Sid Mittra, one of the leaders in the financial planning movement, is a son of India. He recently returned to the subcontinent and provided a fascinating portrait on the changes in his native land. 

Introduction:

This note reflects my personal views, developed during my recent two-week visit to India. In expressing them, I wore different hats: as an economist, a recognized financial planner, a person born and raised in India for over a quarter of a century, an immigrant living six decades of professional and retired life in the U.S., and an occasional philanthropist, hoping to make a slight difference in this world.

Currently, India has come to be recognized as one of the fastest growing nations of the world, making headlines almost on a daily basis.  Modi’s recent full-page ad in the Wall Street Journal attests to this new recognition. For that reason alone, this piece might be worth reading, especially since in preparing this report I have made a sincere effort to present a balanced view.

An important caveat: In order to protect and respect the privacy of my contacts, I have changed the names of every person referred to in this note. For clarity, I have also highlighted (in bold text) each name I have changed.

The Outstanding:

The Average Indian

Let me begin with the loving nature and camaraderie of the Indian people in general. At first, this fact was not so obvious to me.  But I must confess that during this trip my experiences turned out to be truly revealing.  Here are a few randomly selected incidents I wish to share.

1. After arriving in New Delhi, I invited for lunch Kushi Ram, a person with whom I only had business acquaintance.  Ram countered by offering to have me as his house guest during my stay in the capital city.  My hesitation to move in as a house guest with a couple I had never met was summarily overruled. In the end, fighting the notorious Delhi traffic jam for two hours, after picking me up from my hotel Hyatt Regency, Ram drove me to his beautifully decorated apartment and introduced me to his lovely wife.  Suffice to say, the camaraderie, the care, and continuous laughter that followed during my stay with them will forever remain as an unforgettable experience.

2. In Mumbai I spent an evening at a business meeting with Rita, a noted consultant, discussing my future publication plans.  That meeting was long but mutually productive. The next morning my hotel receptionist informed me that a cab was waiting for me.  I soon discovered an amazing fact: Realizing that I had set aside that day for sightseeing, Rita had prepaid a Uber taxi cab for the entire day so I could enjoy visiting all the major points of interest in Mumbai.  And that was not all.  A brand new suitcase was waiting for me at the hotel counter when I returned from my day-long trip.  I then recalled that I had casually mentioned to Rita that I was planning to buy a suitcase to carry the multiple gifts I was receiving on this trip. And to top it off, at an ungodly hour (1 am), before my departure for the U.S., out of nowhere Rita appeared at Santa Cruz airport to wish me bon voyage. I hasten to confess that in my life I never experienced the show of so much care and goodwill coming from a virtual stranger.

3. On this trip, my son Robert planned to perform a sacred Indian ritual: Disperse his late mother’s ashes in River Ganges in Varanasi.  But when my friend Satish (chairman of a prestigious international firm) learned about our plan, he warned that, because of long walks involved in reaching the river bank, and the inevitable barriers which we would undoubtedly encounter in fighting through an unruly crowd, abject failure of Robert’s goal was inexorably foreordained. “But have no fear,” Satish assured me, “I will make sure that your son succeeds in his mission.” And so, with selfless commitment to a beleaguered friend, Satish committed part of his New Year’s family vacation to help us all the way. He drove us to a designated area, then walked with us a long distance fighting the unruly crowd, negotiated a boat ride, and navigated the boat to a sacred spot in the middle of river Ganges.  As Robert performed his sacred ritual on that designated spot, his face reflected Satish’s generosity far better than I can describe in words.

4. It was noon time when we arrived at Mumbai’s beautiful Marine Drive. Shyam, the cab driver, asked my permission to stop for lunch at a nearby restaurant.  Concerned with the safety of eating in an average restaurant, I decided to skip my lunch. But I requested Shyam to have his lunch while I enjoyed the scenery by sitting on the bench facing the Arabian sea. Suspecting the reason for my hesitation, Shyam politely replied: “Sir, my wife has prepared lunch for me in a very clean environment.  Besides, she is a great cook. I beg you to please share lunch with me, Sir!!” His generous offer to share his lunch virtually rendered me speechless.  This expression of love, fellowship, and beauty expressed by none other than an unknown taxi driver brought tears to my eyes.

