The Two Indias

India’s current and potential future economic growth have been the focus of some pretty high-profile media sources lately. Stories in Time (see “India Inc.” cover story June 26, 2006), Newsweek (“The New India,” March 6, 2006 cover story), and even The Economist (“Can India Fly?” June 3, 2006), might lead one to believe that India’s masses are finally being lifted by the rising tide.

In the Indian blogosphere, there is much debate about whether the optimism of these stories is warranted. Here’s how the basic argument plays out: the optimists contend that market liberalization is working, but poverty eradication in India will take some time, and besides this is "The Only Way" that India can possibly hope to take care of its more than 1 billion people. Those more cynical about market liberalization’s current and future impacts on poverty--let’s call them the pessimists--argue that there may be some minor signs of poverty alleviation, but that there are still far too many Indians living in absolute abject poverty, and that the vast majority of India’s growing economic wealth is being concentrated in the hands of the elite.

Here’s an example of the optimist view:

“Poverty in India is real. It's pathetic. But it has been reduced Not by revolution (which never really benefit the poor, now, do they?). But by market reforms.

This sucks less than any other darn alternative out there.

And, this side of the Kingdom, in an imperfect, fallen world, where we don't have a magic wand to suddenly turn everyone into a saint, it's the only way there, I'm convinced more and more. [from a blogger’s post titled “India Shining: II.”]

The pessimists focus primarily on the problems of concentration of wealth, inequality, and a growing rural/urban divide, as illustrated in the following excerpts:

...somehow I believe that there are two India’s and never the ‘twain shall meet ... The ‘twain should meet, because only when you see what is happening, one might realize that the optimism on the surface ... is matched by a level of despondency at the bottom. [from “India A and B” on the blog Don’t Trust the Indian Media!]

“The new wealthy in India are quietly abandoning the state: paying for their own private police force and playing golf at private clubs. There appears to be little concern about supporting public services or about the poor who are stuck with decrepit hospitals and schools.” [from “A Tale of Two Indias,” A Guardian special report]

The pessimists go on to argue that the “India is Shining” viewpoint is largely held by the 12% or so of Indians who are currently benefiting from the country’s economic growth. The optimists claim that the country’s growth has already reduced poverty, and that the pessimists are unpatriotic socialists who’d rather see India stay at the 3-4% rate of growth of the 1980s.

Obviously there is a lot of enmity between the holders of these two views. In future entries, I intend to unpack both arguments and get beyond the “Has economic liberalization been good for India?” debate. After all, whether it has been good depends a lot on what India’s economic and social goals are.

Technorati tags: Indian economy, poverty, development