What's changed? What used to be known as "the Indian rate of growth," the country's perennially subpar economic performance, is no longer a national embarrassment.
The government predicts 8.1% GDP growth this financial year—highest only after booming China among significant economies. Meanwhile, India's middle class is exploding in size; it currently numbers 300 million people—each earning $2,000-$4,000 a year—and is predicted to rise to 445 million by the end of 2006. Incumbent officeholders in the ruling Bharatiya Janata Party (BJP), eyeing all those happy new capitalists, are of course taking credit for the country's vibrant economic growth, for the gleaming business campuses in Bangalore and the sprawling shopping malls in Bombay. The BJP is posting billboards and running full-page newspaper ads with the headline "India Shining," telling Indians they have never had it so good. "We are announcing the arrival on the world stage of an India that will be an economic powerhouse," Prime Minister Atal Bihari Vajpayee declared at a recent rally, "[and] a land of opportunity and achievement."
Meanwhile, the main opposition party, Congress, is busily painting the country black, arguing that, so far, India's progress benefits a lucky few while most citizens remain in abject poverty. Congress's leader, Sonia Gandhi, accuses Vajpayee of living in a "rosy daydream." She says his government's pursuit of selective development—building call centers and technology parks while razing slums to make way for shopping malls and ignoring India's agrarian majority—is "anti-farmer, anti-poor and anti-masses." Says Gandhi: "There is an air of despondency everywhere."
Both Vajpayee and Gandhi are right. The country's transition from socialist past to capitalist future is far from complete, and economists today talk of two Indias: southern and urban, and northern and rural—the former developing, the latter deteriorating. Property consultants Knight Frank say an urban mall boom is raising national consumer spending by 11.5% a year, but last month, Raghbendra Jha of the Canberra-based Australian National University published nutrition studies showing "calorie-deprivation and expenditure-poverty" increasing in five Indian states. Despite the new jobs in IT and back-office work outsourced from the West, unofficial surveys and anecdotal evidence suggest unemployment is rising nationwide. (The government's count, last taken in the financial year 2001-02, stands at 35 million, nearly 10% of the work force.) In the southern state of Goa, average annual salaries are between $514 and $700; in northern areas such as Bihar, they are less than a sixth of that and decreasing.
The growing economic gulf is creating friction between the haves and have-nots. Yogendra Singh, emeritus professor of sociology and development at Jawaharlal Nehru University in New Delhi, warns that "the sudden emergence of the urban middle class and the stultification of the poor and the lower middle class have ignited an alienation, a resentment in the rural population and urban poor." Resentment is boiling over into violence. Riot police had to quell days of uproar in New Delhi last month when authorities began bulldozing slums that were home to 100,000 people to make way for a riverside mall. A few weeks earlier, 59 migrant workers from destitute Bihar were killed in attacks by violent mobs comprising residents of the northeastern state of Assam; Assamites feared that migrants were taking away already scarce jobs.
More serious still is the sustained bloodletting by the communist insurgency in poverty-stricken northern and eastern India, a conflict that has claimed 2,260 lives since 1999—an uprising the New Delhi-based Institute of Conflict Management calls "the largest single internal security challenge in the country after terrorism in Kashmir." The rebels—called Naxalites, a name coined after a 1967 Marxist uprising in Naxalbari, West Bengal—originally targeted feudal landlords. Today they attack those they see as enforcing a new type of economic repression: the capitalist free-marketeers of the BJP and its ally, the Telugu Desam Party (TDP) in the southern state of Andhra Pradesh. In October the Naxalites tried to assassinate for a second time India's champion of outsourcing and IT, the TDP Andhra Pradesh Chief Minister, N. Chandrababu Naidu, when they detonated a clutch of land mines underneath his car south of Hyderabad. And after announcing an elections hit list limited to the BJP and the TDP, the Naxalites last week killed a TDP worker, blew up a rural development office and tried to murder another TDP leader, Kalava Srinivasulu. It was no coincidence that the Naxalites bombed Srinivasulu's car in the market town of Anantapur, a few hours' drive south of booming Hyderabad's cyberparks and shopping malls. Impoverished farmers in communities surrounding Anantapur are not, as the "India Shining" campaign suggests, upwardly mobile. Official statistics show that since 1997, 2,009 indebted farmers have committed suicide in and around Anantapur by drinking pesticide. From his jail cell in Patna, Bihar's state capital, Arvind Sharma, a captured leader of the Naxalite People's War Group, says his movement is gaining recruits because "the economic gulf is uniting the masses."
While the dissatisfaction of the poor won't trigger the civil war wished for by Marxists, it could help Congress Party candidates in upcoming elections. But so far the boost is minimal. Gandhi struggles to be heard in the cacophony of the "India Shining" campaign, which was amplified by the BJP's controversial use of $20 million in government funds to fuel the blitz. Nor does Gandhi do well in a face-off with Vajpayee. The widow of former Prime Minister Rajiv Gandhi, she was born in Italy and has a shaky grasp of Hindi. Vajpayee quotes his own poetry from a platform of Indian nationalism.
Regardless of the winner, this year's elections have for now elevated India's level of political discourse. The country's leaders are at last acknowledging that economic progress is achievable—that the destitution of hundreds of millions of people is not an everlasting, unalterable fact but something that should be the priority of any government. The test will be if campaign promises last beyond polling day. If not, says V.K. Srinivasan, director of the Indian Institute of Economics in Hyderabad, "it spells big trouble."