Boom splits India's middle class

From their sixth-floor apartment, in this thoroughly modern suburb of New Delhi, Gopal and Pranamita Sarma can see a bright future for themselves in India.

Sure, they see the grinding poverty and government corruption. They see the continued power of thuggish politicians and the relative weakness of the middle class.

But behind, they say, there is something bigger: a change in attitude.

The economy is growing at a rate paralleled only by China. Indian companies have become more sophisticated at making products that the world wants. And the Indian middle class has become more sophisticated as well, more willing to try new things and take new risks.

From their perspective, India is shining, and all the conditions are present to turn this once sleepy third-world country into an economic juggernaut.

"The last six months are the first time I have felt vindicated in not leaving India," says Mr. Sarma, an economist and managing director for a consulting firm in New Delhi.

"I had an opportunity to go to the US before graduate school, and I decided against it. All my family told me I was an idiot. But now, I feel this is a great place to be, and it's only going to get better and better."

For American taxpayers who see every job created in India as a job lost for them, this may not be welcome news. Gone are the days when India was a sinkhole for American aid dollars; now it is a colossus ready to consume the world. In truth, India's booming economy is still in its infancy, and not nearly as widespread or as popular as the statistics may indicate.

Here, many middle class and poor Indians complain that the boom has benefited a fortunate few and left ordinary Indians bearing the loss of 1.3 million jobs cut from the government bureaucracy over the past decade. Some of these cuts were made to satisfy international lenders and trade treaties.

The workforce frustration may be reflected in national elections, whose results will be announced Thursday. Current opinion polls show the ruling conservative BJP coalition holding onto just enough power to rule a hung Parliament. In an ominous sign for the BJP, the chief minister of Andhra Pradesh, Chandrababu Naidu, conceded defeat to the Congress Party on Tuesday in state assembly elections. Mr. Naidu, a high-tech poster boy of the new Indian economy, and his party were a major part of the BJP's governing alliance in the national Parliament.

For the BJP, or Bharatiya Janata Party as it is called, it was not supposed to work this way. Early opinion polls, going into the election, portrayed a BJP that couldn't lose. The economy was booming. Foreign exchange reserves - an indicator of foreign investment dollars coming in - were at an all time high. Even the Indian cricket team defeated their longtime rivals, Pakistan. Throwing millions into a glitzy television ad campaign called "India Shining," the BJP called early elections and awaited the sweets and flowers.

Yet the undercurrent of discontent is unmistakable.

"India is not shining; the BJP is shining, and those are two different things altogether," says Dipankar Gupta, a sociologist at Jawaharlal Nehru University. "People who have jobs are getting lots of money, but those who don't have jobs, don't. If you look at public hospitals, they're a mess, the railways are a mess, the water is dangerous to drink. We have yet a lot to achieve."

Indeed, even the signs of prosperity - call centers, computer software developers, and so on - have a feel of desperation. These positions number roughly 1 million, a small fraction of the India's 400 million workforce.

At call centers it's common to see hundreds of college graduates apply for a few dozen jobs. And while the private sector has begun to create jobs, mainly in major metropolitan areas, it has not been able to keep up with the 700,000 new job seekers entering the workforce each year.

"For five years, they haven't created one job, but they've added 5 million new unemployed people," says Prem Shankar Jha, a senior political analyst. "They haven't done a thing for the real people of this country."

Mr. Jha points out that the BJP, bowing to middle class demands, have augmented consumer subsidies that divert government resources away from improving public services and infrastructure. "This is a response to organized middle class groups, and they get the [larger] benefit."

But not all middle class Indians feel the benefit equally. In Bhopal, a lovely city with a tragic recent history of industrial pollution, one sees none of the jaldi-karo, or "speed it up," enthusiasm and competitiveness of India's high-tech or trading centers. The city remains a transit hub for food grains and cotton fabrics, but here middle class families like the Devgans of Green Park Colony have remained relatively untouched by the Indian "shining effect."

Suresh Devgan, an electrical engineer who works for the municipal power company, often admits that he could make a lot more money in the private sector, as a power consultant or even designer for a computer firm. But he just can't bring himself to leave his post. "If everyone left their posts, then who would run the country?" he tells relatives.

His wife, Chanchil, an elementary school teacher at a private Catholic school, says that she sees some Bhopal families spending more money and living a more lavish lifestyle, but most are still getting by and making do. Her salary, and that of her husband, has increased, but not at the same rate as inflation. The saving grace is that a decade ago, they purchased their current apartment in full, using Suresh's mother's jewelry as a down payment. Back then, rents cost 2,500 rupees, or $55; now they are 10 to 20 times that amount.

"If both parents are educated, if both parents are working, and if you are able to get job satisfaction, then definitely things are better now," says Mrs. Devgan, sitting in the modest but immaculate living room of an apartment her family shares with Suresh's brother and his family. "But if you don't have a support network, and are alone, then you get disgusted."

As in the West, competition has filtered into children's education. Every parent wants his child to succeed, says Mrs. Devgan, and will argue with teachers over grades. Sometimes they offer bribes even to raise a grade by one half percentage point. "Everybody thinks their child should be best, and the children grow up watching their parents, and thinking that money can buy everything."

Mrs. Devgan says that while the benefits of a boom economy are still filtering down to ordinary families, there has been a massive - and in Indian terms, quite sudden - cultural shift that she finds frustrating.

"When we were in school, we used to so easily follow what the teacher told us," she says. "Now the children question the teacher. They really don't listen. They are so exposed to the media."

It's a phenomenon that troubles Gopal and Pranamita Sarma as well, one that they experience often among their neighbors in the lavish apartment complex, Ambience Island.

"Values have changed, both for better and for worse," says Gopal. "A lot of people think there is an easy way through life. Children have learned from their fathers how to bribe. But it's also true that a lot of people are willing to work harder than their parents did, and I think that's good."

His faith in India, ultimately, has to do with size and momentum.

"Between India and China, we generate more than 10 percent of the global economy," says Gopal, who has master's degree in economics. "We don't need the United States; it's the US that needs us."

"We're adding $40 billion a year in value to the Indian economy, and in 20 years you'll be seeing the GDP (gross domestic product) adding $100 billion a year," he adds. "Which global corporation can ignore this market?"