India After Gandhi Revised and Updated Edition

by Ramachandra Guha

  Software firms such as Wipro, TCS and Infosys were now household names in India. But they were also known and widely respected in business circles abroad. They were listed on the New York Stock Exchange, and owned and operated subsidiary companies in many parts of the world. But there were also many small and medium-sized companies in the business, and the market share of the largest firms steadily declined.23

  The software enterprises were clustered around a few major cities: Delhi, Madras, Hyderabad and above all, Bangalore, which acquired the sobriquet of ‘India’s Silicon Valley’. Bangalore was home to India’s finest research university, the Indian Institute of Science, established in 1909. After Independence, the city became a hub of industrial units, with large, state-owned factories set up to manufacture machine tools, aircraft, telephones, and electronic equipment. When one added, to this rich scientific tradition, Bangalore’s mild, Mediterranean climate and cosmopolitan culture, one understood why it emerged as such an attractive investment destination. Wipro and Infosys were both headquartered here, as were several other important players in the software industry.

  To explain the rise of the software sector one must invoke factors both proximate and distant. Success, said John F. Kennedy, has many fathers. In this particular case, however, all the claimants had truth on their side. Some credit was certainly due to the reforms of 1991, which opened up the foreign market for the first time. But some credit also accrued to Rajiv Gandhi’s government, which gave special emphasis to the then very nascent electronics and telecommunications industries. Moving back a decade further, the Janata government’s expulsion of IBM allowed the development of an indigenous computer manufacturing and maintenance industry. But perhaps the story should really begin with Jawaharlal Nehru’s government, which had the foresight to set up a chain of high-quality engineering schools, and the wisdom to retain English as the language of higher education and of inter-state and inter-national communication. For, as one respected analyst of the IT sector commented, ‘India’s greatest asset is a large, educated, English-speaking workforce that is willing to work at relatively low wages’.24 This was a delicious irony: that this showpiece of market liberalization was made possible by a man committed to a state-sponsored path of economic development.25

  In addition to these other factors, a geographical accident also contributed enormously to the boom – the fact that India is the other side of the globe from the United States, so that work done in the day was ready by the time the client got up the next morning.

  The facility with English, and the luck to be five or ten hours ahead of the prosperous West, led to other forms of work being outsourced to India. At the higher end of the value chain, medical tests of patients in US hospitals were sent to be analysed by Indian radiologists and pathologists. At the lower end were the mushrooming ‘call centres’, where young Indians stayed up all night to take calls from holders of Western credit cards, or to book seats on Western planes and trains. Many of the employees in these centres were women, who could speak grammatical English in an accent of one’s choice, and who worked harder than their American counterparts at one-tenth the cost. In 2002 there were more than 300 call centres in India, employing 110,000 people. The industry was growing at a staggering 71 per cent per year. It was estimated that by 2008 it would employ 2 million people, and generate $25 billion dollars, amounting to as much as 3 per cent of India’s Gross Domestic Product (GDP).26

  The outsourcing of Western work to Indian workers was now taking ever more varied forms. English teachers in Kerala tutored American kids over the Internet in grammar and composition. Catholic priests in the US and Canada sent prayer requests to their Indian counterparts. One could have a thanksgiving prayer said for Rs40 (roughly one dollar) in an Indian church, whereas in an American church it would cost five times that amount.27

  If somewhat less spectacularly, the reforms initiated by Narasimha Rao’s government and carried forward by Prime Minister Vajpayee also had an impact on the manufacturing sector. Increased competition and the entry of foreign firms led to greater productivity and lower prices, benefiting the domestic consumer. Some Indian industries seized on opportunities offered by the opening of international markets. Top clothing brands like Gap, Polo and Tommy Hilfiger increasingly had their products made in India. By the year 2000, India exported some half-a-million motor vehicles a year, as well as many sophisticated components used in vehicles assembled elsewhere (one out of every two American trucks now used an axle made by an Indian firm). Another growth area was pharmaceuticals. Medicines exported by Indian companies were valued at $1,000 million in 2003 – these included drugs made according to modern pharmacoepia as well as those following the indigenous ‘Ayurveda’ system.28

  The opening of the economy also led to many foreign firms coming in to tap the Indian market. Between 1991 and 2000, the government approved more than ten thousand investment proposals by foreign companies; if all had fructified, they would be worth a staggering $20,000 million. They spanned the range from telecommunications to chemicals, and from food processing to paper products. Of the projects that actually got off the ground, the most visible brands were in the consumer sector: such as cars made by Ford and Honda, televisions by Samsung, phones by Nokia and drinks by Pepsi and Coca-Cola, whose advertisements and showrooms were now a noticeable presence in the major Indian cities. Less visibly, companies such as Philips, Microsoft and General Electric had also begun establishing research stations in India, which employed local as well as expatriate engineers in developing cutting-edge technologies for the global market.29

