8 Market liberalization and the poor in India

Measuring economic inequality through consumption

G.P. Manish

I. Introduction

The period between 1990 and 2010 was a time of historically high growth for the Indian economy. Following the market reforms of 1991, real per capita GDP grew at a rate of 3.7% per annum during the 1990s, and at a higher rate of 5.2% per annum in the following decade. While these impressive growth numbers of the post-reform period represent a continuation of the high growth rates recorded during the 1980s, when per capita GDP grew at the rate of 3.4% per annum, they are a significant improvement when compared to the first three decades under planning, when per capita GDP grew at a rate of merely 1.7% per annum.¹

The impact that liberalization and the ensuing high rates of growth have had on the lives of the poor in India has been the topic of extensive and vigorous debate. Central to this debate has been the skepticism surrounding the official poverty estimates put out by the Planning Commission of India. As a result of this skepticism, several scholars have put forward their own independent estimates of poverty in India for the 1990s and the 2000s.

This welter of poverty estimates for the post-reform period has led to a lack of clarity regarding the extent to which poverty has declined during these years. While most estimates do conclude that the head count ratio of poverty² (HCR) in both rural and urban India did decline during the 1990s and the 2000s, there is little consensus regarding the extent of this decline. Moreover, there is also ambiguity about whether the rate of decline accelerated or decelerated as we move deeper into the post-reform period, with some estimates indicating that the rate of decline of poverty was higher in the 2000s as compared to that in the 1990s, and other estimates suggesting the contrary.

Estimates of the trend in inequality in India, while not as contentious, have also given rise to some debate. The estimates of most scholars indicate that the Gini coefficient of consumption expenditure³ has increased during the post-reform years, especially in the urban areas. A few estimates, however, seem to suggest that this increase has been minimal at best, in both the rural and urban areas of the country.

Thus, when taken at face value, the various estimates of the decline in poverty and the trend in inequality do not provide a clear picture of how the lives of the poor in India have been affected due to the process of liberalization. At best, they lead to the conclusion that the introduction of market reforms did lead to a decline in the incidence of poverty, although this decline may have been lower than that recorded in the decade immediately prior to the onset of the reforms; and they lead one to conclude that consumption inequality has increased during the post-reform period, especially in the urban areas.

There is, however, a more fundamental problem with these measures of poverty and inequality. Due to their aggregative nature, they do not provide a clear or coherent picture of precisely how the lives of the poor have been affected by the reforms. Take, for instance, the case of the HCR. A decline in the HCR implies that a larger proportion of individuals can now avail of a consumption bundle that either yields a minimum amount of satisfaction or an amount of satisfaction that is higher than this minimum. Hiding behind a given decline in this measure, however, could be varying patterns of change in the consumption baskets of households.

Thus, a given decline in the HCR could take place because households now have the means to obtain a bundle of consumer goods that contains more of some or all the goods that they were consuming before, with there being no changes in the quality or in the range of the available goods. Or, this decline could be associated with a significant alteration in the consumption baskets of those who are now at or above the poverty line. These households might now be able to possess new goods that were not available before, along with goods of better quality than before. The gain in well-being associated with these differing patterns of change will necessarily be different for the households concerned.

A similar argument can be made regarding highly aggregative measures of inequality such as the Gini coefficient. To begin with, an increase in this measure might go hand in hand, not with an absolute decline in the real consumption (or income) of the relatively poor, but, instead, with an increase in the level of their real consumption (income). Moreover, assuming the latter to be the case, this increase in per capita consumption (income), might, just as in the case of the HCR, hide very different patterns of change in the actual consumption baskets of those in the lower reaches of the consumption expenditure (income) distribution.

This chapter attempts to provide a clearer picture of how the process of liberalization has affected the poor in India by analyzing changes in the pattern of ownership of four consumer durables across the various deciles of the distribution of consumption expenditure: televisions, electric fans, mobile phones, and two-wheelers. Given that each of these industries was liberalized as a result of the market reforms initiated in the 1990s, such an analysis helps paint a more coherent picture of how the consumption baskets and therefore the lives of the poor in India were touched by this process.

In adopting this approach to analyzing changes in standards of living, this chapter builds on other contributions that undertake a similar analysis of changes in the consumption baskets of American households in the post–World War II era in order to provide greater clarity to the analysis of trends in poverty and inequality in the United States (Rector and Sheffield 2011; Hassett and Mathur 2012; Horwitz 2015). Moreover, it also attempts to make a contribution to the literature that focuses on studying the qualitative changes, especially the changes in the consumption basket of the average consumer, that underlie episodes of economic growth as measured by increases in per capita GDP (Balassa 1959; Nutter 1962; Krueger 1975; Cox and Alm 1998, 1999; Manish 2013, 2014).

Thus, Nutter (1962), for example, analyzes the high growth rates recorded under central planning in the erstwhile Soviet Union. He examines disaggregated primary data in government documents across several consumer and capital goods industries and finds a marked deterioration in the quality of goods under the planned regime. Michael Cox and Richard Alm (1998, 1999), meanwhile, conduct a similar exercise for the United States during the 1980s and 1990s and find marked qualitative improvements in consumer goods over the two decades. In particular, they find that there was a sharp increase in product differentiation and in the variety of goods such as cars, houses, computers, and televisions, as well as a significant advance in the technology embodied in these goods.

The chapter is organized as follows: Section II provides a review of the literature on poverty and inequality in India in the 1990s and 2000s; Section III provides an outline of how the television, electric fan, mobile telecommunication, and two-wheeler industries were liberalized starting in the early 1990s; Section IV analyzes changes in the ownership patterns of these four goods while also providing some details on the qualitative improvements that took place in the television, mobile telecommunication, and two-wheeler industries in the post-reform period; Section V provides the conclusion.

II. Poverty and inequality in India in the post-reform period

II.I The debate over the official poverty estimates⁴

The erstwhile Planning Commission of India⁵ made its calculations of poverty measures using data on consumption expenditure from household surveys conducted by the National Sample Survey Organization (NSSO). The NSSO conducts these surveys on a regular basis, albeit with differing sample sizes: those with smaller sample sizes, the “thin” surveys, are conducted every year, whereas those with the larger sample sizes, the “thick” surveys, are conducted once every five years. The official poverty statistics are calculated using the data from the thick, quinquennial surveys.