Family Relationships

On this trip I had the privilege of meeting many members of my family and extended family. I met some of them after a decade, while others remained elusive for a much longer period. And yet, their instant outpouring of love, sympathy, camaraderie and fellowship made me feel as though I had been socializing with them on a continuous basis.  I realized then that the use of electronic media like WhatsApp and Skype was no substitute for a real-life meeting and the tête-à-tête that inevitably followed. Needless to add, this was one of the most valuable takeaways of my trip.

An interesting digression: One evening, my distant grandson, highly educated and with a bright future, asked me a simple question: “Grandpa, what did you have to do to settle down in America?” Kiddingly, I replied: “That was a no brainer. I learned how to speak bad English fluently.  I also had to learn not only how to speak with an accent but also how to listen with an accent.” That American joke, as it turned out, was too slippery for my grandson to catch. I blew that one for good.

New View of Business Environment:

“Indian bureaucracy and the dysfunctional business environment are a total disaster.” This is a stereo-typed view frequently expressed and firmly believed in India. But two of my real-life experiences disputed that, at least partially.

Cancer Center

1. On October 1, 2017, in memory of my late wife, our family made a donation to the R. K. Mission in Vrindaban (state of U.P., India) to create the BaniMittra Cancer Center.  The inauguration date for the Center was set for January 4, 2018, merely three months after the money was received by the Mission.

On the D-Day, I arrived at the headquarters of the R.K. Mission in Vrindaban, expecting to see merely a vacant land designated for the Center.  After all, I convinced myself, we were dealing with the dysfunctional Indian bureaucracy, and it would be foolhardy to expect otherwise. As it turned out, I was dead wrong.

Upon arrival, the Mission’s President along with his associates and important guests warmly greeted us.  This was followed by an impressive ribbon cutting ceremony, which was beautifully accentuated by prayers.  But the real surprise was waiting for us when we entered the complete structure entitled: Bani Mittra Cancer Center.

I had hard time acknowledging that, in a course of three months, a building had been constructed for the Cancer Center; proper licenses had been obtained; most of the cancer-related machines and other ancillary equipment had been acquired and fully installed; a noted Cancer Surgeon had been appointed for a year; and all the Center’s staff members were at the ready. Equally impressive, the State’s Hon’ble Minister of Power had been invited as the Chief Guest for the Inaugural Ceremonies. And all of this had been achieved over only a three-month period. Where in the world (including the U.S.) could all of this have been accomplished in such a short time?

Tourism

On this trip, as I traveled, both by flying and driving, from New Delhi to Agra, to Mathura, to Vrindaban, back to Delhi, and finally to Mumbai, I stayed mostly in well-known hotels like Amervilla, Taj, Oberai, and Hyatt Regency.  Each hotel was superb in ambiance, food selection, superior service, and even offered amenities like physical fitness centers and American-style bars. Of special attraction, however, was the glamorous Hotel Amarvilla in Agra, which reminded me of the King’s palace in Morocco where I stayed in 1984 (don’t ask me what it cost!).  At Amarvilla, the breathtaking view of Taj Mahal from my own balcony, the spectacular landscape, and the live music under the stars– all left a deep, once-in-lifetime, impression on me.

The luxury was extended far beyond the exquisite hotels, however.  During this trip, I rarely needed to use Indian currency. The almighty Bank of America Visa card was accepted everywhere and credit card machines perfectly functioned to a fault.  Also, thanks to the easy availability of Uber and Ola taxi services with their GPS systems in place, traveling within and even outside major cities turned out to be a breeze and a delight.

These, and other related, symptoms were a clear demonstration of the ability of the Indian people to achieve this level of excellence in every sphere.  But whether there exists the willingness to achieve such perfection in all aspects of national life is a discussion that is better left for another day.

