Spreading the Wealth in India

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It's not every day you get invited to the Prime Minister of India's house for tea. As part of the World Economic Forum (WEF) meeting, which opened in India a few days ago, Prime Minister Manmohan Singh asked a hundred or so delegates to tea on the lawn of his residence Sunday evening. Guests were bused to the PM's New Delhi house and escorted along a path beneath trees that teamed with chirping Indian Mynah birds and the occasional peacock to a meeting room where the softly spoken Singh gave a short formal address. India's economy has experienced 8% annual growth for the past few years but it was vital to make that growth "inclusive," said Singh, an economist who began liberalizing India's moribund economy in the early 1990s. "Unless growth is inclusive, unless we create a lot more jobs in the process, unless we include the backward communities" then growth will be pointless.

This is a common mantra in India these days. The past 15 years have seen massive changes in the world's second most populous nation, but many of the improvements — a booming high-tech and services sector, a growing middle class, rising foreign investment — have been concentrated in the cities and not yet trickled down to the 700 million or so Indians who live in the countryside, most of whom are still poor subsistence farmers.

The current Indian government, a coalition led by the left-of-center Congress party and communists and other leftist groups, has promised more inclusive growth since it came to power in early 2004. Many Indian business leaders now talk about the wealth at the bottom of the pyramid and say they are focused on how to improve the lives of India's hundreds of millions of poor."The economic growth we are experiencing must not be at the expense of social awareness and social responsibility," said Congress leader Sonia Gandhi in a speech at the conference in which she called for companies and government to do more for India's poor. "We still face some massive challenges."

On the lawn outside the prime minister's house, under a large white and purple-colored fabric marquee, guests sipped pomegranate juice and tea and ate fried paneer and samosas, while two or three cats slunk around looking for dropped morsels. One reason for the focus on "inclusive growth" is politics, Harsh Khare, Dubai-based vice president of International Container Terminal Services, told me. The previous government had failed to explain how liberalization could help poor people. "Inclusive has to be a keyword or this government knows it will be kicked out too," says Khare.

Which is not to question Prime Minister Singh's sincerity. He has been linking growth and ending poverty for at least two decades and is directing a lot of the government's energies into helping the rural poor. But change, especially in India's most neglected areas, takes time — and Indians want better lives now, not tomorrow. Television and better communications, especially the incredible spread of mobile phones, has given India's poor a small taste of the life they are missing out on.

"There is a different set of expectations now," says Vijay Chandru, an academic-turned-businessman. "People have a better idea of what they want and that can create problems if they don't get it." Chandru, who heads Strand Life Sciences, a six-year old company that consults to big pharma firms, says that violent revolution is extremely unlikely but that other problems — rising crime, resentment, social instability, pockets of armed rebels — will get worse unless the gap between India's rich and poor can be narrowed. "There's obviously enough concern that everyone is talking about it," he says.

At a breakfast the following morning, Anupam Yog, a consultant at India Brand Equity Foundation, a quasi-government body behind selling India and Indian companies abroad, acknowledged the problems. On a recent visit to Brazil with Singh he was taken by the high crime rates in Brazilian cities. "That's what income disparity can lead to and we need to avoid that here," he says. He agrees that India's success story is still full of qualifications: hundreds of millions still surviving on less than a dollar a day, tens of millions still illiterate and unschooled. "We don't shy away from that that because it's true," says Yog. The coming few years will see if India can start closing its massive gap. In many ways the country's future success depends upon it.