The first set of poverty estimates that proved to be controversial and provoked much debate were those for the period between 1993–1994 and 1999–2000. These estimates were calculated using data from the thick surveys conducted by the NSSO for these years: data that comprised the 50th and 55th rounds of surveys on consumer expenditure. The Planning Commission, in its official estimates, concluded that poverty had declined significantly during this period. These estimates had the HCR for rural India falling by 10 percentage points, from 37% to 27%; that of urban India declining by 9 percentage points, from 33% to 24%; and that of India as a whole falling by a full 10 percentage points, from 36% to 26% (Deaton and Kozel 2005: 186). Thus, according to the Commission, the annual rate of decline of the HCR over the period between 1993–1994 and 1999–2000 was 1.67% for rural India, 1.5% for urban India, and 1.67% for India as a whole.

These figures were, in due course, attacked for both underestimating as well as overestimating the decline in poverty during the years that followed the sweeping reforms of the early 1990s. Thus, Bhalla (2003) argues that the headcount ratio for India in 1999–2000 was no more than 15% (Bhalla 2003: 348). The implication, of course, is that the official estimates severely underestimate the decline in poverty during the 1990s. Assuming the official HCR for India is correct in 1993–1994, Bhalla’s estimate implies that poverty fell by 3.5% per annum during the rest of the decade.

Sen and Himanshu (2004), meanwhile, present estimates to show that the headcount ratio for rural India fell by a mere 0.47% per year between 1993–1994 and 1999–2000, from a figure of 31.9% to 29.1%; while urban poverty declined only by 0.52% per year, falling from 29.2% to 26.1%. According to these authors, therefore, the poverty statistics put out by the Planning Commission overestimate the extent of the fall in poverty during the period between 1993–1994 and 1999–2000.

Deaton and Dreze (2002), meanwhile, present a separate set of estimates for the decline in poverty during the 1990s, which differ from those of Bhalla (2003) and Sen and Himanshu (2004). Their estimates indicate that the annual fall in the HCR during this period was 1.17% for rural India and 1% for urban India. The conclusions that follow from these figures is that the estimates of the Planning Commission considerably overstate the extent of the decline in poverty in both rural and urban areas.

Thus, while there is agreement about the fact that HCRs for rural and urban India did fall during the post-reform period in the 1990s, there is consensus on little else. There is, in fact, considerable disagreement regarding both the level of poverty at the end of the 1990s as well as the extent of the decline that took place immediately after the reforms of the early 1990s. As a result, there is considerable disagreement about the extent of the impact of liberalization on the poor during this decade.⁶

This debate about the extent of the decline in poverty during the post-reform period has also affected the official estimates of poverty for the decade of the 2000s. Key to the disagreements among scholars about the estimates of this decade was the Planning Commission’s decision, in line with the recommendations of the Tendulkar Committee on the calculation of poverty estimates, headed by the economist Suresh Tendulkar, to change the official poverty lines used in its calculations of HCRs and other measures of poverty. The Committee, to correct certain defects in the then official estimates, largely involving the choice of price indices involved to update the lines, recommended raising the rural poverty line while also altering the urban line (Panagariya and Mukim 2013: 6).

These changes have meant that there are now multiple estimates of poverty incidence, and therefore of poverty decline, for the period between 2004–2005 and 2009–2010: one based on the new “Tendulkar poverty lines,” and another based on the earlier official poverty lines, also known as the “Lakdawala poverty lines,” as they were recommended in 1993 by the Lakdawala Committee headed by the economist D.T. Lakdawala. According to the former set of estimates, the annual rate of decline of the HCRs for rural, urban, and all areas are 1.60%, 0.96%, and 1.47%, respectively, for the period between 2004–2005 and 2009–2010. The Lakdawala estimates, on the other hand, are far lower, with corresponding figures of 0.43%, 0.34%, and 0.40% per annum (Himanshu and Sen 2014: 5).

Moreover, the Tendulkar Committee estimates show an increase in the rate of poverty decline during the 2004–2005 to 2009–2010 period as compared to the period between 1993–1994 and 2004–2005. In fact, according to this set of estimates, the rate of annual decline doubled in the latter half of the 2000s as compared to the previous 11 years. The estimates based on the Lakdawala lines, however, show the exact opposite. They show that poverty declined at a much faster rate between 1993–1994 and 2004–2005 than between 2004–2005 and 2009–2010. Indeed, they show that the rate of decline during the latter period was half that of the former (Himanshu and Sen 2014: 5).

II.II. Inequality after the reforms

Estimates of the trend in the inequality of consumption expenditure during the post-reform period are also calculated using data, usually from the thick rounds, of the surveys of consumption expenditure conducted by the NSSO. These estimates, while not as scattered and ambiguous as those of the incidence and decline in poverty during this period, are also, nevertheless, the subject of some debate.

The majority of scholars who calculate estimates of consumption inequality during the post-reform period in India conclude that there has been an increase in the Gini coefficients, especially for the urban areas.⁷ Thus, Motiram and Vakulabharanam (2012), for instance, find that the Gini coefficient for India rose from 32.6% in 1993–1994 to 36.3% in 2004–2005, and further to 37% in 2009–2010. Moreover, they find that this increase was largely driven by rising urban inequality. The rural Gini coefficient rose only slightly, from 28.6% in 1993–1994 to 30.5% in 2004–2005, and thereafter stayed unchanged during the second half of the decade. The urban Gini coefficient, however, rose much more sharply: from 34.4% in 1993–1994 to 37.6% in 2004–2005, and then further to 39.3% in 2009–2010.

Himanshu and Sen (2014: 13) present estimates that show an even sharper increase in urban inequality. The all-India Gini coefficient, according to them, rose from 30.1% to 36.2% between 1993–1994 and 2009–2010, while the rural Gini during the same period rose only by 3 percentage points, from 25.8% to 28.8%. The urban Gini, however, increased by close to 7.5 percentage points, from 31.9% to 38.3%. Moreover, they also find a significant increase in the ratio of the average consumption expenditure of the top 10% of the population to that of the bottom 10% during this period in urban areas: with this ratio rising from 7.14 in 1993–1994 to 10.33 in 2009–2010. The increase in the rural areas for the same period is, however, only slight, with the ratio increasing from 5.06 to 5.94.

This picture of rising inequality in the post-reform era, especially in urban areas, has been questioned by Bhalla (2011). Citing the wide variations in prices observed between the different states and within the urban and rural sectors within the various states of India, Bhalla argues against relying on nominal measures of consumption inequality. Instead, he argues that more accurate measures of inequality will be given by calculating real Gini coefficients: calculations that must be made after deflating the nominal consumption expenditure figures by the appropriate price indices (Bhalla 2011: 8).