The Good:

The National Economy

Ever since Manmohan Singh introduced the free market system in the 1990s (not India’s Prime Minister at that time), India has made rapid progress on the economic front. Nothing speaks louder than the forecasts of an impressive growth of the economy.  A forecast of 7- 8% annual growth in GDP is not too shabby, is it?

But wait. The growth forecast by International Monetary Fund gets even better when we realize that China’s growth is beginning to show signs of strain. In addition, since India’s per capital income is half that of China, the country can go much further than China in years to come.

In 2015 India’s economy grew by 7.2 percent, faster than any other major nation. The travails of other emerging markets make this performance especially eye-catching. Russia and Brazil both shrank by more than 3 percent in 2017. Even China, long the world’s growth leader, slipped behind India, growing at 6.9 percent. And the good news is that in 2018 India is likely to hold its position at the top of the table.

Wave of Rising Expectations

In India, distinct upper middle and elite classes have emerged. These people are recipients of a major share of the country’s growth and vie for maintaining high standard of living comparable to the advanced nations.  They are highly educated, live in posh houses, possess fancy cars, take overseas vacations, command western-brand consumer goods and services, and occupy exalted positions in national and international firms.  Aspiring to maintain a high standard of living, these folks routinely limit their family size to two children, and even enjoy luxuries like physical fitness centers, recreational bars and lavish parties.

Let me digress to share a unique experience. During this trip, Ramesh Sharma, President of ABC Financial Consulting Firm in Mumbai, had invited me to speak to some of his employees. I accepted, assuming that they wanted me to talk about recent advances in the financial planning profession in the U.S.

I was literally swept off my feet when I entered their conference room. All the firm’s employees, numbering 25 or so, greeted me with a thunderous applause as if I were a celebrity. I then discovered that questions the group wanted to ask me had been meticulously prepared in advance, and a key employee had been designated to read them to me (I changed that rule). The meeting lasted three hours, ending with another round of applause in which I participated.

I left the meeting with two distinct thoughts. First, Indians in the middle and upper middle class seem to be anxiously seeking better life for themselves and their families. They all appeared to be hungry to work hard and make sacrifices to achieve their objectives. While some Indians in this category had already settled down in other countries permanently or achieved great success in India capitalizing on their entrepreneurial skills, I felt that the vast majority of middle class Indians are trying to make it big within their own restricted boundaries. Second, (presumably due to the prevailing Indian culture of modesty and sensitivity) at this meeting no one directly asked me: “Sid, in 1951 you were a petty clerk in Mumbai faced with no future, no hope, and certainly no opportunities for advancement. So who or what helped you get to where you are today?” If someone had, I would have answered without equivocation: “America has taught me that the ten most powerful two-letter words in the English language are:

IF IT IS TO BE, IT IS UP TO ME.

The Not-so Good:

Stark Inequality

Look closely inside the Indian economy, and the shining national scenario changes drastically. There is no denying that the elite class has capitalized on the lion’s share of progress. Between 1980 and 2017, the top 1% of earners pocketed nearly a third of all the extra income generated by economic growth. The well-off are ten times richer now than in 1980. By contrast, those at the median have not even doubled their income. True, India did succeed in lifting the earnings below $2 to $3 a day, but that does not match other countries’ records in getting those on $3 a day to earning $5, those at $5 a day to $10, and so on. Middle earners in countries at India’s stage of development usually take more of the gains from growth. Eight in ten Indians cite inequality as a big problem, on a par with corruption.

Another perspective: The top 1% of Indian adults, a rich enclave of 8 million inhabitants making at least $20,000 a year, equates to roughly Hong Kong in terms of population and average income.  The next 9% are like the central Europe, in the middle of the global wealth pack. The next 40% of India’s population neatly mirrors its combined South Asian poor neighbors, Bangladesh and Pakistan. The remaining half-billion or so are on par with the most destitute bits of Africa.

Yet a third perspective is also surprising. In 1980, India’s GDP ($183.5 billion) was roughly equal to that of China ($191.2 billion). Today (2017) India’s GDP has grown to only $2.62 trillion, while China’s GDP, at a whopping $11.2 trillion, is the second largest economy of the world (behind U.S. with a GDP of $18 trillion).