  The importance of foreign trade to the Indian economy steadily grew through the 1990s. Exports increased from 4.9 per cent to 8.5 per cent of GDP, imports from 7.9 per cent to 11.6 per cent of GDP. Yet, in the aggregate, this remained a relatively closed economy. In 1980, India accounted for 0.57 per cent of world trade; twenty years later the figure had inched up to 0.71 per cent.30

  V

  One less noticed aspect of economic liberalization was the changes in the social composition of the entrepreneurial class. Once, the major capitalists in India came from the traditional business communities – Marwaris, Jains, Banias, Chettiars, Parsis. However, in recent years, a range of peasants castes had moved into the industrial sector. Some of the most successful entrepreneurs were now Marathas, Vellalas, Reddys, Nadars and Ezhavas – from castes who for centuries had worked the land. Again, some of the best-known software ‘start-ups’ – such as Infosys – were initiated by Brahmins, from families which traditionally served the state or the academy and regarded commerce with disdain. There were also a few successful Muslim entrepreneurs, such as Azim Premji of the software giant WIPRO.31

  Meanwhile, the surge in economic growth had led to an expansion in the size and influence of the Indian middle class. The emergence of this stratum, wrote E. Sridharan, ‘has changed India’s class structure from one characterized by a sharp contrast between a small elite and a large impoverished mass, to one with a substantial intermediate class’. How substantial it actually was remained a matter of definition and interpretation. Defined most broadly, to include all households with an annual income in excess of Rs70,000 rupees a year (at 1998–9 prices), the middle class consisted perhaps of as many as 250 million Indians. Defined most exclusively, to keep out all those who earn less than Rs140,000 a year, it consisted of only 55 million Indians.32

  In the past, the middle class was dominated by those working in the state sector; as civil servants, public-sector managers, university teachers, and the like. Now, those working in private firms, as well as self-employed professionals, were becoming as, if not more, significant elements of the middle class.33 A large number were first-generation members; the first people in their family to own homes, drive scooters or cars, or take holidays. This new middle class was likely to be vernacular rather than cosmopolitan, speaking Hindi or Marathi or Tamil or Assamese rather than English, thus far the language of the Indian elite.34

&n
bsp; This new middle class was the prime target of the new products and services that had entered the Indian market in recent years. By the early 2000s, there were more than 50 million subscribers to cable television in India, and at least 100 million Indians who owned mobile phones. The spread of these services grew exponentially, as did the spread of that artefact most typical of the modern consumer economy, the motor vehicle.

  In the early years of Indian independence, an ethic of Gandhian austerity hung heavily over the Indian middle class. In a poor country, one was not supposed to have much wealth, and certainly not supposed to display it. Even those inclined towards hedonism were stalled by the absence of choice. With the opening of the economy in the 1990s, the guilt formerly associated with consumerism rapidly disappeared. Whether it be cigarettes, cars, whisky or sunglasses, foreign brands previously unavailable in India now flooded the market. Commercial television carried appealing images of the goods on offer; and banks and credit card companies rushed in to help one buy – and consume – them.35

  Although most characteristic of the big cities, the new consumption was not restricted to them. An ethnographic study of rural Kerala spoke of how consumers in this age of liberalization exercised their choices with care and discrimination, with one eye on their pocket and the other on their neighbour. Rural Kerala, of course, was anything but characteristic of rural India as a whole. For one thing, the villages blended seamlessly into the towns; for another, many villagers had spent time working in the Middle East, making the kind of money that took them straight into the middle class. Anyhow, among these new consumers, wrote two scholars,

  styles and tastes are hierarchically arranged, brand-names acting as markers of distinction: a Keltron (Kerala Electronics; a state enterprise) television confers less prestige than an Onida, Indian made, which, in turn, is not as good as a Sony made under licence in India, with maximum prestige attached to foreign-made, imported televisions . . . Sometimes people leave their labels on consumer durables to emphasise their origins.36

  As with televisions, so too with a whole range of products from facial creams to cars – the Indian consumer was now spoiled for choice. Once, the only automobiles locally available were a 1950s model Morris and a 1960s model Fiat; now, if one had the money one could buy the latest Mercedes Benz. Middle-class Indians, once very focused on saving for the future, were now much more present-minded. Twenty years ago, but a handful of Indians had credit cards; now several million did so. This was once a risk-averse culture, now millions of Indians invested in property and in the stock market.

  These changes in production and consumption led to a fundamental transformation of the urban landscape. Modest homes gave way to grand apartment buildings, one-story offices were replaced by imposing structures in glass and concrete. There were still traditional bazaars, whose little stalls sold locally made pots and pans or locally grown fruits and vegetables; but there were now also large malls, which displayed, under one roof, such international brands as Levi, Estée Lauder, Sony and Baskin Robbins.