His estimates of real Gini coefficients, in stark contrast to the other aforementioned estimates, show much smaller increases in consumption inequality during the post-reform period. Moreover, this holds true for measures calculated using both the uniform recall period (URP) and the mixed recall period estimates (MRP) of consumption expenditure.⁸ Thus, the real Gini for India, according to his calculations, using the URP estimates of nominal consumption expenditure, declined from 30.4% in 1993–1994 to 29% in 1999–2000, and then rose to 32.8% in 2004–2005. For the 11-year period between 1993–1994 and 2004–2005, therefore, the Gini rose only by a little more than 2 percentage points (Bhalla 2011: 9).

The estimates of the real Gini for India using the MRP consumption expenditure estimates tell a similar story. The Gini, in this case, rose slightly from 28.4% to 29.3% between 1993–1994 and 1999–2000, and then increased a little more to 31.2% in 2007–2008. The overall rise for the period between 1993–1994 and 2007–2008 was, therefore, only 2.8 percentage points (Bhalla 2011: 9).

III. The liberalization of the television, electric fan, mobile telecommunications and two-wheeler industries

III.I. The television industry

Television broadcasts in India began in 1959, when All-India Radio, the state-run radio company, began telecasting an hour-long program twice a week that was beamed to the residents of Delhi (Laurie 2006). The production of televisions in India, however, did not commence until 1970, when two public sector firms in the formal, organized sector, and two private firms in the small-scale sector were handed out licenses to produce 10,000 and 5,000 black and white televisions, respectively (Joseph 1992: 143; Guhathakurta 1994: 847).

The production of televisions in India during the 1970s was dominated by small-scale private firms and larger public sector firms: a result that reflected government policy and the way the central government chose to allocate the licenses that were necessary to commence production. Thus, by 1976, 71 out of the 81 firms producing black and white televisions were in the small-scale sector, with the rest in the public sector (Joseph 1992: 143).

Production was undertaken in a highly regulated environment. Over and above the need to acquire licenses to start or expand production, producers were also barred from importing any technology. They were forced, instead, to produce televisions using the home-grown, indigenous technology developed by the Central Engineering and Electronics Research Institute (CEERI) in Pilani (Guhathakurta 1994: 847). Moreover, the licensing system extended to the acquisition of inputs that had to be imported into the country.

The decade of the 1980s witnessed the first wave of liberalization. Between 1981 and 1987, several steps were taken to ease the various regulations and controls that had hitherto been placed on the sector. Most importantly, restrictions on entry into the sector were greatly eased, and large private sector firms were allowed to compete with the incumbent small-scale and public sector firms. The import of technology was also allowed, and firms could now enter into technical collaborations with foreign firms. Restrictions on the import of inputs were also eased, with firms now able to freely import inputs for which there was no significant indigenous capacity of production. This period also witnessed the introduction of color transmission. To promote the production of color televisions, licenses were given out freely to import kits from which such televisions were assembled (Guhathakurta 1994: 849).

This first wave of liberalization, however, was limited in scope. It left untouched the ban prohibiting foreign television producers from setting up shop in India. Moreover, it did not make it any easier to import televisions from abroad. In fact, the import of televisions into the country was still prohibited, except as part of a traveler’s personal baggage; and in that case, it was subject to a hefty tariff of 240% (c.i.f.) (Guhathakurta 1994: 850). The more liberal import of foreign technology to produce black and white televisions and that of kits to assemble color televisions were also intended to be short-term measures; the goal in both cases was to expand indigenous manufacturing capacity and to then phase out the increased imports (Guhathakurta 1994: 849, 851).

The process of liberalization gained steam in the 1990s. In line with the New Industrial Policy of 1991 that did away with licensing in many industrial sectors, the production of consumer electronics, including televisions, was also completely delicensed by the late 1990s (Joseph 2012: 10). More importantly, the sector was thrown open to foreign competition: foreign companies were now free to invest in India and compete with the domestic television producers.

The 1990s also witnessed the dismantling of the foreign exchange licensing system. As a result, the import of inputs to produce televisions was no longer subject to licensing. Through the 1990s and the subsequent decade, a steady and significant liberalization of tariff and nontariff barriers inhibiting the import of various electronic components and equipment also took place. All physical controls on the import of these goods had been phased out by 2005 and the peak customs rate for these goods was gradually reduced to 25% as of 2004 (Joseph 2012: 12). The fact that India was a signatory of the WTO’s Information Technology Agreement also resulted in a sizeable reduction in the tariff rates of various electronic components (Joseph 2012: 12). And perhaps most importantly, the import of televisions was also liberalized. First, such imports were allowed, and then gradually the tariff rates on them were also reduced.

III.II. The electric fan industry

The production of electric fans in India began in the colonial period, with the first fan produced in 1921. Notwithstanding this early start, the domestic fan industry failed to grow significantly prior to independence. Instead, the bulk of the fans sold in the country during this period consisted of imports (NRCD 2005: 2).

The attainment of independence and the ensuing adoption of central planning gave a boost to the fledgling industry. Soon after gaining independence in 1947, the central government banned the import of electric fans, thereby shielding the industry from foreign competition (NRCD 2005: 2). This was to continue all the way till the 1990s, ensuring that the growth of the industry during the period between the official adoption of central planning in 1950 and the reforms of 1991 took place in a sheltered environment.

Sheltered from foreign competition, the industry was subject to all the rigors of the industrial and foreign exchange licensing system that was foisted on domestic firms during the planning era. As per the Industrial Policy Resolution of 1956 (GOI 1956), the industry was effectively placed in schedule C, which consisted of all the industries that were to be left largely to private firms. Industries in these firms, however, were required to obtain all the necessary licenses prior to making decisions regarding production and the importation of inputs.

The years between 1950 and 1991 saw the gradual growth of fan output as well as a gradual increase in the number of organized sector firms participating in production. The first private firm to commence production in the organized sector was Jay Engineering Works, which started producing fans in 1947. This firm was gradually joined by others, such as Orient Fans in the early 1950s, Crompton-Greaves in the late 1950s, Khaitan and Rally Fans in the 1960s, and Polar Fans in the 1970s (NRCD 2005: 2). Along with these firms in the organized sector, there were firms in the small-scale sector that also produced fans.

The New Economic Policy of 1991 (GOI 1991) placed the electric fan sector among those that were not reserved exclusively for the public sector or subject to compulsory licensing. This decision, and the ensuing reforms of the early 1990s, ensured that the production of fans was gradually liberalized. Most importantly, domestic production was delicensed, and the cumbersome foreign exchange licensing system was dismantled, thereby facilitating the easier importation of inputs.