Who is to blame? Democracy? Population explosion? Corruption?  Bad luck? God’s will? You tell me!

Misdirected Priorities

I presume it is the sign of times that every country must indulge in certain wasteful activities in order to be counted. As we have just seen, the vast majority of the people in India are earning a paltry $3 a day– far below the subsistence level. So what sense does it make for this country to be wasting valuable resources in frivolous activities that are proudly displayed in major newspapers?

Here are samples of headlines recently appearing in Indian and international newspapers:

A. Why the World Should Fear India’s New ICBM’s

B. India’s Aircraft Carriers Might Just Be the Ultimate Paper Tiger

C. India tests-fires Agni-V, a nuclear-capable ICBM

D. India’s Supersonic BrahMos Cruise Missile Should Terrify Pakistan (and China)

In a country where 600 million people survive at subsistence level, instead of constructing badly-needed infrastructure, investing in education, and encouraging foreign trade, the country is committing billions of foreign exchange dollars to build nuclear ICBMs? People from which countries does the country plan to kill: Pakistan? Sri Lanka? Myanmar? Bangla Desh? The Philippines? All of them?

Another aspect of India’s preoccupation relates to the way in which big sections of the country (Muslims, Dalits, Christians etc.) are routinely alienated, hampering national progress.  These discrimination practices take many forms, some of which are bizarre.

For instance, The Times of India recently published the following report: Indian police stop Hindu, Muslim rioting that killed 1 on Republic Day. Another leading paper reported the slaughter of a Muslim who runs a business selling beef. And the Hindustan Times points out that the leader of Uttar Pradesh, recently ordered the removal of any reference to Taj Mahal from travel brochures because it was built by a Muslim King. The headline in a leading U.S. newspaper, stated: How Hindu nationalists devoured India.

I must ask: Are these appropriate concerns of a country with 1.4 billion people aspiring to be counted as a major player in the world?

The Amusing:

The following experience I had in Mumbai constitutes a comical experience. But it also reflects the sign of times.

Driving from Parsi Colony to Borivili in Mumbai, I noticed a beggar using a cell phone. Intrigued, I stopped to ask the man: “How come you are begging for money but still can afford to buy a cell phone?” Initially he was hesitant to respond. But after bargaining for a Rs. 10 tip, the man blurted out: “My friends (he meant fellow beggars) and I are scattered throughout the city. We use our cell phones to decide which location in the city on a given day is most lucrative for collecting money. That’s where we congregate for the day.”

The Bad:

I find no purpose in cataloguing all that is bad in India. So, remaining focused on the positive, I will identify a few areas that need close attention. Focusing on these areas can hopefully make India one of the fastest growing emerging nations in the world, surpassing even China.

No middle Class

In emerging nations, the middle and upper middle classes are the engines of growth and prosperity. Unfortunately, India still does not have a middle class. Still worse, growing inequality prevents the emergence of a “true” middle class in the near future.

Take a look at Mukesh Ambani’s house in Mumbai, valued at One Billion Dollars (yes, U.S. Dollars) and some change. It has a staff of 600 to maintain the residence 24 hours a day. Now hop in a taxi and the driver will proudly show you movie star Amitabh Bacchan’s five gated palaces, and especially the $600 Million home of another famous actor, Shah Rukh Khan.

Think you had enough? Then come to Borivili, a northern suburb of Mumbai.  Here the price of a 450 sq.ft. apartment, the size of a three-car garage in America, is—take a deep breath–  Rs. 12 lakhs,  beyond the reach of a large segment of the population of 18 million living in Greater Mumbai.

And that is my point: India is growing rapidly.  But almost all the benefits get sucked into the upper middle class, pushing the bottom 90 percent further and further behind.

