India's Young Spenders

Financially Independent and Lured by Ads, A Nontraditional Generation Embraces Credit

MUMBAI Draped in a wedding sari and adorned with yellow gold necklaces and jangling red marriage bangles, a new bride sat demurely on a bed covered with flowers. In the dimly lit room, she handed a glass of milk to her groom in a flirty wedding-night ritual.

But in this popular and comical TV commercial, another hand suddenly emerged from the floor and grabbed the tumbler of milk, which was then passed to another hand, then another and another. They were all the hands of relatives sleeping in the same room, in accordance with India's traditional extended family system. When the milk, meant to seduce, finally reached the groom at the other end of the bedroom, he drank it and blew a kiss to his bride.

Then came the rub: "Cramped for space?" a voiceover boomed. The ad went on to tout easy credit lines for young couples seeking home loans.

The TV spot is just one example of how India's thriving advertising industry is targeting one of the world's youngest populations and largest markets. More than 70 percent of India's population of 1.15 billion is under 35. With the proliferation of outsourced technology and call-center jobs, a growing number are finding themselves with good salaries, few expenses and large disposable incomes.

These middle- and upper-class consumers, known here as "indies," or financially independent young Indians, are also delaying having children until they are in their mid- to late 20s. Studies show that they are eager to put the latest iPods, brand-name sunglasses and cellphones on their credit cards, take out a loan to get an apartment or car, and worry about it all later.

"The India story today is about the consumer confidence among our young people who are willing to spend like mad," said Kamal Basu, chief executive of the Mumbai branch of the advertising agency Saatchi & Saatchi.

The spending habits of the country's young have even given rise to a new term: "Youngistan," a twist on Hindustan, a time-honored moniker for India. Pepsi created the term as part of an ad campaign, and it's now frequently invoked by ad executives and Indian bloggers trying to describe a generation whose habits in love, life and spending are anything but traditional.

"In many ways, India is the most exciting market in the world because it's so young and the growth has been so fast," Basu said. "We don't want that to change."

Change may very well be coming. Although India's annual economic growth rate has averaged about 9 percent in recent years, the economy is cooling during the global slowdown. This summer, inflation in India ballooned to 11 percent, the highest annual rate in 13 years. Prices for rice, milk and cooking oil, in particular, have skyrocketed, and increases in gasoline prices have sparked protests.

Financial experts in Mumbai, India's business capital, predict that the country's economic growth will slow to about 7 percent. The drop of a couple of percentage points, however, could mean the loss of thousands of jobs.

Still, the Indian economy remains one of the largest in Asia, and many financial experts are optimistic.

India's outpost of Standard Chartered Bank estimates that the subcontinent adds 3 million young earners in the 20- to 24-year-old age group annually, a figure expected to more than double in the next few years. In booming cities such as Mumbai and Bangalore, Citibank released a credit card with the MTV logo that can be used for discounts at CD stores and at clubs.