Trickle Yes, Torrent No...

In the Bangalore metropolitan region, the unquestioned IT capital of India, nearly a billion dollars of IT related wages and salaries are paid each year. In 2004, this translated to about $250 million of raw discretionary purchasing power chasing the glitzy, good things in life. These, of course, include eyeing and if possible buying a spanking new Toyota.

I had a chance to visit one of the two Toyota dealers in Bangalore, located off an impossibly congested arterial highway. Inside the clean showroom there was a spiffy Toyota Corolla with all the trimmings – plush leather seats, 6-CD music system, etc. The other car was Toyota Qualis, an SUV that is geared more for business than personal use. The rising IT-enriched class of Bangalore is the target market for the corollas and camrys at this Toyota dealership as well as cars at dozens of other name-brand dealerships and for the burgeoning malls of Bangalore.

The new economy associated with the IT agglomeration of Bangalore does benefit the old economy of retailing in the city. This Toyota dealership employs about 150 people. Of these, 80 are technicians.

This dealership is fetishistic about service quality. The waiting room for service customers has a huge plate glass window looking squarely on to the “shop” area. Quite different from my experience with my Toyota dealer in the United States, where my car disappears into a shed and then emerges after it is serviced. Here, in Bangalore, all the gory-glorious details of the service operation are clearly visible.

Of course, the service area of this Bangalore Toyota dealer is clean, well organized, and equipped with the best pneumatic and electrical gadgets that any top auto repair shop in the world would have. Workers wear smart uniforms, and go about their tasks with nimble skills.

These workers are hired from India’s technical vocational schools. This Toyota dealership recruits the best technical skills available at the automobile vocational schools.
After training and some experience, the technicians earn about $2200 a year.

Sounds low?

It is a princely wage in India, where the per capita annual income is barely over $500. At this $2200-per-year level, these 20-something young Toyota technicians can afford a motor cycle and a decent apartment with appliances.

So this is the trickle down effect: the 160,000 IT workers supporting 80 high-wage (in Indian terms) technicians at this one Toyota dealership, and of course the pattern repeats itself at other auto dealers and retail stores. And the trickle creates sub-tickles when, for example, the Toyota mechanic goes shopping for a DVD player.

But this trickle down is not a torrent. It is mostly within the Bangalore metropolitan region, with some further trickling into the rural areas but not much.

The political reality of contemporary India is such that these trickles are not enough. While torrents may not emerge instantly, the huge political challenge facing India’s federal and state governments is to create income streams in the rural sector where 70 percent of the population lives. The challenge is rendered more complex by the requirement that the rural development has to occur in parallel with the urban one. After all, killing the golden goose of Bangalore’s new economy is not the solution to the stagnating conditions of rural India!

Nik Dholakia