Soft spot in India's boom: the 60 percent tied to farms

Sitting behind a computer, Sunita Kumari is collecting data from the pension program of a state agency. It's the type of business-process work that international firms are tripping over themselves to outsource to India's high-tech hubs of Hyderabad and Bangalore. But Ms. Kumari is far from either city, or any city for that matter.

She and her co-workers live in Jallikakinada, a village in the state of Andhra Pradesh where the soil is black, banana plantations and rice paddies are always green, and fish ponds are packed with prawns. But the lush surroundings do not translate to riches for the locals, farmers who eke out little more than a dollar a day. As in most parts of India's rural countryside, well-paying jobs are scarce.

To change that, one of the top outsourcing firms from Hyderabad, Satyam Computer Services, has set up a Gram IT center in Jallikakinada. Local high school students and college graduates can land well-paying jobs once found only in cities. Kumari, for instance, earns 2,500 rupees ($55) per month, but since she lives at home with her parents, she says the salary is almost all profit.

"My dream is to continue in this work," she says. In the past, educated people in her village had to move to cities to find jobs, and much of their salaries would be lost in the higher cost of housing and food. Now, she says, "we can make it work here, too."

Stories like Kumari's are still by far the exception to the rule of India's long neglect of its rural countryside. Since frustrated farmers tipped the 2004 national elections and a rural Maoist insurgency spread across the heartland, India's new government has offered some short-term solutions. But Indian analysts say that if the country wishes to sustain its economic boom, it must broaden the benefits of economic reform to the 60 percent of its citizens – and a quarter of the economy – linked to agriculture.

"India cannot sustain an 8 percent growth rate if [a quarter of] the economy is only growing at 1.2 percent," says Rajiv Kumar, director of the Indian Council for Research on International Economic Relations, a think tank in New Delhi. "There's no way that manufacturing or high tech can pull up the rest" of the economy.

More than 110 million Indians are farmers, and an estimated 500 million more make a living primarily off the agricultural sector as laborers, seed and fertilizer traders, tractor mechanics, and so on.

The Indian high-tech industry, by contrast, employs only 1.2 million people, and no matter how fast it grows, the new information economy cannot hope to employ the majority of the country's people – especially the millions who are uneducated.

Instead, analysts say, solutions must be found for the problems facing average farmers like Pilli Arjaya in Bhimavaram. In a good year, Mr. Arjaya may earn a net income of 18,000 rupees ($390) from the two acres he leases, barely enough to take care of the 12 members of his family. But the weather hasn't been good this year, so he has taken out a $200 loan at 36 percent interest.

He'll get by, he says, though it will take years to pay off the debt. For Arjaya, stories of India's emergence as an economic power seem a distant reality: "In coming years, we expect we will develop too. We are better off than our ancestors were. But not much."

India's agricultural sector hasn't always been neglected. The Green Revolution of the 1960s and '70s introduced new seeds that boosted yields and stopped famine.

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