“Never believe all that you hear at diplomatic parties,” the twins chimed in. But I was grateful for the misinformation, which had sent us scurrying here in the monsoon. We had seen the caves, encountered no crowds, and stuck to our schedule. What's more, not a single flight was canceled because of the weather. And we didn't even really get wet.
5. The Transformation of India
53. The Davos Economy
THE ANNUAL GATHERING OF THE GREAT and the good at the World Economic Forum in Davos, Switzerland, has become a pilgrimage site for the twenty-first-century Indian. I was not able to attend in 2007, but saw a list of the Indian delegates who did. They're a “Who's Who” of the country's business and industry, with an impressive sprinkling of top politicians and bureaucrats alongside. Among the sixty-seven names on the list were enough movers and shakers to cause a small earthquake, and the number of zeroes in their collective net worth would probably fill the rest of this chapter. But impressive though that is, it's not the whole story of the Indian numbers at the World Economic Forum. I asked a prominent NRI businessman I know why he didn't go this year. “Oh, I did,” he said. “But since I'm based in London, I'm not included in the Indian list.”
The Indian presence in Davos is emblematic of a larger transformation in India, and in the way India is perceived internationally. It reflects the discovery of India by the world's financial markets. When I first went to Davos in the early 1990s Indians were present, of course, but they bore the faint whiff of the exotic minority, noticeable but hardly worth noticing. The annual Indian reception thrown by the Confederation of Indian Industry in those days was a semi-forlorn affair, overpopulated by official desis in bulging bandhgalas wolfing down samosas and scotch. Today it's the hottest ticket in the town of the Magic Mountain; the lines of well-heeled international businessmen queuing up to shake the hand of Finance Minister Chidambaram are reminiscent of those involving ticket-holders to the World Cup final. Indians are sought after because India, indubitably, matters to the world.
And why shouldn't it? India's gross domestic product is rising by 7.5 percent a year, which means that India is annually becoming richer by $200 billion, an increase in one year that exceeds the total GDP of Portugal or Norway. The level of investment in 2006–7 crossed 40 percent of GDP; just five years ago, it stood at 25 percent. If McKinsey is to be believed, some nine million jobs may be moved to India from the developed West in the next eight years. India's foreign reserves have exceeded $140 billion, enough to cover fif-teen months’ worth of imports; fifteen years ago, the country had to mortgage its gold in London because the foreign exchange coffers were dry. The speed of India's growth is so remarkable that the IMF this year even warned of the risks of the economy “overheating.” In Forbes magazine's published list of the world's billionaires, twenty-seven of the world's richest people are Indians, and even more surprising, only four of them live abroad: Indian wealth is staying in India, and it's growing.
Of course, a rather large portion of the world's poorest people live in India, too. Our country's poor live below a poverty line that seems to be drawn just this side of the funeral pyre. And yet, for all the tragic news of farmers committing suicide and the undeniably sad sight of human beings reduced to begging on our city sidewalks, there have been positive developments as well. In 1991, 36 percent of India's population (in those days, 846 million people), lived on less than one dollar a day, the World Bank's classic measure of absolute poverty. That added up to nearly 305 million people, giving India the dubious distinction of being home to the largest collection of poor people in the world. In 2001, our population had grown to 1.02 billion people, but after a decade of economic reforms, however fitful, the percentage of those living on less than a dollar a day had fallen to 26 percent, or some 267 million people. In other words, even though India had added 156 million more people to its population in the decade between those two censuses, the number of poor Indians had actually fallen by 37 million. The liberalized and liberated Indian economy had, in effect, lifted 94 million people out of absolute poverty in ten years — a feat on a scale that no country on earth, other than China, had ever accomplished. Today, five years later, estimates of people below the poverty level stand at 22 percent. Economic growth is steadily chipping away at poverty, and it is doing so far faster than in the first four decades of independence, when statist economic policies ruled the commanding heights in Delhi.
None of this is grounds for complacency. We still have a long way to go; 22 percent is still 250 million people living in conditions that are a blot on our individual and collective consciences. The necessary steps must be taken to ensure that every Indian is given the means to live a decent life, to feed his or her family, and to acquire the education that will enable him or her to fulfill their creative potential. As an Indian, I'm chuffed at India's prominence at Davos, but to me that's not the most important measure of the country's international standing. I'm much more proud that India has shown a willingness to use its newfound prosperity to benefit others: it's an article of pride, for instance, that the government has written off the debt owed to it for years by African countries. Let us celebrate, too, that India was quick to respond to the devastation that followed the tsunami and helped lead international relief efforts in Sri Lanka, even though Indian victims needed attention. India must show the world that it can go to Davos and stay true to its soul as well.
54. The Myth of the Indian Middle Class
WHENEVER I HEAR FOREIGNERS TALKING ABOUT the Indian “middle class,” I wonder what they mean. Much of the clamor about economic reforms has focused on this group, which may be sociological but is not entirely logical. The conventional wisdom is that this middle class is some 300 million strong — larger than the entire domestic market of the United states, say the marketing gurus — and, together with a very rich upper class, has both the purchasing power and the inclinations of the American middle class.
Today's economic mythology sees this new Indian middle class as ripe for international consumer goods. Our television channels and glossy magazines overflow with ads for foreign brand-name products, from Daewoo Cielo cars to Ray-Ban sunglasses. This is why Kellogg's rushed in with their corn flakes; Nike got our then cricket captain, Mohammed Azharuddin, to endorse their sports shoes (sparking off an unintended controversy since his name is also that of the Prophet and could not adorn an item so lowly as footwear); Mercedes-Benzes began rolling off the automotive production lines; and Johnny Walker Black Label scotch has become an Indian brand, not just one purveyed by smugglers. It was once said that more bottles of Johnny Walker Black Label were sold in India than were distilled in Scotland: now the joke may literally come true.
But all these manufacturers, I hear, have been dismayed by the weak response of the market, for the Indian middle class is not quite what it's cracked up to be. A survey conducted between 1986 and 1994 by the National Council of Applied Economic Research (NCAER) in New Delhi had already found that India's consumers could be divided into five classes, not three: the very rich, of six million people (or one million households), the “consuming class” of some 150 million (half the conventional estimate), the “climbers” (a lower middle class of 275 million), the “aspirants” (another 275 million who in America or Europe would be classified as “poor”), and finally the destitute (210 million). The numbers have gone up by another 100 million or so in the decade since the survey was conducted, but the relative balance among these five classes, despite some progress in all of them, is unlikely to have changed dramatically.