Curse of Agrarian Economy

Over half of India’s population directly or indirectly depends on agriculture. And yet, agriculture represents only 14% of India’s GDP. And therein lies the fundamental problem – even in seven decades since India gained her independence from the British, agriculture has not yet entered the 21st century. The country also remains at the mercy of favorable monsoon seasons. The result is pathetic, if predictable; this sector continues to be a drag on the economy.

Non-monetized sector

You can see this anomaly everywhere, from large cities like New Delhi and Mumbai to the villages of Vrindaban in U.P. and Kattayam in Kerala. Skyscrapers and shacks live in a rare display of peaceful co-existence. In the accompanying picture, there is not much when viewed from the outside. But behind the stained doors and dirty walls lies a renovated cozy home (red circle) decorated with color TV, nice furniture, hot water heater, and more. Go figure.

But the real economic problem is even more complex: Incomes of people living in these shacks totally escape the tax system. By most accounts, these people earn their money by selling on the streets trinkets and food items like vegetables; hence their earnings escape taxes altogether. That puts enormous burdens squarely on the tax-paying sectors. The potential for bringing these people into the fold is enormous.  But the government does not appear to have the political will power to move in that direction.

Underdeveloped Areas Vying for Growth

India has lots of expertise and brilliant minds, and the government must reach out to all of them. But wishing or token efforts won’t drive a complex economy based on principles of democracy. These efforts need to be supported by well-researched data, analysis, strategic thinking, and bold actions.

And then there is social strife which sucks up lot of national energy and goodwill. Newspapers are filled with stories of how the Muslim and Dalit (scheduled castes) are harassed and ostracized by the Hindu majorities while the government looks on with disinterest. India is a diverse society and the governing body has to strive for greater inclusiveness so all individuals, irrespective of caste, race, religion and economic status, feel that they are an integral part of the society. That will bring out the best in people and help nurture the nation’s development.

As the saying goes: In a democratic society, individual creativity is the biggest driver of growth.

Concluding Thoughts:

India’s potential is enormous. Its population is young and dynamic: It boasts 234 million citizens between the age of fifteen and twenty-four, compared with 190 million in China. With a per capita GDP less than half of China’s, moreover, India has far more scope for catching up. And, for now at least, India’s macroeconomic management is credible while its microeconomic record displays some forward momentum. With this year’s oil prices unlikely to rise much above last year’s average of $50 per barrel, India’s performance in 2018 should, at a minimum, match that of 2017. If cheap oil is bolstered by better monsoons, and if the financial cycle turns favorable, the world’s largest democracy could take off.

That said, India also faces enormous problems, and the will to solve them simultaneously is at best “iffy.”  I witnessed the wave of rising expectations at least among the middle class. But I also noted that many on whom the nation’s bright future depends become defensive when confronted with thorny issues. This incidentally is in sharp contrast with the U.S. Here the media goes overboard in washing the society’s dirty linen.

But by nature I am an optimist. India gained independence only 70 years ago (as opposed to 240+ years for the U.S.). Two centuries of brutal attacks by the British on Indian culture and self-respect have left deep emotional and psychological scars on the population. Even today, seven decades after achieving independence, in India it is fashionable to carry on a conversation in English, even where all parties speak fluent Hindi and none has a good command on the English language.

To put it another way: On this trip, I was left with a simultaneous sense of optimism and despair. Even in the most advanced city of Mumbai, numerous skyscrapers, flyovers, glamorous shopping centers and scores of BMWs, Audis, and Mercedes comfortably coexist with endless mud huts, debilitating traffic jams, and hawkers selling trinkets and other items earning a mere fraction of their true potential.

So, while there is hope, what gives me a pause is the absence in India of a risk-taking culture; the willingness to put less reliance on the public sector. And the unusually static financial system (especially the banks) makes it even harder for people with entrepreneurial spirits to get started. Only now the upper class has begun to embrace the concept of borrowing for homes and cars, but that trend has not yet reached the entrepreneurial class on a broad scale. While there are obvious exceptions, as a nation, the majority of the people vie for safety and public sector guarantees which inevitably limit the ability of the country to move forward.

But things can and do change.

