Atanu Dey On India's Development

Fragments – 2

The Missing Middle

“Often in Indian you can find a very fancy Rs 12,000 a night hotel room, and you can find a flea-ridden Rs 700 a night hotel room. Why can’t you find a good clean comfortable Rs 2,000 a night room? What is with this missing middle?”

“Hey, same as in food. I can go and get high-priced medicore food at a fancy restaurant at a fancy hotel and get low-priced low-quality food at a hole in the wall. But it is hard to find a reasonably priced restaurant serving reasonably appetizing food. Again, the missing middle.”

“How about eduation? High priced and fancy, or almost free and totally worthless. How about decent education at reasonable prices?”

Why the excluded middle?

  • http://sambharmafia.blogspot.com Kaps

    I guess Tata’s IndiOne range of hotels intend to fill the void in the middle segment.

  • Praveen

    Because indian middle class are morons?

  • Sanjay

    LOL. You have the same thoughts? I find it very strange that you have tons and tons of 50-400 $ motels and hotels in the US that will satisfy your needs. From motel 8 to westin to marriot.. In India, either it’s some 500 Rs hotel with absymal services and cleanliness(and in a filthy part of town) or some 10,000 Rs hotel which is out of your budget and totally unnecessary. As for food, the less said the better.

  • http://indsight.org/blog Charu

    That is so true… and funnily enough, all we hear about is the great Indian “middle class” – it is like the rich anyway exist and lead exclusive /excluded lives and the poor are not worth discussing… but who is this middle class? and what do they have going for them?!

  • http://www.artfv.com/music/styles/classical/ shiv kumar

    missing middle its easy to figure out why they are left behind as the poor in india are the vote bank of politicians and the rich are the bankers that buys those votes for them so to say middle class gets neglected is just mere understatement

  • http://constructal.blogspot.com Sameer

    I have to disagree. The middle-class in India has everything “going” for them but “themselves”. The middle-class is the one stands to gain the most from the opening up of the markets. It is largely the middle class which can send its kids abroad to study. It is largely middle class (which exists primarily in urban/semi-urban areas) which is reaping the benefits of IT. It is also the middle-class which till recently was “shining” and “feeling-good”.

    The only thing the middle-class doesn’t have “going” is themselves. The middle-class is hopelessly inactive about social involvement to influence policies and politicians. The middle-class if it organizes itself will have great power to change the society but it is unwilling to get involved. The middle-class complains about corrupt politicians/bureaucracy vociferously but when it comes to involvement/demonstration/action its pet line is “time kiske paas hai yaar?” or “ye saab kabhi nahi badalega”.

    Here in the US too, “outsourcing” caused such a furor because people who were losing jobs were largely middle-class people who knew how to protest in the media. In India middle-class somehow hasn’t found its collective voice.

  • Sahil

    The 12,000/night hotel room *is* the middle. ;-)

  • mantra

    My theory is that…
    Traditional indian firms are not skilled at building scalable solutions. High-end solutions are typically big-corporate one-off ventures and low-end solutions are typically offered by small-time entrepreneurs who are trying to earn a small-living. Middle-end solution is probably the next wave. We have good number of target audience and our companies are getting better at scale (tata-indiOne,reliance,big IT cos etc). But I don’t understand why Franchising and such scale-friendly biz models can’t be mimicked by big indian cos though. But again, either they are greedy or not skilled at ‘scale’.

  • http://wateronlotus.blogspot.com Raghu

    ‘Missing middle’ of what? If you are looking at hotels/restaurants/travel and the like, the answer is easy. These are traditionally supported by the tourism industry and there is no critical mass in the middle class segement in India (as yet) to support them. It is not in the lifestyle of the middleclass to indulge in these activities (reasons are manifold – no earmarked ‘entertainment’ money, family to support, no tradition of hitch-hike travel etc.).

    Coming from a middle class family myself (and I think I mirror the average case), I can tell you that a summer vacation was limited to a visit to a relative’s house in a village or a piligrimage – travelling was to see a relative or a God. Visiting Ooty or the like to see a ‘place’ was not even on the radar.

  • http://spaces.msn.com/members/gopalms/ SloganMurugan

    We don’t travel enough.

  • Little Ram

    Atanu,

    I am sure we will find a solution to the missing middle for hotel rooms and restaurants pretty soon. Some one will come along, a la Indione, etc.

    The education bit is however another thing altgether. Is it merely an issue of pricing?- I think not. Our best institutions are not private; and are fairly affordable. The issue is quality education per se- we just do nto seem to have it in the right quantities.

  • Jayakumar

    It sounds like you’ve discovered a business opportunity then!

    I do think that you’ve got some competition from Tata in the under-1k hotel business.
    http://www.tata.com/indian_hotels/articles/20040809_indione.htm

  • http://ruralindia.blogspot.com Malapati Raja Sekhar

    Atanu,

    I think this is a business gap.

    I too often surprised about this. There are very few companies/business areas which are exceptional to this. I have few such exaples. In kolkata, you get reasonably priced with reasonable quality leather chappals @ Srileathers. Similarly Lion Dates(fruit)/Lion Tamarind is avalbale with good quality with a reasonable price.

    Raja

  • Subrat Mishra

    Thats perhaps something to do with what we define as elite here! Is’nt it strange? an ordinary pizza or pasta is astronomically priced just because it has it origins outside of India!! It also has to do with the way we run the economy in this country – the solution is very simple really. Let more copetition in and u’ll get a better product. Just look at what Mc donalds has done to the fast food sector – they sell their burger at the same price that the neighbourhood cake shop does but give a far superior product.