A Tale of Two Indias

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There are few finer views of the new India than from the cliff-top terrace of manufacturing magnates Parmeshwar and Adi Godrej. At night on the horizon, like a diamond necklace, streetlights trace a shoreline curve past the high-rise bank offices and apartment blocks of downtown Bombay, skirt the bars, gyms and boutiques of Marine Drive, and encircle Chowpatty Beach, ending in the rocky surf below. On a warm, monsoon night this summer, the pool lights were on, and from inside came the murmur of a low-lit dinner party for the élite. Among the guests: a Hollywood megastar, a Murdoch network boss and his model wife, and the head of a Gates AIDS charity. The dress was informal but elegant, the conversation confident, informed, international. "Just a small get-together," said Parmeshwar. It could have been the Hamptons, Monaco or Hong Kong. But it's not. It's 10 km from Asia's biggest slum.

Across town the next morning, Vijay Mallya partied in a brassier style. The Kingfisher Beer baron is famous for living up to his KING OF GOOD TIMES slogan, and as he boarded his private Boeing 727 at Bombay airport, his beard and belly suggested an Indian Henry VIII. On the flight, he explained that his image is part of his job: the more he parties, the more exposure he gains and the bigger the brand. "Work hard, play hard: same thing," he guffawed. That night, Mallya threw a Kingfisher-sponsored 1,000-guest bash for the Kingfisher Derby horse race in Bangalore, which he won the next day with the Kingfisher stallion Fantabulous King. Mallya didn't show at the party until 11:30 p.m. and then slipped off to his private go-kart track to race a fashion designer and an MTV presenter until dawn. "People call me extravagant," said Mallya. "I couldn't give two hoots. I sold 38.5 million cases last year and that's a whole bunch of booze." The flight from Bombay to Bangalore took 90 minutes. The first 20 were over an area where poverty and malnutrition have killed thousands of children this year.

Two billionaires, two lifestyles—and both light-years from that old India of saris, slums and snake charmers. The last of the three great state-run economies, India watched China and Russia open up; in 1991, it loosened the socialist bonds that had caused decades of shortages and a moribund "Hindu rate of growth." Today, like China and Russia, India boasts a crop of supercapitalists who are as sophisticated or ostentatious as any in the West. India's richest man, Azim Premji, boss of tech giant Wipro, may be just 58th on Forbes' rich list, and India might have just 61,000 millionaires compared with Russia's 84,000 and China's 236,000, according to Merrill Lynch's world wealth report. But as its economy grows, by 8.2% last year, India is making millionaires at a record rate. According to Merrill Lynch, some 11,000 Indians reached the benchmark in 2003. Forbes says the richest five Indians (worth $24.8 billion) are wealthier than their counterparts in Britain ($24.2 billion) and richer than citizens of anywhere else in Asia, bar Japan and Hong Kong.

Ballooning bank balances, however, are not even half the story. India is a living, breathing example of the challenges that face closed economies, which stressed equality of misery, when they go in search of growth and open themselves up to the gales of the global marketplace. A rising tide of prosperity has lifted millions of Indian boats—but it has raised some a lot more than others. Management consultancy KSA Technopak says the wealthy are leading a spending spree that boosted urban consumption 12% in 2002 and 16% in 2003, accounting for three-quarters of India's total growth. Malls are multiplying across the country, consumer credit has tripled in five years, and Indian psychiatrists are reporting a new condition: obsessive-compulsive shopping. Luxury brands like Mercedes and Gucci are flocking to the country. Louis Vuitton general manager Thierry de Longevialle, who is opening outlets across India's major cities, says: "These people aren't just rich, they're superrich."

But India also has more than its share of the superpoor. A quarter of the world's truly destitute—300 million people each subsisting on less than $1 a day—live in India. Jean Drèze, a professor at Delhi School of Economics and co-author with Nobel laureate Amartya Sen of Poverty and Famine, says that even Bangladesh outdoes India in most measures of development. In August, the World Bank approved up to $3 billion annually for the next four years to assist India's poor. Michael Carter, the bank's country director for India, says the nation occupies "two worlds simultaneously. In the first, economic reform and social changes have begun to take hold and growth has had an impact on people's lives. In the other, citizens appear almost completely left behind by public services, employment opportunities and brighter prospects. Bridging the gap between these two Indias is perhaps the greatest challenge facing the country today."





