The Indian Paradox


The Strange Rise of Modern India

By Edward Luce

Doubleday; 383pp; $26

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Editor's Review

Four Stars
Star Rating

The Good A graphic, and deeply personal, portrayal of India today.

The Bad The author's prescriptions for change are hardly profound.

The Bottom Line A balanced chronicle of the often contradictory dynamics that are driving the country.

James Paul, 29, is emblematic of India's new dynamism. The son of lower-middle-class Christian schoolteachers from the southern state of Kerala, he is a graduate of the elite Indian Institute of Technology in Mumbai. His parents were forced to take out a loan to fund his $120-per-term tuition. It paid off: Paul now manages a 1,500-person business unit at Bangalore software giant InfoSys Technologies Ltd. (INFY ), where he was hired in 1998. His salary has jumped tenfold in a decade, to $50,000, a huge sum given the area's low cost of living.

India, as anyone who hasn't had his eyeballs permanently affixed to a Sony PlayStation knows, is an economic juggernaut. In 2005, while launching its first bank in the country, General Electric Co. (GE ) projected double-digit revenue growth in Indian banking far into the future. "No one blinked," observes author Edward Luce. But weighing against GE's glowing assessment is the nation's widespread poverty: More than 300 million people live in squalor in the country's 680,000 villages, where both land and water are in short supply. Many homes are made with buffalo dung and feature charcoal hearths whose fumes worsen the symptoms of a prevalent disease, tuberculosis. Only 65% of the population can read, and in the villages that number falls as low as 33%. (China's literacy rate is 90%.)

Luce graphically depicts these conflicting forces in In Spite of the Gods: The Strange Rise of Modern India. From 2001 to 2005, the author was based in New Delhi as a correspondent for The Financial Times. His experiences ran the gamut: He visited InfoSys' plush, Googleplex-like office suite in Bangalore, as well as bustling call centers in Mumbai and publishing subcontractors in Chennai. In one of the country's poorest states, Uttar Pradesh, he shared a meager ration of boiled milk with a family of eight who depend on two acres of dry farmland to get by. And he regularly conversed with political leaders including Prime Minister Manmohan Singh. Drawing from these experiences as well as his own life--his wife is Indian--Luce provides a balanced, deeply personal chronicle of the frenetic and often contradictory political, religious, and economic dynamics that drive the country.

Prior to 1991, India's economy operated under a tight system of state controls and permits known as the License Raj. Its dismantling under Prime Minister P.V. Narasimha Rao transformed the country. The number of television channels expanded from 1 to more than 150. As foreign investment rose, the number and types of clothing stores, newspapers, and other products also increased. Since that time annual economic growth has averaged 6%. But unlike China, where labor-intensive industry dominates, enterprise in India tends to be more capital-intensive and more reliant on skilled employees. There aren't enough jobs for the millions who want the middle-class lifestyles they see on TV. Fewer than 10% of India's 470 million workers are employed in the formal economy, and only 35 million people pay income tax.

Layers of bureaucracy still encumber India's government, and corruption impedes the policy changes that would stimulate growth. At one point, Luce visits V. J. Kurian, head of Kerala's highway department. Intent on building an airport in the port town of Cochin some years back, Kurian had to fight endemic dishonesty. He was offered a $200,000 bribe to accept the second-lowest bid for runway construction, but he refused. As punishment, he was transferred to an obscure job for two years. In the end, the airport got built and is today profitable. But Kurian had to go along to get along. He is now quick to grant fellow bureaucrats airline upgrades and other small favors.

Such vivid anecdotes make In Spite of the Gods a pleasure to read. Two-thirds of the way through, though, there's a surfeit of detail on the workings of India's political parties. And Luce's prescriptions for the would-be superpower are hardly novel: Address energy needs, public health, and poverty. Change labor laws that discourage hiring. Few would take issue, but the reader wants something more profound.

At the heart of India's problems lies a great paradox, which Luce ably describes: Democracy and meritocracy are huge assets as they permit economic change and promote such harmony as is possible in a land with 18 official languages and deep religious and caste divisions. Yet an open society is also a curse, given that it is sustained by a massive bureaucracy that addresses the multitude of groups while often blocking needed reforms. Does regimented China offer a better model? Luce says no. The likes of James Paul provide his strongest argument.

By Jessi Hempel

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