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AUGUST 11 , 2000 VOL. 26 NO. 31 | SEARCH ASIAWEEK


Photo illustration by Manodh Premaratne/John MacDougall AFP; U.S. Defence Department; Namas Bhojani for Asiaweek.
Giant on the Move
From high technology to the creative arts, India is rapidly becoming a global player
By ROGER MITTON New Delhi

Forget the India you once knew: It is gone. Contemplate instead a new, funky, self-confident, resurgent nation, embracing its role as an emerging Asian superpower. This year, India's growth rate could outstrip China's — and prove more sustainable. From far-off Silicon Valley to home-base Bangalore, Indians are big in global software development. In tacky Tinseltown and London's effete Bloomsbury, Indian writers, film stars and directors are tops. India's core institutions, from an independent judiciary and a feisty free press to a massive, nuclear — but always apolitical — military, are anchored by roots more than half a century old. There is mounting support for India to become a permanent member of the United Nations Security Council. The country's scientists plan to launch a moon probe. Then there is the brightest jewel in India's crown: its firm adherence to democracy. Put all this together and the surprise is not that India is gatecrashing the elite superpower league, but that it has not happened earlier.

The changes hit a visitor right away. In newspapers ads, the tradition of parents seeking spouses for their offspring continues. But read those classifieds more closely and see the number that give an e-mail address or even a website for reply. And note all the telephone chat lines for everything from spicy film gossip to advice on cutting business deals. Want to celebrate at a spiffy eatery? Then make a reservation, for while the choice is staggering, the queues can be too. No, this is not Lan Kwai Fong, Boat Quay or the Ginza. It's Delhi's Pandan Market, Bombay's Colaba and Bangalore's Gandhi Road. India is on fire — and its people know it, from the dotcom wallah to the man at the top. Says Prime Minister Atal Bihari Vajpayee: "Together we are building a strong and resurgent nation whose confident march forward is being keenly watched by the whole world. Let nothing be done that would slacken the momentum."

What has kicked India's pace up a gear is its ongoing economic revival. Under Vajpayee, the so-called second-phase market reforms are completing the unleashing of India's long-shackled economy. It is happening so fast some believe India may overtake China. It has many advantages, like facility in English. "Our strength compared to China is that more Indians know English, the international language," says power minister R. Kumaramangalam. "So we have a greater reach." That means a lot in this dotcom age. Says Vinod Mehta, editor of the Delhi-based newsweekly Outlook: "If you come here as a businessman, you can hire everyone — your accountants, lawyers and so on. If you go to China, you must take the whole lot with you."

Kumaramangalam says that "the political will to forge ahead with these faster second-generation reforms is more evident today." It shows in ways that reach down to all levels of Indian society, but especially the affluent middle class — estimated at over 200 million, or equivalent to the entire population of Indonesia. "We have perhaps the largest middle class in the world — and it is going to expand rapidly," says law minister Arun Jaitley. As it does, its children will demand more. Adds Jaitley: "After graduation, every second fellow is not looking for a job in government, but trying to get into a higher institution. Many are going to be entrepreneurs."

Of course, there's no need to go abroad to get a top degree. In this year's Asiaweek rankings, two of Asia's top ten MBA schools are Indian (Ahmedabad is No. 1 and Bangalore No. 5), and fully five out of the ten best science and technology schools are Indian (Bombay, Delhi, Madras, Kanpur and Kharagpur). Recalls Jaitley: "When I went to school, people would talk of the ten elite schools you would want to go to. Today, you have a choice in New Delhi alone of 400." Even Indians who studied overseas are returning. Harvard-schooled Suhel Seth, vice-chairman of Brand Dotcom, says: "I studied and worked abroad, but I chose to come back. I believe India is a first-rate country."

Today's new breed of Indians are embracing a liberating, anything-is-possible atmosphere. Says Seth: "To succeed in today's India, you don't need a legacy of wealth or connections." You just need to be good. And that is what a growing number of Indians are, from CEOs to production-line workers. "After two decades of decline, manufacturing productivity increased in the 1980s and again in the 1990s," says Isher Judge Ahluwalia, who heads a Delhi think-tank. "So India's growth is really productivity-led, rather than investment-led." And it is finally bearing a rich harvest.

