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Boom splits India's middle class

By Scott BaldaufStaff writer of The Christian Science Monitor / May 13, 2004


From their sixth-floor apartment, in this thoroughly modern suburb of New Delhi, Gopal and Pranamita Sarma can see a bright future for themselves in India.

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Sure, they see the grinding poverty and government corruption. They see the continued power of thuggish politicians and the relative weakness of the middle class.

But behind, they say, there is something bigger: a change in attitude.

The economy is growing at a rate paralleled only by China. Indian companies have become more sophisticated at making products that the world wants. And the Indian middle class has become more sophisticated as well, more willing to try new things and take new risks.

From their perspective, India is shining, and all the conditions are present to turn this once sleepy third-world country into an economic juggernaut.

"The last six months are the first time I have felt vindicated in not leaving India," says Mr. Sarma, an economist and managing director for a consulting firm in New Delhi.

"I had an opportunity to go to the US before graduate school, and I decided against it. All my family told me I was an idiot. But now, I feel this is a great place to be, and it's only going to get better and better."

For American taxpayers who see every job created in India as a job lost for them, this may not be welcome news. Gone are the days when India was a sinkhole for American aid dollars; now it is a colossus ready to consume the world. In truth, India's booming economy is still in its infancy, and not nearly as widespread or as popular as the statistics may indicate.

Here, many middle class and poor Indians complain that the boom has benefited a fortunate few and left ordinary Indians bearing the loss of 1.3 million jobs cut from the government bureaucracy over the past decade. Some of these cuts were made to satisfy international lenders and trade treaties.

The workforce frustration may be reflected in national elections, whose results will be announced Thursday. Current opinion polls show the ruling conservative BJP coalition holding onto just enough power to rule a hung Parliament. In an ominous sign for the BJP, the chief minister of Andhra Pradesh, Chandrababu Naidu, conceded defeat to the Congress Party on Tuesday in state assembly elections. Mr. Naidu, a high-tech poster boy of the new Indian economy, and his party were a major part of the BJP's governing alliance in the national Parliament.

Election Results

For the BJP, or Bharatiya Janata Party as it is called, it was not supposed to work this way. Early opinion polls, going into the election, portrayed a BJP that couldn't lose. The economy was booming. Foreign exchange reserves - an indicator of foreign investment dollars coming in - were at an all time high. Even the Indian cricket team defeated their longtime rivals, Pakistan. Throwing millions into a glitzy television ad campaign called "India Shining," the BJP called early elections and awaited the sweets and flowers.

Yet the undercurrent of discontent is unmistakable.

"India is not shining; the BJP is shining, and those are two different things altogether," says Dipankar Gupta, a sociologist at Jawaharlal Nehru University. "People who have jobs are getting lots of money, but those who don't have jobs, don't. If you look at public hospitals, they're a mess, the railways are a mess, the water is dangerous to drink. We have yet a lot to achieve."

Indeed, even the signs of prosperity - call centers, computer software developers, and so on - have a feel of desperation. These positions number roughly 1 million, a small fraction of the India's 400 million workforce.

At call centers it's common to see hundreds of college graduates apply for a few dozen jobs. And while the private sector has begun to create jobs, mainly in major metropolitan areas, it has not been able to keep up with the 700,000 new job seekers entering the workforce each year.