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India

Has India Emerged? Just The Tip Of The Iceberg

After praise from Obama, the reality of the "Indian miracle" shows a country still submerged in widespread poverty and underdevelopment

"India is not simply emerging, India has already emerged." When he uttered these words before the Indian Parliament last November, U.S. President Barack Obama generated a wave of euphoria. The next day, The Times of India proclaimed that Obama said "exactly what India wanted to hear," having declared his host country a valuable partner in helping to "define the century."

Yet soon after Obama's visit, a certain disenchantment began to set in. When the country's most respected businessman, Ratan Tata, found himself entangled in a troublesome wiretapping case, he about how he'd just been at a summit with the US president who "talked about us having emerged and not as being an emerging force…(while) here we are, fallen" into the pettiness of scandals. Just the kind of scandals one expects from the Third World, rather than global leaders.

Another taste of India's uneasiness with its new "great power" status came with Nicolas Sarkozy's visit to India in December. On the state visit, the French Development Agency agreed to help Indian authorities fund a renewable energy project, but India insisted that the accord not be officially signed during the French president's visit, out of fear the country would be painted again as underdeveloped, and in need of assistance.

In fact, the suggestion that India is no longer an emerging country is premature. Instead, it might be best compared to an iceberg: the visible tip is much smaller than the submerged part. The visible part is real, and it shines brightly for the world: a global leader in high-tech outsourcing, and its industry groups, like Tata, have shown they can compete with Europe's giants. There are billionaires who unabashedly display their wealth and upper-middle class families who enjoy Western luxuries and regularly indulge in the joys of consumerism in the country's gleaming shopping malls.

But the submerged part of the "iceberg" is in fact much more important. Rural India, which represents 70% of the country's population, has remained almost completely shut off from the country's modernization. A look at global data is telling. In the 2010 UN human development ranking, India placed 119th out of 169 countries. Just over half of active adults live on less than $1.25 per day, and only 62.8% of the population is literate. In 2008, GDP per capita was $1.02 dollars, compared to $3.27 and $8.21 in China and Brazil, respectively. The 2010 world hunger index established by the International Food Policy Research Institute puts India 67th out of 84 developing countries, far behind Pakistan and many countries in sub-Saharan Africa.

Suman Bery, Managing Director of the National Council of Applied Economic Research, a prominent think tank, explains: "We must not forget that India is by far the poorest G20 country in terms of GDP per capita." The activist and economist Jean Dreze, who specializes in poverty in India, is more outspoken: "If Obama wanted to say that India has emerged as a market for the United States, he is probably right. But the Indian elite has chosen to understand that he said India has emerged as a superpower. It's one of the country's favorite fantasies, but it is completely disconnected from reality."

What has changed in recent years, then, has been foreign perception of India's reality. "Ten years ago," says Bery, "India was perceived as an enormous reservoir of human misery. But today, the country has been asked to assume global responsibilities." Why the change? In part, the economist explains, "because of population and the country's growth." But also because India is increasingly seen as a counterweight to China, which is often a source of worry in the West. But the reality, Bery estimates, is that India's development "is just the beginning of a journey that will take 30 to 40 years."

Fortunately, the iceberg analogy has its limits. The natural tendency of a block of ice floating in the sea is to melt, its visible part gradually disappearing. In India's case, the opposite is likely to occur. Even if the path to development is long and difficult, the optimism and fortitude that characterize the country give cause for hope.

For the India that has already emerged, the underdeveloped portion of the country may even serve as an opportunity: "I agree in part with Obama, that we have emerged relative to where we were in the past," says Chanda Kochhar, CEO of ICICI, India's second largest bank. "But compared to the opportunities that are before us, no, we have not yet emerged. We can still lead the country into double-digit growth and keep it there for two decades. And it will require much work."

The iceberg that is modern India, in other words, will one day rise out from the water. But defying the laws of nature was never going to be quick or easy.

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