HOW HE SEES IT Declining prices raise India's living standard

By SIDDHARTH SRIVASTAVA
GLOBAL BEAT SYNDICATE
NEW DELHI -- India's recent economic reforms are making a difference, and while it is still true that millions of Indians have not been able to reap the benefits, many millions have, and the effects are clear to see.
Due to healthy doses of competition in many sectors of the economy, consumers are seeing real benefits. Durables items, for example, are now affordable for large numbers of people as their income rises. A desktop computer that cost more than $1,500 five years ago now sells for under $250 and laptop prices have fallen by $250 in a year.
Cell phone prices are also plummeting. Cell phones costing $250 two years ago now sell for under $50, with better features, technology and connectivity due to the huge increase in competition between new players such as Nokia, Samsung, Motorola, LG and, most recently, Bird and Sagem.
Meantime, telephone landline rates have tumbled due to competition between Bharti, Reliance and Tata phone companies, who are offering more and more services to customers.
Other items such as air conditioners, microwaves, washing machines and TV sets now cost half of what they did a few years ago. A heavy duty air conditioner that cost more than $700 five years ago is now digital, has remote control and costs $400, with such added incentives as a free holiday package worth $100, gift vouchers of up to $100 and a free electrical appliance such as a kettle or an all-weather flask.
The list continues to grow. Tata, also a leading automobile manufacturer, has announced that it will be putting a $2,500 car on the market in the next year or two, and last year Hyundai announced a $1,250 discount on its compact car, the Xing, which now costs about $9,000.
Price war
The cost of air travel is also being revolutionized. Until four or five years ago, government-owned Indian Airlines had a monopoly on domestic flights, and had a poor record for punctuality. Now it faces a host of competitors -- Sahara and Jet Airways have been recently joined by new entrants SpiceJet, Air Deccan and Kingfisher airlines. The result is a fierce price war that has seen some airlines offering tickets for next to nothing on a first-come, first-served basis. Nor are these mere publicity gimmicks.
Thousands of budget travelers have been able to fly on these hefty discounts.
A journey from Delhi to Mumbai that usually costs $150 can be purchased by some early customers for only $5, which covers the government tax on the flight. Air Deccan offers travel to any destination in India for $20, and the result is that many middle-class families who seldom journeyed far from their homes are now taking exotic holidays to destinations such as Goa and Kerala.
The government is also establishing partnerships with private companies, opening up sections of national highways as toll roads that provide higher quality highways, dramatically increasing revenues for the domestic tourist industry.
Indians love to eat out. Competition between food retailers has translated into costs for hamburgers, ice cream and pizzas dropping to throwaway prices. McDonald's is particularly popular -- its "chicken burger" sandwich is selling for 50 cents and its ice cream for 15 cents.
There is a flip side to all this good news.
Lifestyle changes
With the proverbial rat race and rampant consumerism rising, dramatic lifestyle changes are evident in the younger generation, and there is a noticeable rise in social tensions that is linked with unorganized urbanization and the increasingly evident accentuated differences between the rich and poor. The Indian bureaucracy and the political framework have not been able to keep up with the rapid changes. The government-run railway system, for example, is badly outdated and has a poor safety record.
Passenger costs continue to rise due to the railroad's dependence on crude oil, 70 percent of which is imported, and there is no sign that officials are looking at alternative energy sources.
India's economy is undergoing dramatic changes, but there is still a long way to go. Comparing lifestyles and affluence in Mumbai with lifestyles in Shanghai or Singapore is still mostly far-fetched, but thanks to the introduction of competition, the trend is in the right direction.
X Siddharth Srivastava is a New Delhi-based journalist who writes frequently on economic and national security affairs. This piece was written for Global Beat Syndicate. Distributed by Knight Ridder/Tribune.