  VI

  A second consequence of the rapid economic growth of the 1990s was a decline in the percentage of Indians who lived below the official poverty line. There was a vigorous scholarly debate on precisely how many poor people there were in India. Some statisticians concluded that a mere 15 per cent lived below the poverty line, while the more pessimistic estimates put the figure as high as 35 per cent. While the precise numbers were in dispute, virtually all scholars accepted that in both absolute and relative terms poverty had declined in the 1990s. At the beginning of the 1990s, close to 40 per cent of Indians were ‘poor’; by the end of the decade, the figure had dropped by 10 percentage points or more.37

  Still, there were huge numbers of poor people in India – close to 300 million perhaps. For beyond the glitzy malls and spanking new office buildings lay the slums and shanty towns where the majority of urban residents lived. These were the people who serviced the middle class yet would never be part of it, who ‘sell newspapers they will never read, sew clothes they cannot wear, polish cars they will never own and construct buildings where they will never live’.38 Other slum dwellers laboured long hours at low wages, in jobs perilous to their health, such as cutting metal and separating chemicals. They were usually unorganized, liable to be laid off without notice and without insurance or pension benefits.39

  The majority of the poor people in India, however, lived in the villages. For the fruits of economic liberalization had scarcely percolated into the countryside. Agricultural growth was painfully slow during the 1990s. There were some attempts at the diversification of crops, at growing fruits and vegetables for the domestic market, and flowers for export. Yet these moves were limited in their success, largely because of deficiencies in infrastructure, i.e., the lack of electricity to process crops or keep them in storage, and the lack of roads to take them to the market.40

  Even when it came to that basic resource, food, the picture was less cheering than it might have been. Taking the country as a whole, there was a comfortable food surplus. ‘Buffer stocks’ of 40 to 50 million tonnes were being maintained in government godowns. Yet the distribution mechanisms in place were seriously inadequate; in times of scarcity, stocks did not move quickly enough to communities that needed them. The targeting was inefficient; grain from the Public Distribution System (PDS) more easily reached urban areas than rural ones, and rich states than poor ones. And there was terrific corruption; according to one estimate, only 20 per cent of the grain released through the PDS actually reached the intended recipients, the rest being sold on the black market. Hunger and malnutrition remained endemic in many parts, with starvation deaths reported when the rains failed.41

  Through much of the country, life and livelihood remained dependent on the availability of water. Fifty years after Independence, less than 40 per cent of cultivated area was under irrigation. For most farmers, the uncertainties caused by the year-to-year fluctuation in rainfall were compounded by the pre-emption of perennial water sources by the cities. Delhi took its supplies from the Tehri dam, two hundred miles away; Bangalore from the Cauvery, a hundred miles distant. Home to the privileged and the powerful, the cities got the water they demanded at a highly subsidized rate. Scarcity and discrimination sometimes promoted desperate acts. Travelling in Tamil Nadu, the journalist P. Sainath saw his train stopped in the dead of night by peasants who then took all the water they could find. Ten years later, when a drought hit northern Rajasthan, herders in Bikaner had to buy water in the open market to save their livestock from dying. The price they paid was 166 times the price a Delhi consumer was paying for his water.42

  In the last years of the twentieth century, the first farmers’ suicides were reported. This was a disturbingly novel phenomenon, for while hunger and poverty had been a feature of the subcontinental landscape for centuries, never before had so many rural people gone so far as to take their own lives. Suicide, as the pioneering studies of the French sociologist Emile Durkheim had shown, was a product of the anomie and alienation caused by modern urban living. It increased in late-nineteenth-century France, among migrants to cities dislocated from the protective care of the family and community; and it also, as it happened, increased in late-twentieth-century Bangalore, among young software professionals stressed out by the long hours of work or the rapid success of their colleagues.

  Indian anthropologists had previously reported high rates of suicide among some isolated mountain tribes.43 But what was now happening among settled peasant communities was unprecedented. Between 1995 and 2005 there were at least 10,000 suicides by farmers, these occurring in states as dispersed as Andhra Pradesh and Rajasthan. Usually, it was the male head of the household who killed himself, most often by swallowing pesticides, at other times by hanging or electrocution. In many cases, he took this extreme step because of an inability to pay off debts accumulated over the years, these owed to banks, co-operatives, or private moneylenders. But indebtedness had also been a p
ervasive feature of rural life; why, now, did it lead so often to this tragic outcome? No systematic studies exist yet to answer this question, but some preliminary speculation might be in order. The rash of farmers’ suicides was perhaps related to the rapidity of social change in contemporary India. The new consumer society, its images carried into the villages by television, placed a very high premium on success and failure. Thus, when crops failed, or a new crop did not give the yield it promised, the personal humiliation felt was greatly in excess of what it might have been in an earlier, more stable, and less acquisitive time.44

  VII

  One reason for the continuing poverty was the government’s poor record in providing basic services such as education and health care. In 1991, the year the reforms began, only 39 per cent of Indian women could read and write; and only 64 per cent of the men. Here, India lagged behind not merely the developed nations of the West, but also some of its Asian neighbours. Thus Sri Lanka had educated 89 per cent of its women and 94 per cent of its men, while the corresponding figures for China were 75 per cent and 96 per cent respectively.