A Tale of Two INDIAS.

AuthorSmith, Patricia
PositionINTERNATIONAL - India's economic conditions

The world's largest democracy has a booming economy that's lifting millions into the middle class. But many Indians are still struggling to escape from poverty.

Down a winding alleyway strewn with trash and up a narrow staircase is the small two-room apartment where 14-year-old Sushmita lives in an overcrowded neighborhood of Delhi, one of India's largest cities. Her family is part of the huge wave of Indians who've moved from impoverished rural villages to the city in search of better lives. Yet Sushmita's family still lives day to day. Her parents both work, and they struggle to make ends meet. Sometimes there's no electricity. The apartment has one bed, which Sushmita * and her brother share. Her parents and older sister sleep on the floor next to them in the cramped bedroom.

Just 12 miles away, on the eastern side of the city, 14-year-old Anirudh Joshi lives in another world. His neighborhood is known for its parks, a nearby shopping mall, and convenient access to Delhi's subway system. His family's apartment is situated on a quiet, well-kept street and boasts an air conditioner, a flat-screen TV, and a family computer. Anirudh has his own cellphone and likes to play cricket with his friends after school.

"I have everything provided for me," he says.

Anirudh and Sushmita reflect the two sides of India today. On the one hand, India's economy has boomed in the past 25 years, and hundreds of millions of people have been lifted out of poverty. Last year, a British think tank predicted that by the end of 2018, India's economy will surpass both France's and the United Kingdom's in size, making it the fifth-largest in the world.

But at the same time, millions remain stuck in the old India, a place that's very poor, uneducated, and trying to make the transition to modernity. About 20 percent of the population still lives on less than $2 a day.

"India has come a long, long way when it comes to its economy," says Anubhav Gupta, an India expert at the Asia Society in New York, "but it still has a long way to go."

1.3 Billion People

Modern India was born in 1947, when it gained independence from its longtime colonial ruler, Great Britain. (The British partitioned the country into Hindu-majority India and the Muslim country of Pakistan.) For more than four decades after gaining independence,

India's economy was heavily controlled by its socialist government, and the nation made little progress in tackling its crippling poverty.

But in 1991, the government began turning away from socialism, loosening regulations, opening India to foreign investment, and adopting other free-market practices. The economy took off, and since then the ranks of the middle class have more than doubled.

With 1.3 billion people, India has the world's second-largest population (after China) and is the world's largest democracy. Indeed, India is now seen by many as the other rising global power--along with China--that the United States will have to compete with in the decades ahead.

Despite India's huge leaps forward, however, large swaths of the population have so far been left behind. About half of Indians who live in rural villages don't have toilets, and 240 million Indians lack electricity. Education is another huge challenge: About 25 percent of Indians can't read--that's some 325 million people, or about the population of the United States.

"Because it's such a vast country, the challenges are just greater in scale," Gupta says.

India is also hampered by the caste system, a traditional social hierarchy that dates back to the ancient origins of Hinduism, the country's majority religion (see "The Caste System," facing page).

Moving Up the Economic Ladder

One of India's great strengths, however, is the youth of its people. More than 600 million Indians are younger than 25-- about half the population. By 2020, analysts predict, India will account for 12 percent of the world's college graduates. Some U.S. tech companies, including IBM and Dell, have moved substantial numbers of jobs to India because the tech workforce is well-educated and salaries are much lower than in the U.S.

The opportunities created by this growth have Anirudh Joshi, the 14-year-old Delhi boy, and young people like him optimistic about the future.

In just one generation, Anirudh's family has moved several rungs up the economic ladder: His father grew up in a village of about 100 people in Uttarakhand, where his family were farmers. As a child, Anirudh's father walked two miles to school and then did farm chores when he got home. He was 18 the first time he watched TV.

He got ahead by studying hard and eventually going to college to become an accountant. Having a reliable profession enabled him to move his family into a nice neighborhood in Delhi and send his children to a private school where instruction is in English. That's a huge advantage in India because English is the language of business, and speaking it fluently gives any young person a leg up.

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The family is even able to afford some extravagances, like the hired car that drives Anirudh and some classmates to school. Some of those luxuries are helping Anirudh in his quest for success: He uses his smartphone and the...

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