India Learns the Dark Side of Free Markets

Honeymoon Is Over and Jet Airways' Non-Layoffs Are a Case in Point

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Sourabh Mishra Sourabh Mishra
A couple of weeks back, India's leading private airline, Jet Airways, announced the layoff of 1,900 employees in the face of growing concern with the economic slowdown. All the usual suspects from the local political circus, predictably, got into the protest mode. Naresh Chandra, chairman, Jet Airways, had to quickly get into the act and rescind the layoff decision.

There are a couple of really interesting points to be observed in this entire episode.

Jet Airways was (and even today is) one of the foremost poster boys of India's honeymoon with market liberalization and private enterprise. There used to be the government-owned Indian Airlines flying the domestic routes, but it was best-characterized by indifferent service and tardiness when it came to timing and schedules. Then came the private airlines around the mid-1990s and Indian consumers could not get enough of the much higher levels of service that came with them. Jet Airways went on to become the leader of the domestic skies in consumer perception and deservedly so. While we were more than happy to enjoy the much better service that came with these "private" or non-government-owned companies, we apparently are not so happy when these private enterprises follow the dictates of market forces and take tough and unpalatable decisions like laying off employees during a slowdown.

Which brings me to the second point to be noted from this episode. Indian consumers, especially those we call the consuming class or the middle class, have wholeheartedly embraced the consumerist culture that comes with the free markets. They love the number of malls they have today to shop at. They love the international brands in everything from televisions and television channels to cars, electronics and fashion labels. And of course they love the smiling hostesses as they board the private airliners. It makes them feel one with the "developed" world, which was rather inaccessible for the majority of them even a decade and a half ago. But this supposed acceptance of market liberalization is still one-sided. They have not yet fully understood and reconciled to the flip side of a freer market -- that while the going is good it feels like a picnic, but the picnic is not forever.

As we grow up as an economy, this, I suppose, is our equivalent of coming to terms with knowing that there are no fairy tales in real life. During this phase of growing up, we perhaps need to be more sensitive when dealing with our consumers. After all, being told that there is no Santa can be traumatic if done either too early or too abruptly.
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