good idea for the VIP Indians to have the personal drivers and perhaps other "servants" when their salaries are so affordable? Or does this hierarchical system amplify or preserve the poverty? Note that most of the Indian economy is informal and only some 3% of the citizens pay any income taxes at all! This number does make India look like a paradise or a "tax heaven". ;-)

I think that the Western countries are not treating India sufficiently nicely – despite India's actually being the most populous democratic country. At the end, lots of Westerners end up worshiping the Chinese system – which doesn't really respect most of the Western values – because China is richer. But I think that this "preference of China over India by the Westerners" is ultimately a form of corruption. It is understandable but it is morally problematic and it may have negative consequences both for India and the West in the future.

At any rate, I wish India lots of the growth, happiness, and the freedom to remain proud about their country and their civilization that has quite some tradition. From many viewpoints, I am jealous. Most Indians aren't not tired by luxurious things yet. They may still be happy now even if their present is humble – and they may also be enthusiastic about the vision of a more glorious future. I will never forget the natural, child-like excitement of an Indian colleague after he spent the first nights in an East Coast hotel. When were you wowed by something like that the last time?

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