I conclude documenting my experiences on the 70th anniversary of India’s Republic Day with sincere hopes that that someday soon people in India will look at the word IMPOSSIBLE and read it as:

I-M-POSSIBLE (I am possible).

Epilogue: 

My short trip to India ended with two incredible experiences.

Hidden Treasure?

The day was January 12, 2018, the time 3 a.m., and the place was the lounge at the Santa Cruz International Airport in Mumbai. I was waiting for the announcement to board the plane, scheduled to depart at 4.05 a.m. (Yukl!)

All was well until I reached for my cell phone to check if I had received any communication from the airline regarding the scheduled departure. I screamed with horror when I discovered the cell phone was gone. Fearing that my life practically depended on it in a foreign land, I almost blacked out.  After gaining strength, I sprinted to the rest room I had just visited, and also looked around. There was no trace of my phone.

For a while I stood there, motionless, as dreadful thoughts continued to rush through my mind. My Apple i6 cell phone was virtually untraceable. Even worse, I was about to board the plane, at which point any hopes of getting the phone back would disappear into thin air. I was literally doomed.

Soon I realized that I had little choice but to keep looking for the phone. So I found sufficient strength to move up to the nearest bar and asked the bartender a pointless question: “Has anyone turned in my cell phone to you?” I had not yet finished talking when suddenly someone tapped on my shoulder from behind. I turned around and saw a young lounge boy standing with my cell phone in hand.

Before I could speak, the boy pointedly asked: “Is this your phone, Sir?”

For a moment I thought I was hallucinating. As I said, my cell phone was totally untraceable. Besides, that phone in India cost a fortune (Rs. 100,000, or one lakh), far too tempting for a bell boy making $2 a day to refrain from keeping it for himself. I was shaking my head in disbelief.

After regaining my composure, but still unable to think coherently, I blurted out: “Yes, but how did you know it was mine?”

“It’s written all over you, Sir,” was the instant reply.

Then, as I was still standing, thunderstruck, without waiting for receiving even a token reward, the boy turned around, and quickly disappeared.

Dumb luck? Or brilliant display of a priceless treasure embedded in India’s timeless rich cultural heritage and national character?

Dream—An Universal Phenomenon 

Fearing that I might not be able to handle a 4 a.m. departure from Mumbai and long walks without escalators and shuttle services in foreign airports, I had arranged for a wheel chair for this trip.  When I got off the plane at the Schiphol airport in Amsterdam, a young girl was waiting for me with a wheel chair. She explained that she would need to walk for a good half hour to reach my gate # 74, but that I was in good hands. I felt assured.

Soon after she started pushing my wheel chair, I noticed two things. 1. Even though she was Dutch, her English was flawless. 2. Her concern for me was a bit annoying, since she kept on repeating that I was in good hands and that there was nothing to worry about.

After tolerating this for a while, I felt I needed to break the monotony. So to change the subject I asked her how long she had been working on this job.

“Two years, Sir,” was the reply. Feeling more relaxed, I then asked her: “Good that you have a steady job.  But do you also have a long-term dream in life?”

She stopped pushing the chair, and I could hear her mumble: “No one has ever asked me that question, and I don’t know what to say.” Then suddenly she blurted out: “How do I dream, Sir?”

I was stumped. After a pause, I responded: “How about becoming a pilot of KLM airline, and flying between Amsterdam and New York?”

Right about this time we arrived at Gate # 74 where a KLM rep rushed toward me and screamed: “Hurry up Sir. Everyone has already boarded and we are waiting for you to get on the plane.”

At that point, something extraordinary happened. When I got up from the wheel chair, the Danish girl stepped up next to me and whispered: “I don’t want to lose your memory.” And with that, she whipped out her cell phone, extended her hand and took a selfie picture of both of us as I stood there. And then she hugged me and mumbled: “Thank you for teaching me how to dream.”

As I started walking toward the plane, still thunderstruck, I felt that everyone looking at us was asking the same question:  A young white European girl is embracing an old Indian man on a wheel chair, a transient passenger no less. What in the world is going on here?