The post-reform period has thus witnessed a significant increase in the levels of competition in the sector. By 2010, there were as many as eight leading brands in the organized sector jostling for about 60% of the annual market. In addition, there were a hundred smaller, lesser known firms in the organized sector that accounted for about 25% of the market, while the remaining 15% was in the hands of producers in the small-scale sector (Singh, Barve and Sant 2010: 6).

In keeping with the increased competition, the output of fans produced in India has increased steadily during the post-reform era. In the initial period after liberalization, the second half of 1990s, however, the growth of output was relatively slow. The production of fans during this period increased from 8.6 million units per annum in 1994–1995 to 10.3 million units in 1999–2000, growing at close to 4% per annum (NRCD 2005: 3). The rate of growth of output, however, increased significantly in the following decade. Domestic fan production during the 2000s increased from the figure of 10.3 million units per year recorded for 1999–2000 to 40 million units per year in 2010, growing at a high rate of 14.5% per annum (Singh et al. 2010: 7).⁹

III.III. The gradual liberalization of the telecommunications sector

As per the Industrial Policy Resolutions (IPRs) of 1948 and 1956, the telecommunications sector was deemed to be of strategic and national importance and reserved for the public sector.¹⁰ Accordingly, the Indian Telephone Industries (ITI) was set up in 1948 to produce telephone switches, transmission cables, and telephone instruments; this was soon followed by Hindustan Cables Limited, which was established in 1952 to manufacture a range of transmission cables, and Hindustan Teleprinters, established in 1956 to produce terminal equipment such as modems and teleprinters.

These public sector enterprises sold their output to the Ministry of Post and Telegraph, which had a monopoly on the provision of telecommunication services. The entire sector, including the producers of equipment as well as the lone service provider, was shielded from all forms of competition. As per the guidelines of the IPRs, they were shielded from all domestic competitors, with private players entirely barred from entering the sector. Moreover, they were also shielded from foreign competition via hefty tariff barriers as well as other quantitative import restrictions.

This situation remained more or less unchanged until the mid-1980s, when the New Telecom Policy (NTP) of 1984 resulted in a shake-up of the sector. The NTP, at long last, ended the public sector monopoly over the production of telecom equipment and allowed private firms to produce selected terminal equipment meant for subscriber premises, albeit under the restrictions imposed by the industrial licensing system.

In the following year, the Ministry of Post and Telegraphs was bifurcated. A separate Ministry of Communications was established, and within this a Department of Telecommunications (DOT), now responsible for managing and regulating the provision of telecom services, was set up. This was followed by the establishment of two new state-owned corporations: Mahanagar Telephone Nigam Limited (MTNL), set up to handle the distribution of services in Delhi and Mumbai, and the Videsh Sanchar Nigam Limited (VSNL), which was set up to provide international services. Telecom services to the rest of the country continued to be provided by the DOT as before.

The sector was buffeted by another round of more radical changes in the early 1990s. In line with the New Industrial Policy of 1991, which took the telecommunications sector off the list of industries reserved for the public sector, the production of all telecommunications equipment was delicensed and foreign capital was allowed to flow into the sector, albeit in partnership with a domestic firm and with foreign equity ownership of a maximum of 49%.

The reforms of the early 1990s touched not only the production of equipment but also the provision of telecommunications services.¹¹ In 1992, the government approved of private sector participation in the provision of wireless services, including fixed wireless and cellular wireless services. In addition, the NTP of 1994 allowed private sector participation in the provision of fixed wireline services.

The result of these decisions was a series of auctions of licenses for both cellular and fixed line services to private operators to provide telecom services in various parts of the country. The incumbent public sector providers, the DOT and MTNL, were not allowed to compete for the cellular licenses, but they would now have to compete with one fixed-line private service provider in their areas of operation.

This rash of reforms and the attendant influx of competition, although limited, were fought tooth and nail by the close to half a million employees of the DOT. Leery of having to compete and of having its monopoly disturbed, the DOT did everything in its power to scuttle the license auctioning process. Moreover, it took several steps in the aftermath of the auctions that all but drove the private service providers, especially the providers of cellular services, out of business. This, coupled with the rather unsuccessful entry of private providers of fixed line services, ensured that the public sector monopoly over the provision of telecom services remained, for all practical purposes, intact till the late 1990s.

The dam was finally breached with the introduction of the NTP of 1999, which resulted in a series of decisions that finally succeeding in breaking the stranglehold of the public sector over the provision of telecom services and really opened the sector up to competition. In the words of the erstwhile managing director of Idea Cellular, Sanjeev Aga, one of the leading providers of cellular services in the country, it was the “watershed event” that changed the face of the Indian telecom sector and ushered in the mobile revolution that swept the country in the following decade.

III.IV. Economic reforms and the two-wheeler industry

The Indian two-wheeler industry, which consists of scooters, motorcycles, and mopeds, first emerged in the mid-1950s as a result of government efforts to shelter indigenous production from foreign competition (George et al. 2002: 7). In 1949, imports of fully built vehicles were virtually eliminated due the imposition of a very high tariff. Subsequently, in 1953, requirements for the domestic production of automotive components were imposed on foreign assemblers of completely knocked down vehicles, which drove them out of the market (Tiwari et al. 2011: 29). Thus, due to these measures that effectively blocked out all foreign competition, Indian consumers, starting from the mid-1950s, could only purchase domestically produced vehicles.

The Indian two-wheeler industry that emerged in the mid-1950s was heavily constrained by the industrial and foreign exchange licensing systems. Any firm producing vehicles of any kind needed a license to start production as well as to expand production (George et al. 2002: 10). Moreover, the chronic shortage of foreign exchange that characterized the early years of planning, especially the period between 1955 and 1970, led the government to limit the imports of automotive components using both high tariff rates and quantitative restrictions (Tiwari et al. 2011: 31). This period did, however, witness significant collaboration between domestic and foreign producers of two-wheelers. Thus, the three domestic manufacturers of motorcycles during this period all had collaborations with foreign producers, as did the two domestic scooter manufacturers (George et al. 2002: 26).

