Hey, Big Spenders

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This growth has been a godsend for Indians like Kedia. Two years ago, Kedia was just a run-of-the-mill college grad with little idea of what to do next. He tagged along with a friend visiting a call center. The recruiter there asked if he would interview for a job, and he scribbled out a resume on the spot. His first task was troubleshooting for U.S. computer-maker customers over the phone, working all night in New Delhi to help Americans with their PCs during the day. Since then, Kedia moved to a similar company and has been promoted twice to manager. His salary has quadrupled to $6,200 annually — a treasure in a country where the per-capita income is only $470--and he believes it will double again over the next two years.

Jyoti Sthankey, 21, a part-time student from western India, left a job at a state-run airline this year to become a sales clerk at Wills, a new clothing shop in central New Delhi, convinced that she had a better chance to move up in the rapidly growing chain. She's aiming to quadruple her $2,000 salary by advancing to management in two years. In June, Sthankey and her brother, who manages a Pizza Hut restaurant, moved into their first, small house, its $10,400 cost paid entirely with savings. A month before, she spent a month's salary on a Nokia mobile phone. "In previous days, we didn't have such an opportunity," Sthankey says.

Kedia and Sthankey can thank an increasingly liberalized Indian economy for their more affluent lifestyle. For the first four decades after India gained independence from Britain in 1947, its socialist-leaning leadership, fearful of domination by foreigners, walled off its economy from global markets, using high tariffs and stiff entry barriers. An ideology favoring small cottage industries, fostered by no less a figure than Mohandas Gandhi, led the government to tie up private enterprise in a web of regulations, nicknamed the License Raj, that shifted economic power to inept bureaucrats. Foreign companies pushing their way in often found that only a few people had the cash to buy their products. But by 1991, with its economy stalling, India began opening up its markets. Though that process has often crawled along, Indian incomes have been climbing more rapidly.

The rising number of young consumers in India is providing one of the few hot markets in a sluggish world economy. U.S. telecom-equipment maker Motorola says sales of its mobile phones in India increased 200% in the first six months over the same period last year. Tearing a strategy page from its very successful China playbook, Motorola targets youngsters with cheap phones. In June Motorola joined up with Bharti to offer phones at $64--an offer it claims is the cheapest in India. "The attitude of the young generation is to enjoy life and spend money," says Pramod Saxena, president for Motorola in India. "We're looking at India as a major growth market."

Economic liberalization has led to cultural liberation too, as young Indians become more connected to global entertainment. From only two staid state-run television channels in the early 1990s, cable-TV subscribers can now get 80 or more, replete with MTV and episodes of Friends. These mutually reinforcing trends prompt Indians to crave the big-name foreign brands that India's protectionist politicians kept out of reach for so long.

Attitudes toward money are also changing. The mantra for the average Indian family, as in most of Asia, has always been save, save, save, but young Indians today, inspired by job opportunities, have switched to spend, spend, spend. According to KSA Technopak, Indians spent 55% more money eating out in 2002 than the year before. They're also more willing to take on debt. In the past two years, the number of new credit cards issued has jumped 25% annually, and new mortgages 35%.

Typical of the new trend is Samit Kapoor, 28, an assistant manager at Exl Service, a call center near New Delhi. Last year Kapoor took a mortgage to buy a two-bedroom apartment, and this year he purchased a car, a Hyundai Santro, for about $7,000. Four times a month, Kapoor visits New Delhi's top restaurants, among them Italian bistro Flavors or Indian-food specialist Bukhara, dropping as much as $40 a meal. In the process, he ran up about $4,200 in credit-card debt, spread over three cards. Since getting married six months ago, he has been persuaded by his wife to scale back and pay the debt down, but he was never too worried about it. "I see more opportunities to make money in the future," he says. Though not as extravagant as Kapoor, Pawanjit Singh, 25, a manager of a busy McDonald's restaurant in one of New Delhi's main markets, splurged on secondhand golf clubs, which set him back more than $400. He heads out to a golf course (golf is a prestigious hobby in Asia) or a driving range every weekend. "I don't think people my age right now want to save," he says.