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India Learns the Dark Side of Free Markets
Honeymoon Is Over and Jet Airways' Non-Layoffs Are a Case in Point
Posted bySourabh Mishraon
11.03.08@ 11:44 AM
A couple of weeks back, India's leading private airline, Jet Airways,announcedthe layoff of 1,900 employeesin the face of growing concern with theeconomic slowdown. All the usual suspects from the local political circus,predictably, got into the protest mode. Naresh Chandra, chairman, JetAirways, had to quickly get into the act andrescindthe layoff decision.There are a couple of really interesting points to be observed in this entireepisode.Jet Airways was (and even today is) one of the foremost poster boys of India's honeymoon withmarket liberalization and private enterprise. There used to be the government-owned IndianAirlines flying the domestic routes, but it was best-characterized by indifferent service andtardiness 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 thatcame with them. Jet Airways went on to become the leader of the domestic skies in consumerperception and deservedly so. While we were more than happy to enjoy the much better servicethat came with these "private" or non-government-owned companies, we apparently are not sohappy when these private enterprises follow the dictates of market forces and take tough andunpalatable decisions like laying off employees during a slowdown.Which brings me to the second point to be noted from this episode. Indian consumers, especiallythose we call the consuming class or the middle class, have wholeheartedly embraced theconsumerist culture that comes with the free markets. They love the number of malls they havetoday to shop at. They love the international brands in everything from televisions and televisionchannels to cars, electronics and fashion labels. And of course they love the smiling hostesses asthey board the private airliners. It makes them feel one with the "developed" world, which wasrather inaccessible for the majority of them even a decade and a half ago. But this supposedacceptance of market liberalization is still one-sided. They have not yet fully understood andreconciled to the flip side of a freer market -- that while the going is good it feels like a picnic, butthe picnic is not forever.As we grow up as an economy, this, I suppose, is our equivalent of coming to terms withknowing that there are no fairy tales in real life. During this phase of growing up, we perhapsneed to be more sensitive when dealing with our consumers. After all, being told that there is noSanta can be traumatic if done either too early or too abruptly.
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