One big risk that the numbers don't capture
In this issue:
» Ultra-rich and poor share the same space in Mumbai
» Indian IPO makes staggering Nasdaq debut
» China prefers Japanese debt over American
» Rural India a treasure trove for companies that get it right
» ...and more!!
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The year gone by saw the highest number of global unemployed youth ever measured by the International Labour Organisation (ILO). Infact, the youth unemployment rate grew twice as fast as for adults and stood at 13% in 2009. In absolute numbers, youth unemployment hit a record 81 m youngsters worldwide.
The ILO now fears that this could potentially breed a 'Lost Generation' for the world economy. One made up of young people who altogether detach themselves from the labour market. This is quite real possibility considering that the ILO report found evidence that some young people were so discouraged that they were dropping out of the labour market completely. "They're doing all the right things and the doors close in their face" exclaimed one of the authors of the report.
This is one of the most vulnerable sections of society. If after years of education and skill development many youth find that there are no takers for what they can do, disillusionment and frustration can quickly follow. This could be somewhat like the baby boom generation in the US. But with one difference though. The former had tremendously positive implications for the US and the rest of the world for many decades. The so called 'lost generation' on the other hand can easily turn out to have exactly the opposite effect.
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*average of all developing countries put together
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Nowhere is this more evident than in the financial capital of the country - Mumbai. Here, the rich and poor both are in abundance. And both co-exist together. So, while the poorest of poor live in the crowded slums of the city, the ultra-rich share the same space. Just that the latter live in the high-rises set up on slum lands.
Take for instance the 60-storey Imperial towers in Tardeo, South Mumbai. A penthouse here costs around Rs 600-650 m! It boasts of the view of the Arabian Sea, a golf course and Mumbai's horse-racing track. These towers were built on the narrow lanes cluttered with tin sheds that once housed 10,000 slum residents.
Well, builders blame this on the archaic land laws that prohibit them from the raising a building height beyond a point. So they end up finding spaces in shanty places to construct their luxurious residential buildings.
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However, Hindustan Unilever (HUL) proved that it is possible to target and grow in this market. It started providing sachets of soaps and shampoos. These could be easily distributed and were sold at a very affordable Rs 1 per packet. Other MNCs are now starting to design their products and services to be able to cater to this huge market. The mantra to succeed is simple. The MNCs have to get the right mix of product, price and distribution to reach to these customers. The ones that do get this right will be the ones who will capitalize growth from this huge growing customer base.
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04:45 | Today's investing mantra |
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5 Responses to "One big risk that the numbers don't capture"
sanjay
Aug 13, 2010"45% of our population lives on less than 1.25$ per day." why??? i am closely observing the rural economy and linked work habits for the last ten years. there is no dearth of work. it is seasonal, may need a bit of moving away from home temporarily / sometimes on daily basis. due agri-based employment opportunities (75%) in rural setting, education is not considered an asset. true, but it (or lack of it)results in unproductive and highly individualistic work / social / economic ethics in the rural population. result - irregular working pattern, lack of application on low / medium skilled jobs, low / inconsistent output resulting in low wages. min wage bill notwithstanding. solution....anybody???
Gokal
Aug 13, 201060% of population of total lives on US$1.25 per day?
How to increase standard of living?
(1) Increase agricultural output. How? tax on rich farm land and invest in low irrigration area.
(2) Person works on construction site in large building. 2% of construction cost for welfare of employee.
(3) Private companies to develop rural area as investment. Concept to develop as per specilazation. Increase far output, check damp, pipe water, micro irrigration and etc.
Companies get tax benefits.
LAKSHMAN PARDHANANI
Aug 13, 2010Like yourselves my heart also bleeds when I read that 45% of our brothers live on less than 1.25$ per day while the rich live in luxurious penthouses costing 650 million Rupees and flaunt their wealth at every conceivable opportunity.
What is your solution though? Armchair and computer couch potatoes like you and me will not solve India's problems by just writing about them. We need action. Are you prepared to sponsor some project that will help? I am prepared to help on my return to India by the end of the month?
Please forgive my candour.
K. CHANDRAN
Aug 13, 2010India's factory output may have slowed down in June. But that is not likely to dampen the GDP growth estimate of 8.5% this fiscal. The Index of Industrial Production (IIP) declined to a 12-month low of 7.1%. This is because demand cooled and the base effect of the last year faded away. It may be recalled that the past few months had seen India clocking strong in industrial output largely on account of high demand and inventory restocking. That is now coming to an end. Further, part of the slowdown was also policy induced as the central bank gradually began to withdraw stimulus measures. The slowdown was more apparent in basic and capital goods. Intermediate and consumer goods managed to withstand the slowdown. Of course, it remains to be seen whether this trend continues in the coming months. Having said that, the RBI most likely will not halt its policy tightening measures even if industrial production slows down as inflation continues to remain high.
shaikh shamim
Aug 16, 2010Dear friends,
I also feel sad that maximum people are just to mouth and handful of people are enjoying life, and on the top just look at the inflation, price hike on food items, medicine, housing,traveling and few job opening, situation is bad and worst in villages, i feel we have the right to know and control the tax amount which we pay where is it going and how it utilize, and what amount of this money is used on poor people welfare. I strongly feel there is misuse of tax money and it is not going for poor peoples welfare. beside that there should be more social organisation to help people that it is there in canada and usa. i hope we can solve problem to some extent by taking such measusre.
bye,