A tale of two Indias: one of the fastest-growing countries in the world, India is emerging as a major global power. But huge challenges remain.

• Author: Smith, Patricia
• Position: Cover story

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To get to 15-year-old Vikas Sharma's home in Bangalore, you have to travel along a narrow dusty lane, then climb a steep flight of stairs that's draped with a neighbor's drying laundry. Inside the tiny apartment, the bedroom Vikas shares with his younger brother is so small there's barely room for the bed and the table where the two boys study.

It may sound sparse, but the Sharma family has already come a long way. Seven years ago, they moved to Bangalore--a rapidly growing city often referred to as India's "Silicon Valley"--from a tiny impoverished village in the northern state of Bihar, where there was no running water or reliable electricity. There was also no English-language school.

"My parents wanted us to join an English school and make our future in the big city," explains Vikas. Most Indians consider mastery of English, used in business and government, to be essential for success.

The Sharma family is among the millions of Indians who are moving out of poverty and into the middle class, as India's economy continues to soar. They represent a bridge between two vastly different Indias: The India they've left behind is largely agricultural, uneducated, and very poor; the new India they're grasping at has a vibrant economy with an expanding high-tech sector and is rapidly becoming a global economic power.

"You have striking growth and progress and terrible poverty and lack of progress in the same country," says Isobel Coleman of the Council on Foreign Relations.

World's Largest Democracy

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 independence, India's economy was heavily controlled by its socialist government, which meant little progress was made in tackling the country's 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. In the 20 years since, the ranks of the middle class have more than doubled, and India has started playing a much larger role on the global stage.

"In Asia and around the world, India is not simply emerging," said President Obama during his trip to India in November. "India has emerged."

In recognition of India's rise, Obama pledged U.S. support for India's bid...