Of course, many problems remain. One concerns the pace of economic reform. New-generation free marketeers like Jaitley and Seth cross swords with old-guard socialists like aviation minister Sharad Yadav and Congress legislator Mani Shankar Aiyar. Says Ahluwalia: "It is a serious problem. There are those two forces, both within the ruling coalition and the opposition." But Vajpayee, a noted consensus builder, is working deftly around the face-off.

Another major obstacle is widespread, abject poverty, especially in the rural areas. According to the U.N. Development Fund, some 53% of India's population live on less than a dollar a day — the World Bank's definition of dire poverty. That compares with 37% in China. The poorest Indians are concentrated among landless agricultural laborers, those with unviably small land holdings, the rural and urban unskilled, the disabled, and the chronically sick in destitute families. Despite the greater numbers of poor peasants, urban poverty is causing more concern, says former prime minister V.P. Singh. "While the rural poor have some space for life and some political representation, the urban poor are very badly off," he told Asiaweek. The government expects half of India's population to be living in the cities by 2011. While acknowledging the national consensus on political liberalization, Singh warns that it could bring widespread unemployment and social upheaval.

Even so, the positive mood prevails. "India has finally found its place in the community of nations on the strength of knowledge rather than size," says Seth. Its knowledge-based competence is on show not only in information technology (IT) but across a broad spectrum of activities — including the arts. Veteran film actor Om Puri, who starred in this year's award-winning hit movie East Is East, says: "Indian actors are in demand in the U.S. and Europe now. But Bombay is still best." And, of course, there are the writers, from heavyweights Salman Rushdie, Anita Desai and Vikram Seth to newer lights like Arundhati Roy, Raj Kamal Jha, Jayabrato Chatterjee and this year's Pulitzer prizewinner Jhumpa Lahiri.

India's expanding middle class, with its cars, powerbooks, mobile phones and holidays in Phuket and Singapore, is increasingly unabashed about extolling its achievements — and material gains. Even flaunting success is no longer frowned upon. Says Seth: "I drive a Mercedes and I am happy doing it." Indians, says Tarun Tejpal, who recently launched a groundbreaking website (see story page 44), "are increasingly less inward-looking. Take the Indian Diaspora, it's all over the place. So much of the U.S. and Canada, as well as Malaysia and Singapore, is India now." Foreign leaders have noticed. Luminaries like Jiang Zemin and Bill Clinton have recently visited, and Russia's Vladimir Putin will drop by soon. "They are coming mainly for economic reasons," says a diplomat in Delhi. "They see the big middle class and an opportunity to make money in India."

Adding to the optimism is a perception that the present government, while seeming fragile, is actually quite solid. Vajpayee, who heads the ruling coalition's dominant Bharatiya Janata Party (BJP), has cobbled together an alliance of 23 parties, the broadest in India's history. "It is the first stable government since 1995 and should last a full five-year term," says a diplomat. "That is a big psychological boost." The key factor holding Vajpayee's patchwork group together is that it hammered out an agenda as a team before the election. It also has a safe majority of about 50 seats, contains no capricious mavericks, and none of its members want another election soon. Moreover, the opposition Congress is in disarray.

Still, the BJP needs to broaden its base to seek long-term power. With members like the neo-fascist Shiv Sena group, it has gained a reputation for rightwing Hindu-chauvinist policies which are viewed as discriminatory, especially by the nation's 120 million Muslims. (Not a single full minister in Vajpayee's cabinet is a Muslim.) "That is a wrong perception," protests Shiv Sena minister Suresh Prabhu. "We are not anti-anybody. We are pro-India and everybody who is a citizen of India." Notes a diplomat: "Prabhu may belong to a fairly radical party, but he is very pragmatic and totally pro-development." Indeed, the energetic former accountant from Maharashtra state exemplifies the new trend of merit winning out over lineage or wealth. "In certain sectors, yes, you get by on merit," says Vir Sanghvi, editor of The Hindustan Times. "IT is the prime example; it's a great leveler. The other is the multinationals coming into the country so that salaries for professionals have gone up. That has been a huge boost to middle-class confidence."