This trend was reversed during the 1970s with the passage of the Foreign Exchange Regulation Act (FERA) in 1973, which greatly increased the controls placed on the import of raw material, technology, components, and equity by the automotive sector (Tiwari et al. 2011: 35). In fact, the 1970s witnessed no new foreign collaborations between domestic and foreign two-wheeler firms. This greatly hobbled the production of motorcycles, which was heavily dependent on foreign collaboration for technology: no new manufacturers or models entered this sector during this decade, resulting in technological stagnation. The production of scooters and mopeds, which were technologically more self-sufficient, was less affected: two new scooter producers entered the market in the 1970s, and the domestic production of mopeds commenced, with three new producers entering this sector (George et al. 2002: 11, 26).

The automotive sector and the two-wheeler industry were first touched by economic reforms and liberalization in the mid-1980s. There was, to begin with, an easing of some of the onerous industrial licensing requirements. The government, as part of its New Economic Policy of 1985, introduced the policy of broadbanding for the auto sector. Firms producing vehicles still had to obtain licenses to begin and to expand production, but these licenses were now more broadly defined, allowing for more flexible use of installed capacity (Tiwari et al. 2011: 41).¹² Moreover, the licenses issued allowed for a larger licensed capacity, which allowed producers to take greater advantage of economies of scale (George et al. 2002: 12). Along with this easing of licensing requirements, there was also an easing of the controls placed on foreign collaborations. This allowed incumbent producers, especially in the motorcycle segment, to launch new products and to upgrade their technology.

These measures of liberalization resulted in the entry of several new producers into the motorcycle and scooter segments of the two-wheeler industry during the 1980s, and especially in the period between 1985 and 1990. As many as four new motorcycle producers, for example, entered the industry during this period, all of them with technical collaborations with foreign producers, whereas two new producers of scooters, also armed with foreign technical collaborations, commenced production during this period (George et al. 2002: 11, 26).

The trickle of reforms turned into a flood over the course of the next two decades. In July 1991, for instance, the entire automotive components sector as well as the manufacturing of all vehicles (with the exception of passenger car producers) was completely delicensed (Tiwari et al. 2011: 45). Domestic producers in the two-wheeler industry were, therefore, free to make production decisions, not based on the edicts and decrees of the government but based on their assessment of market conditions. There was also an easing of rules governing foreign direct investment (FDI) in 1991. FDI up to a limit of 51% of equity was allowed without government approval; and a greater share of foreign investment up to a limit of a 100% was also allowed but subject to government approval (Tiwari et al. 2011: 45). The latter regulation was also removed in 2002, and up to 100% FDI was allowed in the automotive components and all vehicle manufacturing sectors.

Moreover, beginning in the early 1990s, there was also a gradual liberalization of import restrictions. Quantitative restrictions on the import of components were removed in 1997 (Tiwari et al. 2011: 47) and the tariffs placed on them were also gradually reduced, reaching a low of 10% in 2008–2009 (Tiwari et al. 2011: 48). Similarly, quantitative restrictions on the import of vehicles in a semi- or completely knocked down state (SKD/CKD) and in completely built form (CBU) were removed in 2001, while tariff rates on CKD units was reduced to 10% by 2008–2009 (Tiwari et al. 2011: 48). The tariff rates on SKD and CBU units, however, remained high throughout the 1990s and the 2000s, and were as high as 60% for some and 100% for others by the end of the latter decade (Tiwari et al. 2011: 48, 50).

IV. Televisions, electric fans, mobile phones and two-wheelers: analysis of ownership patterns in the post-reform period

IV.I.I. The patterns of television ownership

Tables 8.1 and 8.2 provide data on the rate of television ownership across households in various deciles of the distribution of consumption expenditure for rural and urban India. The data were obtained from the 50th and 66th rounds of the consumer expenditure survey conducted by the National Sample Survey Organization (NSSO 1993–94, 2009–10). As the data show, the years between 1993–1994 and 2009–2010 saw a robust increase in the ownership rate of televisions across all deciles of the consumption expenditure distribution in both rural and urban areas, with households at the lower end of the distribution increasing their rates of ownership at a higher rate than those at the upper end of the distribution.

As is evident from Table 8.3, the robust growth in the ownership of televisions during this period meant a significant increase in the average rates of ownership across the distribution of consumption expenditure in rural India. The average ownership rate in the two lowest deciles, for example, increased from a meager 0.5% of households in 1993–1994 to 12.7% of households in 2009–2010, whereas across the bottom four deciles the corresponding figures were 1% and 19.6%, respectively. Meanwhile, in the middle of the distribution, only 3.3% of households possessed a television set in 1993–1994, and the corresponding figure for 2009–2010 was much healthier, 37.6% of the households. It is interesting to note that the average ownership rate of the top two deciles in 1993–1994 was lower than that of the bottom four deciles in 2009–2010.

Table 8.4 presents similar trends for urban India. Whereas only 12.3% of households in deciles I and II possessed a television in 1993–1994, a much higher percentage, 51.3%, did so in 2009–2010. Similarly, the average ownership rate of television across the four lowest deciles increased from 19.3% in 1993–1994 to 62.1% of households in 2009–2010. It is interesting to note that the average ownership rate for both the two lowest deciles and across the four lowest deciles were higher in 2009–2010 than the corresponding figure for the two middle deciles in 1993–1994. Moreover, whereas 62.1% of households in the four lowest deciles enjoyed the services of a television in 2009–2010 in urban India, only 57.7% of households in the top two deciles did so in 1993–1994.

Tables 8.5 and 8.6 provide data on the percentage gaps of ownership across deciles for rural and urban India for the years 1993–1994 and 2009–2010, calculated from the data presented in Tables 8.1 and 8.3. The percentage gap G₁ measures the difference between the average ownership rate of televisions of the top two deciles, IX and X, and that of deciles I and II. G₂, meanwhile, shows the difference between the average ownership rate of deciles IX and X and deciles I through IV, whereas G₃ shows the corresponding difference between the former and the average ownership rate of televisions of deciles V and VI.

As is evident from the tables, these measures evolved very differently for rural as compared to urban India during this period. Thus, whereas all three measures show an increase in the case of rural India, they all show a decline for the urban part of the country. In rural India, the value of G_2, for example, increased from 18% in 1993–1994 to 46% in 2009–2010. Thus, whereas the average rate of television ownership by households in the top two deciles of the consumption expenditure distribution exceeded that of the lowest four deciles by 18% in 1993–1994, this figure had shot up to 46% by 2009–2010. Similarly, the value of G₃ rose from 15% to 28%.

In urban India, however, the differences in average ownership rates between the top two deciles and other deciles lower in the distribution narrowed. The value of G_2, for example, fell from 38% in 1993–1994 to 19% in 2009–2010. Thus, whereas the average ownership rate of televisions of households in deciles IX and X had been a full 38% higher than that of households in the four lowest deciles in 1993–1994, it was only 19% higher in 2009–2010. Similarly, G₃ also fell from 17% to −2% during the same period.