 

Chat-show host simi garewal, who interviews the new rich on her weekly show Rendezvous, has no doubt about her nation's transformation. "It's all changed," she says. "Suddenly India's a candy store. It's about wanting to own, to possess, to be in the newspapers, show off and be recognized." As Gurcharan Das, author of India Unbound—a book that examines the economy's growth since 1991—said in Outlook newsmagazine recently: "Money, like sex, is out of the closet. Everybody wants to be rich, and live rich."

Yet for many traditionalists, the consumer boom is an assault on India's soul. Underneath its surface exuberance, they maintain, India is defined by a restraint reflected in Gandhian frugality, Victorian morality, even cricket. Money, they argue, is vulgar. For these cultural guardians, the new India represents decay. They point to the garish coffee chains replacing modest chai houses, the vogue for blond hair, the beery gangs of software engineers in Bangalore's pubs. "Gandhi may still be an icon," says columnist Swapan Dasgupta, "but Gandhism is dead as a dodo."

In some ways, the new India is a throwback to an earlier time. For centuries the subcontinent was a land of maharajas and urchins, a caste-iron divide backed by a Hindu faith that encouraged the poor to know their place and respect their elders and betters. Then along came Gandhi. As well as challenging the idea of British rule, the Mahatma fought its substance, too. In contrast to imperial pomp and snobbery, Gandhi dressed in homespun rags, walked barefoot, and welcomed Brahmans and untouchables alike. His message was one of freedom from oppression by wealth as much as by race. Fifty years ago in newly independent India, castes mixed in the street and overt displays of wealth were more than crass—they were suspicious. But today rich and poor lead wholly separate lives. The rich shop in malls, patronize private schools and hospitals, and relax in gyms and spas. The poor live in slums, send their children to work, and can't afford health care.

This economic partition means that a two-bedroom flat in south Bombay, with a view of the 700,000-resident Dharavi slum, may sell for $750,000. Construction giant Sahara offers Swiss-style chalets and Burmese-style teak villas in a secure 2,025-hectare park outside Bombay. Manager Seemanto Roy says Amby Valley will have artificial lakes, a golf course, an indoor ski slope and a dial-a-nightclub service enabling residents to order lights and sound to their own patios. When residents venture out, they can be whisked by a high-speed train to downtown Bombay, which Roy says will cut a three-hour trek through the slums to 20 minutes in comfort. In the words of Delhi University politics professor Achin Vanaik, those on the train will avoid the "angry humiliation" of India's backwardness.

Just 200 km north of Bombay, in the village of Patilpada, that backwardness is all too visible. In virtually every house, there is at least one child with a distended belly and stick limbs. Teacher Davidas Bhodore, 27, says three children from the village starved to death so far this year, as did 30 in the immediate area. A hospital admissions blackboard at nearby Jawahar tells the same story: by noon on one day in August, 23 children have arrived with grade 3 malnutrition, meaning that they are just 50-60% of normal weight. Another 15 register at less than 50% of normal weight. Official statistics show that between March 2003 and June 2004, 9,245 children died in the countryside around Bombay, India's business capital. Though the Maharashtra state government denies that any of these deaths were from starvation, doctors privately say many are and that officials pressure them to write any other cause of death. Slumped in her Patilpada doorway, Jaie Bhambruy, 32, struggles to pull her one-year-old twins onto her breasts. The children, one wailing, one limp, are too weak to suckle. "We went to the hospital," she says, "but they sent us away [so as] not to embarrass the government." At the hospital, Dr. Marad Randas estimates that 15% of the local population is malnourished, and talks about families who live "without education, without clothes, without a sense of time." Asked if Bombay seems like a different world, he replies, "Something like that."