Even so, the "old economy" — agriculture, manufacturing, industry, resources — cannot be disregarded. "Try telling the poor that the answer to their problems is the Internet, that it lies in Microsoft," says Congressman Aiyar. "You'll see the absurdity of the position. We need the old economy, as well as the new." Also needed is greater attention to implementation rather than conception. Says Seth: "We are a superb nation when it comes to thinking and discussing, but perhaps the worst at implementing."

Underpinning the forward movement is India's commitment to democracy. That a nation of a billion people, ranging from the super-rich to the abysmally poor, continues to practice what may be the world's most open system of government is little short of a miracle. Add on the independence of national institutions and it is evident that India's civil society has a sturdy moral backbone. Says minister Kumaramangalam: "Democracy gives a lot of stability to the economic situation. You are answerable, so you are more careful. But it does slow the decision-making process." That has been the bane of India's development in the past. Yet few Indians would sacrifice their freedoms for faster development. Says Sanghvi: "Indians value things like freedom of speech and democracy, which some countries in Southeast Asia haven't valued to the same extent."

Indians also cherish their rich heritage. "Look at the incredible romantic charm of classical India," says Tejpal. "It may be a mess, but it's also a dream." Adds minister Jaitley: "India has great resilience. If you have flooding in one part of the country, India is not paralyzed. We had the Kargil conflict last year, we had the hijack of an Indian Airlines plane, but the country became normal within two days. We don't allow ourselves to be bogged down." Yet many wish the forward momentum were faster. "My only frustration is that we are capable of much more," says Ahluwalia. "If we would just get our act together a bit more, we could easily hit 9% to 10% growth this decade." But commerce and industry minister Murasoli Maran is happy. "We don't believe in big-bang reforms because we have seen that the countries that did are suffering," he says. "In Southeast Asia, there was a meltdown."

For all that, India will continue to be at ease with both East and West. "We've always believed in interacting with the world," says Aiyar. "We've never gone the Burma way or the Mao way." Yet India is wary of translating its elevated profile into a more forceful role in South Asia. And New Delhi, which has traditionally looked West, is now turning its gaze toward East Asia. "That's changed over the past five years," says Ahluwalia. "Now, there's much more awareness of the need to look East." Adds Sanghvi: "We've been concentrating on Singapore. We think that's where we can make a mark." It is already evident in Calcutta, where the new Singapore-style Upwan Horticultural Resort, with its conference center, water sports park, go-kart track, ten-pin bowling, tennis and condominiums, is taking shape. Its brochure boasts: "Drive 30 kms to Singapore" — the distance, of course, from Calcutta. The idea is to marry Singaporean infrastructure with Indian openness.

Geopolitically, India's importance is as a bastion of democracy and a counterbalance to China. "The U.S. has come to understand us better,' says Kumaramangalam. "We have proved that democracy works in Asia." But ties with Beijing remain edgy. Yet, the minister adds, "no one is really a threat to India today. We are growing too fast." Still, it irks Indians that China often gets better press — and more investment. Says Ahluwalia: "The Chinese always look so much better than they really are because they sweep the right things under the carpet and say the right things. Whereas India never looks as good as it is economically, because we are so complex, so open, so diverse."

Many Indians already think of themselves as second to none in Asia. Combine that with the economic boom and you have a recipe for the current mood of euphoria. But it is tinged with doubt. "We've been on the launch pad a long time; we've now ignited," says Kumaramangalam. "The key is whether we've got lift-off velocity." There is little likelihood of going back. Says Seth: "We have traveled too far to tolerate resistance of any kind to the economic reform process."

Besides, there is a sense that no sector of Indian society wants to back-pedal. "If you visit villages today, you will find long-distance telephone booths," says minister Jaitley. "Soon, there will also be a television, an Internet connection, and they will become communications hubs. There is no resistance to technology." That is why India is surging ahead. As Seth notes: "The rapidity of change over the last two years has been far greater than in the preceding 50 years." Imagine what the next two years will bring, let alone the following 50. Those who ignore India's rise do so at their own peril.

Write to Asiaweek at mail@web.asiaweek.com

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