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In the New India, Gucci Is In, Gandhi Is Out

The nouveaux rich are on the rise, and so are sales of luxury goods. But the very wealthy are a tiny princely pocket in a pauper's country.

April 09, 2006|Tim Sullivan | Associated Press Writer

NEW DELHI — Its sleek contours are ringed by etched filigree. Its design was inspired by the architecture of ancient Greece. Handmade in Italy, it is available in only a handful of high-end boutiques and costs more than many Indians earn in a year.

It's a ballpoint pen -- unless you happen to be the guy selling it.

"What we are using here is not a pen. It is a jewel ... a masterpiece," said Juzar Zaveri, the sales manager overseeing the Indian launch of Omas pens. Then he paused, struggling to find the right level of hyperbole: "It is a jewel of a masterpiece!"

In a country long known for its poverty, a tiny pocket of immense wealth is growing, and lifted by a booming economy, the very rich are lusting for brand name luxury goods. For this class, consumption is nothing if it's not conspicuous.

So the sellers are coming: Louis Vuitton, Dior, Chanel and Bulgari have all opened boutiques. You can now buy a Rolls-Royce Phantom or a Porsche 911 Cabriolet from showrooms in the capital.

There are magazines telling the rich how to spend their money (colon cleansing at an elite Bombay clinic, one glossy recently suggested) and news conferences that unveil new designer wear ("The color nude is all you need to know this season," Dior representative Kalyani Chawla told reporters). There's even help for the staff, with Rolls-Royce reportedly flying a representative to India to help train chauffeurs.

More than 40% of India, a country of more than a billion people, live on less than $1 a day, many without electricity or running water. But this country also has an economy growing at nearly 8%, fed by its importance as an international center for outsourcing and high technology. As import restrictions have loosened in the last couple of years, the trickle of foreign luxury goods has become a torrent -- aimed directly at the appetites of the new spending class.

"Now it's not Mahatma Gandhi who is important, it's Coco Chanel," said Suhel Seth, one of India's best-known marketing executives.

"Today we have multiplexes, we have malls, we have restaurants," said Seth, who navigates clogged streets in a Porsche Boxster. "In all these places you want to be seen wearing the right badge ... and that badge is the Dior, the Chanel, the Louis Vuitton."

Times, very clearly, have changed.

When India achieved independence from Britain in 1947, everyone was expected to pay public fealty to the example of Mohandas K. Gandhi, the independence leader who promoted not only nonviolence but austerity -- spinning cotton, eating sparingly and traveling third-class. For a time, homespun cloth was an ostentatious gesture of denial in wealthy Indian circles. Even India's royalty -- maharajahs and nawabs famous for their profligacy -- had to tone things down.

Tikka Shatrujit Singh remembers those days with a shudder.

"We had to hide our Rolls-Royces and drive around in half-moth-eaten vehicles," said Singh, a society fixture whose father was the maharajah of Kapurthala, a former north Indian princely state. His grandmother, he said, was particularly enamored with Gandhi's philosophy, and made sure the rest of the family attempted to follow his example. "You sort of were ashamed of being wealthy," said Singh, who is now an advisor to Vuitton.

For many years, class was most often determined by education or job status, and star university graduates became government officials, writers and professors.

With new money, though, comes a redefinition of class.

Government and academia still have prestige, but it's the investment bankers, real estate developers and software magnates who can navigate the world of $450 Omas pens and $1,000 Dior purses.

And the truly rich remain a very small crowd -- about one-thirtieth of 1% of the population, India's National Council of Applied Economic Research reports. That's about 50,000 households with annual incomes above $225,000.

Although a minuscule percentage, it's more than twice as many as five years ago, and the number is expected to double again by 2010.

The nouveaux riches are a reflection of an economy that has changed dramatically since socialism was abandoned for economic liberalization in the early 1990s.

Some made fortunes in real estate, others in the stock market. Some have moved home after spending years in the United States or Britain. Top business school graduates now receive pay packages that rival salaries in New York or London.

But to some Indians, these people reflect a skewed vision of a country struggling with profound social problems, where the rise of the rich has simply widened the already vast gap between the wealthy and the poor.

"A hyper-inequality is being imposed on already high levels of inequality," said P. Sainath, a journalist who has spent much of his career writing about rural poverty.

High-tech cities like Bangalore, filled with free-spending young people and crowded bars, have become a symbol of the new India, but much of the country remains cut off from modernity.

According to government statistics, half of rural Indian homes have electric lights and 4% have refrigerators. Hundreds of debt-burdened farmers have committed suicide in south India over the last four years, crippling water shortages are increasingly widespread and the school system barely functions in some areas. From 1994 to 2004 -- the time when the economic reforms were taking hold -- rural unemployment nearly doubled.

"There are these huge brand names at one end of the spectrum, and at the other end there is serious deprivation -- whether it's in health or sanitation or education," said Sainath.

For the spenders, though, that's beside the point.

"It's a question of choice," said Singh, the royal man-about-town. "Why should Indians be denied access to the best?"

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