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Gurgaon News - 2004

Boom and gloom for India’s decade of growth

NEW DELHI: In the wealthy heart of the Indian capital, the showroom for Bentley cars stands empty.

But appearances can be deceptive. Demand is so great that every model has been pre-sold months in advance.

It is a potent symbol of how a decade of economic reforms has generated wealth in India, but also of the growing divide between the haves and have nots in the world’s second-most populous nation. Hundreds of millions remain mired in poverty.

“India is a growing market. People are starved of good cars and there are customers who want status symbols,” said sales manager Rahul Grover. The price of that status doesn’t come cheap — about $460,000 for the basic-spec top-of-the-line model. Since opening its first showroom in October, the marque has sold 10 cars and expects to sell double that number in a year. A decade ago there were no Bentleys, nor many of the other makes of cars that now battle it out in a fiercely competitive market.

Showrooms are filled with the latest South Korean, Japanese and European makes and buyers have access to cheap, easy credit for near-instant delivery. Ten years ago, buyers were limited to three makes, the venerable Ambassador, or Morris Oxford, Maruti Suzuki and the Fiat Premier and had to wait weeks.

In 1994, there were no mobile phones nor many of the electronic goods urban, middle-class Indians now take for granted. Western-style malls complete with Western-branded shops were non-existent. All that has changed. A decade of rapid economic growth has revolutionised parts of India, throwing open its companies to global competition, creating thriving IT, pharmaceutical and tourism industries and placing it on a footing to compete with China.

Annual average gross domestic product growth between 1992 and 1997 averaged 6.7 percent. During the period from 1997 to 2002, it was 5.5 percent.

Inflation has fallen from 12.8 percent in 1994/95 to 4.26 percent now, while foreign exchange reserves have grown from $25.17 billion in 1994/95 to $118.49 billion in April this year.

Boom for some, not for all: For hundreds of millions of urban Indians, rising incomes and cheap loans have fuelled a boom in consumer goods and property, drawing in foreign companies and investment. Reinvestment by millions of Indians abroad has also driven change.

But for the majority of Indians who live in the countryside, the boom of the past decade has largely passed them by. Farmers still regard regular electricity, clean water, and access to good education and health care as luxuries. It was rural anger at not being able to share the spoils of a booming economy that cost Prime Minister Atal Behari Vajpayee his job this week after a shock election defeat.

Now the Congress party, which began overhauling the economy just over a decade ago, has been swept back to power.

Analysts say reforms are here to stay and will play a crucial role in alleviating poverty and realising India’s potential as a leading global economy. Radhika Chopra, sociologist at Delhi University’s School of Economics, says people have the taste for change and have adapted quickly to the ethos of the competitive economy. They have also learned to take pride in India’s new role on the world stage.

“There is a great willingness to be entrepreneurial. People are much more willing to move and try different jobs and locations. “In terms of nationhood, over the past decade, the concept of nation has come to mean a lot more,” she said. Vikram Mittal, whose family runs a specialty tea business, agreed. “The apparent respect of Indians in the eyes of foreigners has become far more positive. We definitely weren’t taken so seriously 10 years ago.”

Heat and dust: In the dusty village of Badauli about 70 km (45 miles) southeast of Delhi, farmer Santram is living proof of the other India, where the past decade has brought little change.

Badauli, not far from Delhi’s industrial parks and malls, has intermittent electricity, mud earth houses and a road, though built only about four years ago, that is already falling apart. For Santram, 40, and other villagers, the economic boom stops at the boundary of towns and cities, robbing them of jobs. Government aid doesn’t seem to reach them, either.

“None of that reaches us because the politicians and the bureaucrats eat up the money that is supposedly for us,” he said as he and about a dozen other villagers sheltered from the scorching afternoon sun under a tree.

Roaring trade: For many in the cities, it is a very different story. In Gurgaon, a booming satellite city south of Delhi, high-rise apartment complexes, glass office towers and glitzy shopping malls epitomise new wealth. In the Metropolitan Mall, one of the largest in the area, shoppers flock to a newly opened Tommy Hilfiger store, the country’s first. “In every way life has changed,” said Sharmila Bakshi, 39, a smartly dressed teacher, as she shopped for a pair of sunglasses. —Reuters