The author, Jim Rogers aka "Mr. Bowtie", has more or less proved himself to be a nut. A couple of years ago, he was suggesting that investors sell all their US stocks and buy Sri Lankan black pepper! And if you dig deeper, you might also find him extolling the investment opportunities in Timbuctoo!
I have heard the same bloke talk in an NPR interview about 6 months ago, where he was saying that over the next 3 or 4 decades, India would break up into smaller kingdoms. However, he said India "will do fine" for the next 2 to 3 decades -- as if investors will be helped by somebody ringing a bell when India makes the transition from prosperity to anarchy!
As for claims about the "world's largest middle-class", here is an article by Shashi Tharoor that puts things in proper perspective :
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A View of the World -- Myth of the Middle-Class
Shashi Tharoor
Whenever I hear foreigners talking about the 'Indian
middle-class', I wonder what they mean. Much of the clamour
about economic reforms has focused on this somewhat chimerical
'middle-class', a construct that may be sociological but is not
entirely logical. The conventional wisdom is that this middle-class
is some 300 million-strong, larger than the entire domestic market
of the US, and, together with a very rich upper-class, has both the
purchasing power and the inclinations of the American
middle-class.
Today's economic mythology sees this new Indian middle-class
ripe for international consumer goods. Our television channels and
glossy magazines overflow with ads for foreign brand names, from
Daewoo's Cielo cars to Ray-Ban sunglasses. This is why
Kellogg's rushed in with their cornflakes; Nike got our then cricket
captain, Mohammed Azharuddin, to endorse their sports shoes;
Mercedes Benzes are already rolling off the automotive
production lines; and Johnny Walker Black Label scotch has
become an Indian brand, not just one purveyed by smugglers.
It was once said that more bottles of Johnny Walker Black Label
were sold in India than were distilled in Scotland. Now, the joke
will literally come true.
But Kellogg's, I hear, has been dismayed by the weak response of
the market; Nike is far from turning a profit; Mercedes knows
they will sell very few cars; and Johnny isn't walking with quite the
same strut as before. The reason is simple: the Indian middle-class
is not quite what it's cracked up to be in the West.
Most members of the Indian middle-class are quite content with
their idlis or puri-bhaji for breakfast and have no desire to eat
expensive bits of shredded cardboard merely because their
American counterparts do so. Most find Bata shoes expensive
enough; Nike's prices are simply phenomenal.
A survey conducted between 1986 and 1994 by the National
Council of Applied Economic Research (NCAER) in New Delhi
has already largely debunked the myth of the Indian middle-class.
After questioning 182,600 urban and 99,150 rural families, the
survey found that India's consumers could be divided into five
classes, not three:
(1) the very rich, or six million people;
(2) the ''consuming class'' of some 150 million;
(3) the ''climbers'' (a lower middle-class of 275 million);
(4) the ''aspirants'' (275 million, who in the West would
be classified as ''poor''); and finally,
(5) the destitute (210 million).
It's only among the six million very rich that there exists a
sustainable interest in Kellogg's, Nike or Mercedes-Benz.
Not that Indians aren't spending more and acquiring more: since
the 1980s, there has been a Reaganesque boom in buying. Forty
million Indians own television sets, even if many of these are
black-and-white sets bought second-hand. All but the most
destitute own wrist-watches, bicycles and portable radios.
Cumulatively, the NCAER survey concluded, India has a
''consuming population'' of 168 million to 504 million people.
All of which suggests that though we do have a middle-class, it
consumes fewer 'consumer goods' than the working-class in the
West. The dollar signs may well be lighting up in the eyes of some
foreign manufacturers who are looking at India, but they may not
shine so brightly in those of the manufacturers of brand-name
consumer goods.
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