IV.I.II. Televisions and television broadcasts: qualitative improvements

When the production of televisions first began in India in the 1970s, only black and white televisions were produced. This was the result of government policy and not of television producers catering to the preferences of consumers. During this period, the government simply refused to give out any licenses to produce color televisions. Moreover, the production of such televisions would have been an exercise in futility in any case, because the Indian government had a monopoly over the transmission of television signals and had chosen to transmit only black and white signals.

The situation changed in the 1980s, when the government decided to allow color transmission. By now, it is important to note that black and white transmission and televisions were more or less obsolete in many parts of the world. Color televisions and transmission had, indeed, already made their way, not only into the homes of the average television viewer in the developed part of the world but had also been introduced in other developing nations such as Nigeria, Sri Lanka, and China (Reeves 1994: 3).

The introduction of color transmission and the modest liberalization in the production of televisions in the 1980s, however, failed to significantly alter the product mix on offer. In fact, the production of black and white televisions increased rapidly during this decade, rising from 369,000 units in 1980 to 3.6 million units in 1990 (Joseph 1997: 110). And while the production of color televisions did increase significantly from zero units in 1980 to 1.2 million units in 1990, by the end of the 1980s, black and white televisions still accounted for 75% of the annual production (Joseph 1997: 110). Moreover, things did not change much in the early 1990s as well, and as of 1995 color televisions accounted only for 24% of the annual television output (Joseph 1997: 110).

The changes started to take effect only after the production of televisions was delicensed in 1996–1997, and the sector was thrown open to foreign competitors. The second half of the 1990s and the following decade witnessed a significant and rapid transformation in the product mix available to consumers. The production of color televisions grew quickly, while that of black and white televisions declined. Thus, by 2001–2002, the share of black and white televisions in annual production had declined to 37.5% (Indian MIT 2005: 8), and by 2004, this share had fallen further to just 20% (Laurie 2006: 19). This period also witnessed the entry of several foreign producers into the Indian television market. By the early 2000s, multinational giants such as Phillips, LG, Sony, Samsung, and Panasonic had begun producing televisions in India and were competing against Chinese companies such as Haier, TCL, and Konka, and with domestic firms like BPL, Videocon, and Onida (Laurie 2006: 8).

Moreover, there were constant improvements in quality within the color television sector. As the decade of the 2000s progressed, flat screen color televisions started taking the place of traditional color televisions using the cathode ray technology (CRT). The market share of flat screen televisions increased rapidly during this period, climbing from a mere 2.7% in 2001–2002 to 47% in 2005–2006 (Gupta 2006: 216). The second half of the decade also saw increased production and imports of LCD televisions.

The most far-reaching qualitative improvement as far as the television sector is concerned, however, relates not so much to the quality of the televisions themselves as to the quality of the television broadcasts. During the 1980s, despite the advent of color transmission and color televisions, television broadcasts were still monopolized by the Indian government. As a result, the possessors of televisions had only one channel, Doordarshan, the public service broadcaster, to watch during this decade.

The following decade brought with it not only the liberalization of the production of televisions but also the setting free of the airwaves, with the government allowing private participation in broadcasting. The number of broadcasters quickly grew from the one public sector monopolist in 1991 to 24 by the end of 2011. This was accompanied by a steady increase in the number of channels available to view, from the one beamed by Doordarshan in 1991 to 161 pay channels by 2011 (TRAI 2012a: 80–82).¹³ The growing list of available channels – featuring prominent international channels such as ESPN, CNN, BBC, HBO, TLC, and VH1, as well as a host of Bollywood movie channels and news and entertainment channels in Hindi and many regional languages – catered to many different groups of consumers (TRAI 2012a: 127–142).

IV.II Electric fans: ownership patterns in the post-reform period

Tables 8.7 and 8.8 provide data on the rates of ownership of electric fans across the deciles of the consumption expenditure distribution for households in rural India for the years 1993–1994 and 2009–2010. These data, like those on the ownership rates of televisions, are drawn from the consumer expenditure surveys conducted by the National Sample Survey Organization (NSSO) in the years 1993–1994 and 2009–2010 (NSSO 1997, 2012). As is evident from the tables, the growth of the ownership rates of fans in the lower deciles of the distribution outstripped that of households in the middle and upper deciles in both rural and urban areas during this period.

As Table 8.9 shows, the years between 1993–1994 and 2009–2010 also witnessed a significant increase in the average ownership rates of fans for households in all deciles of the distribution in rural India. Thus, focusing on the lower ends of the distribution, in 1993–1994 a mere 2.5% of households in the two lowest deciles owned an electric fan, whereas 24.7% of households in these deciles did so in 2009–2010. And across deciles I through IV, the corresponding figures were 4.2% and 32.3% of households, respectively. It is interesting to note that the average rate of ownership across these deciles in 2009–2010 was almost as high as that in the top two deciles of the distribution in 1993–1994.

There were similar increases in the average ownership rates of fans for households throughout the consumption expenditure distribution in urban India. As is evident from the data presented in Table 8.10, these increases in average rates of ownership were especially pronounced for households in the lower ends of the distribution. Thus, in 1993–1994, whereas only 26% of households possessed an electric fan in the two lowest deciles of the consumption expenditure distribution, a much greater 74.3% of households did so in 2009–2010, a figure that is higher than that of the top two deciles in 1993–1994. The extent of the increase in ownership was similar when measured across the lowest four deciles of the distribution. Thus, whereas 36% of households in deciles I through IV owned an electric fan in 1993–1994, a full 80.5% of households did so in 2009–2010.

Tables 8.11 and 8.12 provide data on three measures of the gap in ownership rates for households across the deciles of the consumption expenditure distribution. The trends in these measures were different for rural and urban India. In the former, the increase in average ownership rates of fans across the distribution analyzed earlier went hand in hand with an increase in the difference between ownership rates across the various deciles.

In sharp contrast to these trends in rural India, the ownership gap measures in urban India decreased between 1993–1994 and 2009–2010. G₁, for instance, recorded a steep decline from 46% to 23%, as did G₂ from 36% to 16%. G₃, meanwhile, declined from 13% to 4%. These decreases in the ownership gap measures indicate that the robust increases in the average rates of ownership of fans in urban India across the consumption expenditure distribution was associated with a decline in the difference in the ownership rates for households in the different deciles of the distribution.

