India at a crossroads: the world's largest democracy deals with growing pains as its economy continues to boom.

• Author: Sengupta, Somini
• Position: INTERNATIONAL

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Just a month before an Indian automaker had been scheduled to roll out the Nano--at $2,500, the world's cheapest car--from a new factory in West Bengal State, a series of peasant uprisings forced the company to suspend construction of the plant and consider pulling out of the area altogether.

In many ways, Singur, the cluster of villages where the Nano was to be produced, stands at the crossroads of two Indias: one, traditional and agricultural; the other, modern and rapidly becoming a global economic power.

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For Tata Motors, one of India's most successful companies, Singur is ideally located along a new national highway that heads north to New Delhi, the capital, and intersects an important east-west artery.

For farmers, Singur is ideally located on the fertile delta plains of the Ganges River, making the earth so rich and red that it yields two rice harvests a year, in addition to potatoes, cucumbers, and squash.

The standoff at the Nano plant is an example of the challenges facing India as its economy continues to grow: how to divert scarce fertile farmland to industry in a country where more than half the people still live off the land.

Poverty has dropped appreciably in 17 years of strong economic growth, and the nation has developed a sizable middle class. But 35 percent of all Indians are still below the poverty line, living on less than $1 a day; almost half of India's children are malnourished.

For India's government, the challenge is not only how to compensate peasants making way for India's industrial future, but also how to prepare them for the new globalized economy in which India is so successfully participating.

Clashes over land have dogged several major industrial projects in this crowded democracy of 1.1 billion people.

'PAPER-PENCIL WORK'

The farmers who resist most intensely are often those who know they are qualified to do little beyond eke out a living off the land--although protests are also a way to drive up the price of their land.

The target of their anger is often the government, which usually acquires the land and turns it over to private industry. In Singur, the protesters want the government to return a third of the 997 acres that it acquired for the Tata factory, some of which was taken by force from farmers.

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In September, the government announced a more generous compensation package for those who had been evicted, and offered job training for...