Kevin Watkins Tuesday October 3, 2006 Guardian
In EM Forster's A Passage to India, Adela Quested arrives wanting to discover the "real India" behind the stereotypes of the British Raj. She ends up sinking into a state of illusion and misperception. These days, enthusiasts for globalisation seeking a "real India" of boundless opportunity born of free-market reforms suffer the same fate.There is abundant ammunition to fuel the globalisation euphoria. Once a synonym for stagnation, India is now tracking China at the top of the world economic growth super league. From information technology to steel, cement and automotive parts, Indian companies are world beaters. Symbols of the new prosperity are everywhere. The relentless expansion of gleaming shopping malls reflects a surge in the prosperity of India's middle class - some 250 million people. Mobile phone connections are growing by 5m every month. Stock markets are booming, and foreign investors are lining up for a slice of the action.
In these heady times it is easy to forget the other "real India". This is the country in which 2.8 million children die annually as a result of poor nutrition and easily preventable illness - almost one quarter of the global total. Almost half of all Indian children are underweight for their age - a larger proportion than in Ethiopia. Meanwhile, some 300 million Indians survive on less than 50p a day.
On any measure of economic success, India's credentials as a five-star performer speak for themselves. When it comes to human development, it is trundling along in the slow lane. Comparisons with neighbours make painful reading. Bangladesh is poorer than India and its economy is growing far more slowly. But over the past decade, child deaths have been falling at an annual rate 50% faster than in India, and Bangladesh now has a better child survival record.
When it comes to India's income poverty the picture is more mixed. The good news is that overall poverty rates are falling at about 1% a year. The bad news is that this is a derisory return on the high growth of the past decade.
So what is holding India back? This is a country defined by division. Inequalities exist between economically dynamic states in the south and the slow-growing, impoverished north; between urban areas and agricultural ones; between rich and poor; between women and men. Economic reform and global integration has done little to break down these divides, with the result that high growth has been grafted on to mass poverty.
Consider the hi-tech boom. This is seen by some as a force that is transforming Indian society, but the reality is more prosaic. The IT sector employs about 1 million people in a country where 8 million join the labour force each year. Employment in the formal manufacturing sector has fallen over the past decade. Meanwhile, agriculture, the source of livelihood for three in every four people, is trapped in a cycle of low growth and under-investment.
Poor public services reinforce the impact of unbalanced growth. Uttar Pradesh, with a population bigger than Germany and Britain combined, has immunisation rates that compare unfavourably with those in Mali, and child death rates to match Sudan's.
The public education system is in a parlous state, with fewer than 10% of children making it to tertiary education. Business leaders such as Narayana Murthy, the head of the IT group Infosys, have warned that a first-world industrial system cannot be built on a foundation of mass illiteracy, exclusion from education and huge gender inequalities.
Chronic under-financing, allied to a culture of non-accountability in service provision, is at the heart of the problem. With low tax-collection rates and large fiscal deficits in most states, economic growth has not translated into public spending. Simple redistribution could help. More public finance is directed into subsidies that provide wealthy farmers with free water - with devastating consequences for the environment - than is spent on basic healthcare.
Gender inequality is another powerful impediment to social progress. Girls are 50% more likely than their brothers to die before the age of five - a death differential that translates into 130,000 missing female children each year.
While some observers are dazzled by growth rates, Indians themselves have a more sophisticated perspective. Last year, voters decisively rejected a government that went to the polls with the feelgood slogan "India shining", reflecting a perception that social justice had been left off the agenda.
Changing that perception will require reforms every bit as bold as those that have transformed the economy.
· Kevin Watkins is director of the UN's Human Development Report Office hdro at undp.org