The Threat of Social Explosion

in India

Presented by,

Nithin Seenivasan (859867)

Introduction – The ugly Rich India

• House of Mr Ambani, 53, with a $27bn

(€20bn) fortune.

• Cost more than $1.8bn = €1.35bn

(Milliarden)

• 600 Staff working in the building

• 3 Helicopter Pads, Parking for 160 cars,

Gym, Swimming Pool, Theater etc.

• Electricity Bill - €104655/Month

• Equivalent to monthly power consumption of

7,000 homes in India

• 27 floors for a massive family of…. 6

people.

Antilia – The house

of the Ambani’s

A 3D model of Antilia- One of the most

expensive, ugliest houses ever built by mankind

4 Major slums near Antilia

A few pictures of the Slums

The Social Divide

38% of India’s population (380 million) live Below

Poverty Line (BPL)

International poverty line- US$ 1.25, which is

INR 21.6 (0.31 EUR) a day in urban areas and

INR 14.3 (0.21 EUR) in rural areas (after PPP)

Six low-income states – Bihar, Chhattisgarh,

Jharkhand, Madhya Pradesh, Orissa and Uttar

Pradesh – are home to more than one third of

India's population – Have severe poverty,

unemployment and a general lack of development. PPP link

The Vicious Circle

Overpopulation

Comparison of Population with

GDP, Energy Prices and Inflation

Source: CIA World Factbook

PopulationGDP (PPP)

(Billion $)

GDP

(Growth

Rate) (%)

Electricity Consumption

(Billion Kwh)

Electricity Production

(Billion Kwh)

Inflation (Consumer

Prices) (%)

2000 1,014,004,000 2,200 4.03 416.35 448.6 5.3

2001 1,029,991,000 2350 5.21 424.03 454.56 5.4

2002 1,045,845,000 2,660 3.76 509.89 547.12 5.4

2003 1,049,700,000 3,033 8.37 497.2 533.3 3.8

2004 1,065,071,000 3,319 8.27 497.2 533.3 4.2

2005 1,080,264,000 3,666 9.31 510.1 547.2 4.2

2006 1,095,352,000 4,156 9.27 519 556.8 5.3

2007 1,129,866,000 2,966 9.81 587.9 630.6 6.4

2008 1,147,996,000 3,297 6.23 517.2 665.3 8.3

2009 1,166,079,000 3,680 9.1 517.2 665.3 10.9

2010 1,173,108,000 4,060 9.71 568 723.8 11.7

2011 1,189,173,000 4,469 8.21 568 723.8 11.9

Population vs GDP

0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

5.000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

GDP (PPP) (Billion $)

GDP

(PPP)

(Billion $)

0

2

4

6

8

10

12

GDP (Growth Rate) (%)

GDP

(Growth

Rate) (%)

900.000.000

950.000.000

1.000.000.000

1.050.000.000

1.100.000.000

1.150.000.000

1.200.000.000

1.250.000.000

Population

Population

Population vs. Electricity Production/Consumption

900.000.000

950.000.000

1.000.000.000

1.050.000.000

1.100.000.000

1.150.000.000

1.200.000.000

1.250.000.000

Population

Population

0

100

200

300

400

500

600

700

800

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Electricity Production (Billion

Kwh)

Electricity

Production

(Billion Kwh)

0

100

200

300

400

500

600

700

Electricity Consumption (Billion

Kwh)

Electricity

Consumption

(Billion Kwh)

Population vs. Inflation

0

2

4

6

8

10

12

14

Inflation (Consumer Prices) (%)

Inflation (Consumer

Prices) (%)

900.000.000

950.000.000

1.000.000.000

1.050.000.000

1.100.000.000

1.150.000.000

1.200.000.000

1.250.000.000

Population

Population

Installed Electricity capacity - 185.5 GW

Available peak load supply is 118.7 GW, but demand is 136 GW

Even major cities suffer from 1-2 hours of electricity blackouts occasionally

Electricity absolutely critical for EVERY sphere of development- Education, Manufacturing, Agriculture, etc.

300 million Indian citizens have no access to electricity. (One third of rural population, and 6% of the urban population)

A huge sense of Social Inequality arises when deprived of this basic “necessity”

Impending Energy Crisis

Impending Energy Crisis

India’s primary energy consumption is 524.2 MTOE.

(Coal 52.9% , Oil 29.6% and natural gas 10.6%)

Huge dependency on oil exporting countries- 73% of

the oil consumed is imported

Important to remember that there are only 13 million

cars currently on the Indian streets. This amount is

rising almost in accordance with the population rise.

With respect to Oil, Two scenarios feared- Disruption

and Price rise.

No Strategic Oil Reserves at all. If supply is disrupted,

13 million vehicles come to a stop.

According to Goldman Sachs, the increase in oil price

by $10 per barrel could potentially slow India’s GDP

growth by 0.2%.

Increase in Oil prices will also cause Exchange rates to

fluctuate, potentially causing inflation rates to increase

Current fuel prices are INR 73 (1.07 Eur) per liter of

Petrol and INR 45 (0.66 Eur) per liter of Diesel, which is

still too high for most of the population

More people are unable to afford to own a vehicle and

travel

Still many depend on wood and coal for domestic

energy requirements

Impending Energy Crisis

Risk of a Social Explosion

Growing Energy prices, overpopulation and poverty is

increasing the Social Divide between the rich and poor

every single day

Will result in a “hopeless” generation, who will never

have the chance to prosper even if they possess all the

necessary talent to succeed

Will lead to a social unrest, leading to a full scale

explosion of society

Public flaunting of wealth by the rich makes the problem

worse

Why should International

Managers know this?

More sensitive towards local customs,

traditions

Understand employees from such regions

better

To be aware of the situation in the

country and to behave appropriately and

ethically, to avoid exploitation

Final Thoughts

Queen Marie Antoinette - "Qu'ils mangent de la brioche” (English- “Let them eat Cake”), when they were starving due to severe drought, causing unrest among the French peasants and ultimately causing the French Revolution

Ratan Tata (2011) - "It makes me wonder why someone would do that. That's what revolutions are made of.” , commenting about Ambani’s huge and ugly $1.8 Bn house

Hopefully, Ratan Tata’s words are not prophetic

Thank you!