IV.III.I. Mobile phones and mobile subscriptions: the explosion in ownership post-reforms

During the period between 1980 and 2010, telephone subscriptions in India grew at a high and increasing rate. During the 1980s, when there was limited liberalization in the production of telecom equipment and a public sector monopoly over the provision of telecom services, the number of telephone subscriptions grew at a rate close to 9% per annum.¹⁴ Because cellular services were not available to customers during this period, this growth was driven entirely by an increase in the number of fixed line subscriptions, which grew from 2,149,470 to 5,074,734.

In the 1990s, when greater liberalization in the production of telecom equipment was accompanied by a largely futile attempt to break the monopoly of the public sector over the provision of telecom services, total telephone subscriptions grew at the higher rate of close to 22% per annum. Given the emergence of the first mobile phone subscriptions in 1995, this growth was driven by an increase in both these subscriptions and an increase in fixed line subscriptions. Whereas the former grew from 76,680 lines in 1995 to 3,577,095 lines in 2000, the latter increased from 5,074,737 lines in 1990 to 32,436,134 lines in 2000. Total subscriptions, therefore, went up from 5,074,737 to 36,013,229 over the course of the decade.

The decade of the 2000s, when there was private participation in the provision of both fixed line and mobile telecom services, saw the growth rate of total subscriptions rise to an annual rate of 36%. This high growth was fuelled, almost exclusively, by a veritable explosion in the number of mobile subscriptions. The number of fixed line subscriptions, after initially increasing from 32,436,134 lines in 2000 to 50,176,509 lines in 2005, declined thereafter to 35,090,000 lines by 2010. Mobile phone subscriptions, on the other hand, shot up from 3,577,095 lines in 2000 to 752,190,000 lines in 2010, growing at close to 71% per annum. Total subscriptions, meanwhile, rose from 36,013,229 to 787,280,000 lines during this decade.

The growth of 9% per annum during the previous decade notwithstanding, the average ownership rate of telephone subscriptions in India was a very low 0.59% as of 1990. Thus, at the start of the 1990s, less than 1 out of every 100 households in India had a telephone subscription. Over the course of the 1990s, this rate increased but marginally, rising to nearly 3.5% by the year 2000. Given this very low rate of average ownership of telephone subscriptions, it would be safe to conclude that, as of 2000, the bulk of telephone subscriptions in India were in the hands of households in the top deciles of the distribution of consumption expenditure.

Further evidence for this conclusion comes from the fact that, throughout the 1990s, it was very difficult to get a fixed line telephone subscription. In fact, a subscription was not available on demand. Instead, the prospective consumer had to wait, on average, for a period of 49 months to obtain a subscription in 1991 (Noll and Wallsten 2011: 16). While the size of this waiting list shrank over the course of the decade, a waiting period of two years was still involved with obtaining a fixed line subscription in 1995. The waiting list only disappeared in 1999, when a fixed line subscription was finally available on demand (Noll and Wallsten 2011: 18–19). Given the existence of a waiting list to obtain a new subscription and the length of the wait involved, it would be fair to surmise that a rich individual with political connections would be more likely to obtain a fixed line subscription than one who was poor.

In stark contrast, the ten-year period between 2000 and 2010 witnessed a very impressive and significant increase in the average ownership rate of telephone subscriptions. Indeed, as of 2010, this rate stood at just over 65%, with 65 out of every 100 Indian households in possession of a telephone subscription. This increase in the average ownership rate during the 2000s was driven, as the figures on the growth of subscriptions analyzed earlier would suggest, entirely by an increase in the number of mobile subscriptions. In 2000, the number of mobile subscriptions per 100 households stood at a paltry 0.34, but by the end of the decade, this figure had increased to a little over 62. In line with the decline in the number of fixed line subscriptions during this period, the number of these subscriptions per 100 Indian households actually fell from 3.11 in 2000 to 2.91 in 2010.

Table 8.13 presents data on the ownership rates of mobile phones for households across the deciles of the distribution of consumption expenditure in rural and urban India in 2009–2010. As the data shows, the impressive growth in the number of mobile phone subscriptions over the course of the period between 2000 and 2010 was not restricted only to households in the upper deciles of the distribution. Instead, households in the middle and lower deciles also shared in this growth, both in rural and urban India.

Further evidence to this effect is provided in Table 8.14, which shows the average rate of ownership of mobile phones across deciles of the distribution of consumption expenditure for both rural and urban India in 2009–2010. As the data clearly show, the rate of ownership is significant even for households in the lower and middle deciles of the distribution. This holds true especially for households in urban India.

Thus, when looking at the two lowest deciles in the distribution, the average rate of ownership of mobile phones was 20.6% and 47.7% in rural and urban India, respectively. Or, stated differently, nearly 21 out of every 100 households in the two lowest deciles owned a mobile phone in rural India, while close to 48 out of every 100 households in the corresponding deciles in urban India did so. When looking at households within the bottom four deciles, 28 out of every 100 households and nearly 60 out of every 100 households owned a phone in rural and urban India, respectively. And as for the two deciles in the middle of the distribution, i.e., deciles V and VI, the average rate of ownership of phones stood at 49.6% in rural India and 83.3% in urban India.

IV.III.II. Mobile phones and cellular services: qualitative improvements

This increase in ownership across the deciles of the distribution of consumption expenditure was accompanied by a steady increase in the number of mobile phone handsets available for purchase. From a scenario where the choice in handsets was limited to a few, the number of different models of phones available for purchase in 2011 stood at 296 (TRAI 2012b: 15). Along with greater choice in the type of handset that they could purchase, consumers also had to pay less for mobile phone services in 2010 as compared to earlier in the decade. Thus, in March 2007, the average cost incurred (including both rental and call charges) on an outgoing call per minute for prepaid customers was more than Rs. 1.10 per minute. By March 2010, this figure had declined to less than Rs. 0.60. Similarly, for postpaid customers, the average cost incurred on an outgoing call per minute was more than Rs. 0.90 in March 2007 – a figure that fell below Rs. 0.80 by March 2010 (TRAI 2012b: 26).

Moreover, there was also an improvement in the quality of the cellular services available to consumers. In 2003, the average call drop rate for phone calls made from mobile phones in the four metropolitan telecom circles (serving Chennai, Delhi, Kolkata, and Mumbai) stood at 1.41%, whereas the corresponding figure for the other telecom circles (those serving, roughly, the various states) was 2.53% of all phone calls. These figures fell through the decade so that in 2010, the figure for the metropolitan areas was 0.78%, whereas that for the states was 1.02% (TRAI 2012b: 33).

