Stay hungry, stay foolish

India is home to a quarter of the world’s hungry — about 230 million people — according to the World Food Programme. About half of the country’s children are malnourished, a record poorer than the world’s poorest area, sub-Saharan Africa [1].

Hardly a day went by during the past month, in which we didn’t think of food. And no, it wasn’t because we couldn’t get our minds off of planning the first meal we would have at the end of our experiment. Rather, it was because, food was the largest component of our budget at both Rs. 100/day (50%) and Rs. 32/day (68%).

The Great Indian Thirst

We invited our friend and neighbor Sunita, who is the CEO of the NGO Arghyam, to write on water issues faced by the common man. Below is her post. You can also see a related video interview we took of a washerman in Bangalore who didn’t have enough water to wash clothes here.

Living on Rs. 100 a day – How does it impact how much water you consume?
Sunita Nadhamuni, CEO Arghyam (sunita@arghyam.org)

The Indian standard for daily water requirements varies based on where you live. For a Bangalorean, it is a 150 lpcd (litres per capita per day), for her rural cousin it is 40 lpcd. This difference is primarily because metros & large cities have piped water supply, which has a certain amount of unavoidable leakages and sewerage systems that require a certain volume of water to ensure

You drink/smoke/chew, you lose

“You can burn down your house smoking”. “You can drink your dreams away”. The fact that addiction is bad for financial balance is well known. But that it can be economically devastating for the average Indian was somewhat of an eye-opener for us. This topic struck our curiosity when we realized that it was virtually impossible for us to have even one drink without seriously affecting our daily budget. To get a better picture of the situation, we interviewed a couple of pan walas (the road side tobacco and pan sellers) and also visited couple of suburban liquor stores. You can see a video interview here. The following is a summary of what we learned:

1. A Katta of Bidi (pack of local 24 cigarettes): Cost Rs. 10; average consumption is 1 – 2 kattas per day.

2. A Gutka or a small packet of chewing tobacco costs Rs. 2 – 4 per packet; Average consumption is 10 – 15 packets per day.

3. A standard “Quarter” bottle of the cheapest alcohol at the liquor store: 180ml. Cost Rs. 45 – 50; Average consumption is 1 bottle (daily for some, weekly or bi-weekly for others).

Using these numbers, we ran the following sensitivity analyses on the possible scenarios for the total spend on addiction related expenses:

opportunity costs?

When we started this experiment roughly two weeks ago, we foresaw it as a part-time exercise. We had just left our jobs with the intention of starting up on our own and figured that a month was the perfect duration of time to do some business planning. But 17 days into our  ‘average living’ we have hardly done anything related to our venture. No doubt, we were initially tired and hungry from the nutritional/caloric deficiencies, which prevented us from having the energy to do much. However, even after acclimating ourselves to the lifestyle, we found that there was simply not enough time left in the day to do any start up related work. The primary reason for this was that we didn’t have a ‘houseperson’ at home.

Who exactly is a houseperson?

The X factor: Size does matter

Remember “economies of scale” from Econ 101? We got to experience it first hand recently! Since Matt joined Tushar in the experiment, the average costs per person have done down,  along with our risk exposure to external economic shocks, while the average morale has gone up. And no, it isn’t because Matt is a highly disciplined, jovial fellow (well, not entirely at least), its because when it comes to living together, eXtended is the way to go – be it families, communities or “societal networks”.

So where does it impact the most? We looked at a few trends and came up with the following areas where we think this “X factor” hits us hard.

COST TREND LINES - before and after Matt joined. See the bullet on "Hedging economic shocks" to understand the calculation behind risk exposure ratio.

The worst is yet to come

That is for sure. It has been three days since I joined Tushar in this experiment of ours. Luckily for me, two of those days fell on the weekend, which meant no expenses for transport. Moreover, my mobile expenses were pretty close to zero as well. It helps not to have too many friends.

But, this doesn’t mean I have been been splurging

Travel trauma!

How much can an average Indian afford to travel? Our estimate is: not more than 5 km each way per day!

I tried to break that 5K barrier using Matt’s dad’s 25 year old Hero Honda giving 50-60kmpl yesterday…

Initial reaction: holy cow!

Tushar: Its the end of day two for me and as I eagerly wait for Matt to join me on Thursday morning, here is a summary of things changed and new things learnt till now along with a video interview of a representative average income lady ( a local vegetable seller)

1. Offloading the excess:

We had to say goodbye to:

The budget plan – how much can we have

Before we begin, here are some details on whats going to be our daily budget and what can we spend on and not! This is going to be our bible for next 4 weeks – overshoot it one day, go hungry the next! Cost is in rupees per person

NON FOOD EXPENSES

Breakdown of total non food expenses - in Rs./person/day

what are we getting ourselves into

So, we are about a week away from our start date. After normalizing for rent, we have about Rs. 3000/person to spend. Time to get into the hard numbers. Here’s what we think it roughly costs one person (we plan to have exact numbers in the next day or two and further do a post fact update at the end of each day):

1. Utilities
-LPG: Rs. 100
-Electricity: Rs. 100

2. Communications
-Telephone (mobile prepaid): Rs. 300
-Internet (slowest plan, with less than 10GB/month download): Rs. 300

3. Transport (buses, and the occasional ride on motorcycle that give us about 50 kmpl):Rs. 400

4. Toiletries/household supplies: Rs. 100

5. Contingency planning (if possible): Rs. 200

All that adds upto Rs. 1500. This means we have about Rs. 1500 or Rs. 50/day for food (hungry already..) and this has to generate a 2,000 calorie diet (thats 40calories/Re. 1), ideally balanced to 40% carbs, 30% protein, and 30% fat (okay, we need to stop dreaming!)