Some see the seeds of unrest in India's divide. Professor Vanaik says that flaunting wealth in a desert of poverty is not only "obscene" but provocative. Like others, he explains the defeat in the national parliamentary election in May of the ruling coalition led by the right-of-center Bharatiya Janata Party as an expression of anger at India's members-only boom. The new government of Congress Party Prime Minister Manmohan Singh has made narrowing the gap between the two Indias a priority. Montek Singh Ah-luwalia, the Prime Minister's policy coordinator and deputy head of the Planning Commission, says: "Growth cannot be the sole focus of our action. We need to re-deploy expenditure to health, education and agriculture." Vanaik points to the anticity, antidevelopment 10,000-strong rebel Naxalite army, which runs a virtual state in rural central India, as an example of the risks of rising discontent. On Nov. 25, as a sign of the group's gathering strength, a band of Naxalite guerrillas killed 17 policemen in an ambush outside the northern city of Varanasi. "The poor have retaliated against a repressive government and our battle will continue," said rebel leader Kameswar Baitha in a statement. "Our fight is against the exploitative forces in the government. The poor are now waking up." Says Vanaik: "There's dissatisfaction in the countryside and a crisis of expectation among the young. These displays of wealth let them see the life they want, but after a while they realize the idea of this prosperity coming to them is ridiculous. Then conditions are ripe for all sorts of explosions and social turmoil."

Such unrest might be headed off if India's new rich learned how to spread the wealth. But as Mallya himself admits: "There is no collective interest in India. Only vested interests." There are exceptions to that rule. Parmeshwar Godrej, for example, has been instrumental in pulling in Bollywood and cricket stars to front India's first meaningful national aids-awareness campaign, while Premji has put millions of dollars into education projects. Nevertheless, India's ability to provide a safety net for its poor is sabotaged by tax cheats, who underreport India's true national income by half, concerned tax officials say. And it is an American—Bill Gates—rather than an Indian who is the largest donor to charitable causes in the country.

But giving to the poor doesn't only mean giving money. Subrata Roy—whose son manages Amby Valley—exemplifies how wealth can benefit more than just the wealthy. Roy started with $43 in a rural savings scheme in 1978. Today, his Sahara group has assets worth $11 billion. A rival to beer king Mallya in flamboyance, he lives in a palace in Lucknow, complete with an artificial waterfall and a 10,000-liter fish tank. But Roy also employs 700,000 people. In a little more than a quarter-century, he has become India's second largest employer after the railways. "I can remember people who started with me on bicycles and a one-room house," says Roy. "Now, they have a Mercedes and a good house."





 

Roy also represents a powerful case for the way in which money can buttress India's traditions rather than undermine them. He is fanatically patriotic, sponsoring the national cricket, hockey and Olympic teams. One of Sahara's symbols is a figure of Mother India, and the company motto is "Nationalism is the supreme religion." Roy claims to extend his love of his own family to his workers. "I think very emotionally and the whole team is truly like a family," he says. This gushy talk isn't all meaningless. On a more modest scale, familial altruism can be seen any day of the week in India's shopping centers. So many IT workers have bought cars for their parents, for example, that it has become an industry cliché.

And there's another upside to the new wealth. Chat-show presenter Garewal says Rendezvous's record viewer ratings can be explained in part by the chance to ogle a billionaire—Roy and Mallya have both been guests—but also by something more fundamental. "It's inspirational," she says. "Aspirational. People want to know how successful people do it, what it is about them." That's a sentiment echoed by Mallya's party guests. Dhunji Wadia, a 43-year-old executive at advertising agency J. Walter Thompson, described the host as an icon. "We need more Mallyas. There's been more change in the last five years than the last five decades, and he's done that more than anyone." Even Vanaik admits that India finds its superrich dazzling. "These people have become our role models," he says, with an air of lament. Columnist Dasgupta goes further, claiming that the "self-confidence" of India's new billionaires has helped restore national pride. Twenty years ago, "getting out of India used to be the most important thing," he says. The National Association of Software and Service Companies reports that 35,000 Indian IT professionals have returned from the U.S. in the past three years. People like Roy "let us believe we can make it, that India can make it—by ourselves and without losing ourselves," says Dasgupta.

For now, the divisions that have come in the wake of India's development seem a price the country is ready to pay. Columbia University economist Professor Jagdish Bhagwati says: "India always was a stratified society. And India has always been about poverty. The question has always been: How do you tackle it? Growth never trickles down evenly. But it's only by opening up, by growing the economy and, yes, by producing the odd billionaire who creates thousands of jobs, that you can really pull people up."

In a country on the make—which India surely is—the superrich are often heroes. Speaking to his stud manager after his derby win, Mallya explained how Fantabulous King, an unpredictable performer for years, just needed to be given his head. "Let him run free," says Mallya. "Let him do exactly what he wants. And he'll show you what he can do." He could have been talking about the nation.