A similar improvement was seen in the percentage of phone connections with good voice quality. In 2003, this figure for the metro areas stood at 81.9% and that for the states was 97.1%. By 2010, these figures had risen to 98.5% for the metro areas and 97.7% for the states (TRAI 2012b: 33).

IV.IV.I. Motorcycles and scooters: ownership patterns after liberalization

Tables 8.15 and 8.16 provide data on the rates of ownership of motorcycles and scooters across the deciles of the consumption expenditure distribution for households in rural India for the years 1993–1994 and 2009–2010. These data, like those on the ownership rates of televisions, electric fans, and mobile phones, are drawn from the consumer expenditure surveys conducted by the National Sample Survey Organization (NSSO) in the years 1993–1994 and 2009–2010 (NSSO 1997, 2012).

As is evident from these tables, despite households across the distribution recording increases in the ownership rates of these goods over this period, the average ownership rates of motorcycles and scooters in 2009–2010 in rural India was still extremely low for all but the households in the top two deciles of the distribution. This is shown, especially, in Table 8.16, where the average ownership rate for these goods in households in the bottom two deciles is an extremely low 1.5% in 2009–2010, whereas average ownership rates for deciles III and IV also did not exceed a low 4% of households. The corresponding rate for households in the middle two deciles, meanwhile, was also a very low 8.4% in 2009–2010. Based on these numbers, one can conclude that motorcycles and scooters did not enter in a significant manner into the consumption baskets of households in both the lower and the middle deciles of the consumption expenditure distribution in rural India and that these goods, therefore, did not significantly affect the welfare of these households even after two decades of liberalization.

The data on ownership rates for these goods for households in the urban areas, presented in Tables 8.17 and 8.18, however tell a different story. In the urban areas, the period between 1993–1994 and 2009–2010 not only witnessed increases in ownership rates for households across the consumption expenditure distribution, with the rate of growth of ownership of households in the lower and middle reaches of the distribution being higher than that of households in the top two deciles. It also saw meaningful and significant increases in rates of ownership for households in the lower and middle deciles, as shown by the average ownership rates depicted in Table 8.18. The average ownership rate for households in the middle two deciles of the distribution had, for example, reached a figure of 31.6% by 2009–2010. The corresponding rate for households in the third and fourth deciles, meanwhile, was also a not insignificant 16.4%. Thus, unlike in the case of the rural India, motorcycles and scooters did play a reasonably significant role in the consumption baskets of households in these deciles of the distribution after two decades of liberalization.

IV.IV.II. Motorcycles and scooters: qualitative improvements

The first signs of qualitative improvements in the motorcycles and scooters available to Indian consumers emerged soon after the first wave of liberalization in the mid-1980s. In the motorcycles segment, this period saw the introduction of new models for the first time in over 20 years (George et al. 2002: 26). Seven new models were quickly introduced (George et al. 2002: 26), all of them produced by Indian firms in collaboration with foreign manufacturers, and signs of competition began to emerge for the first time in the sector. The sales of the old models, which suffered from the twin drawbacks of low fuel efficiency and high weight, declined as consumers switched over to the new models that were much lighter as well as more fuel efficient (George et al. 2002: 12).

This pattern of product differentiation continued into the 1990s and the 2000s, as the pace of reforms gathered steam. In fact, the rate at which new models of motorcycles were introduced increased to such an extent that by 2012, the entry-level segment of the sector, featuring the cheapest motorcycles with an engine capacity between 75 cc and 110 cc, alone had as many as 12 models, more than the entire motorcycle segment put together in the late 1980s (Ray and Makkar 2012: 7). Moreover, there were other models in the more expensive segments of the sector. Thus, there were as many as eight models in the segment with slightly more expensive motorcycles with an engine capacity between 110 cc and 125 cc (Ray and Makkar 2012: 9), and 20 models vying for the attention of consumers in the segment with the most expensive motorcycles with an engine capacity between 150 cc and 220 cc (Ray and Makkar 2012: 10).

The scooter sector of the two-wheeler industry tells a similar story. With the first wave of liberalization in the 1980s, two new scooter models were introduced into the market (George et al. 2002: 26), with features such as automatic transmission and gearless riding that were missing from the older models (George et al. 2002: 12). And like the motorcycle sector, the rate of product differentiation increased significantly in the 1990s and the 2000s. Thus, by 2012, there were ten scooter models (Ray and Makkar 2012: 12), and these new models had pushed out the old models of the pre-liberalization era from the marketplace.

V. Conclusion

The 20-year period after the commencement of market reforms and liberalization, between 1990 and 2010, was a time of historically high growth for the Indian economy. The impact that liberalization and the ensuing high rates of growth have had on the lives of the poor in India, however, has been the topic of extensive and vigorous debate.

The various estimates of the decline in poverty and the trend in inequality do not provide a clear picture of how the lives of the poor in India have been affected due to the process of liberalization. At best, they lead to the conclusion that the introduction of market reforms did lead to a decline in the incidence of poverty, although this decline may have been lower than that recorded in the decade immediately prior to the onset of the reforms; and they lead one to conclude that consumption inequality has increased during the post-reform period, especially in the urban areas.

This chapter first notes that, due to their aggregative nature, these measures of poverty and inequality do not provide a clear or coherent picture of precisely how the lives of the poor have been affected by the reforms. Specifically, they do not provide any information about whether or not there was a significant alteration in the consumption baskets of those who are now at or above the poverty line.

The chapter then attempts to provide a clearer picture of how the process of liberalization has affected the poor in India by analyzing changes in the pattern of ownership of four consumer durables: televisions, electric fans, mobile phones, and two-wheelers across the distribution of consumption expenditure between 1993–1994 and 2009–2010. For three of these goods, i.e., televisions, mobile phones, and two-wheelers, it also analyzes if there were significant qualitative improvements during this post-reform period. Given that each of these industries was liberalized as a result of the market reforms initiated in the 1990s, such an analysis helps paint a more coherent picture of how the consumption baskets and, therefore, the lives of the poor in India were touched by this process.

It is seen that, for all four goods, there was a significant increase in the average ownership rate among households in the lower and middle deciles of the distribution, with the increase being especially pronounced in the urban areas. The chapter also finds significant qualitative improvements in the televisions, mobile phones, and two-wheelers available during the period under consideration. Based on this evidence, the chapter concludes that, especially in urban India, market reforms have generated a significant improvement in the consumption baskets of Indians in the lower and middle deciles of the distribution of consumption expenditure.