Between Gandhi and Gates India at Crossroads on Path to Superpower Status

Poverty is still rampant in India and chaos remains a defining characteristic. But the country is also a global leader in high tech, has become the world's leading weapons importer and is planning a mission to Mars. On the way to superpower status, India must first overcome deep-seated corruption and internal division.


By Erich Follath

It's the most expensive private dwelling in the world, but it isn't in Los Angeles, London or Dubai. It's in Mumbai, just a few stone's throws from one of the world's biggest slums. The property is called "Antillia," named after a mythical island in the Atlantic that the persecuted developed into a refuge.

The new home of Indian billionaire Mukesh Ambani is a steel-and-glass collection of superlatives thought to be worth $1 billion (€800 million). The 27-story structure has three helipads on its roof, nine elevators, a movie theater and crystal chandeliers in multiple rooms, from the ballroom to the parking garages. There are 168 parking spaces in the six lower floors for the luxury cars of Ambani, 55, who is also known as "Mister Big." He is the chairman and CEO of Reliance Industries, a conglomerate with holdings in oil fields, solar-panel manufacturers, pharmaceutical firms and textile companies. Ambani, one of the 20 richest men in the world, once gave his wife, Nita, an Airbus A319 jetliner for her birthday -- not a gold-plated model, but the real thing, with, of course, a somewhat more upscale interior than usual.

Ambani's Mumbai residence provides roughly 37,000 square meters (about 394,000 square feet) of living space for its six residents: Ambani and his wife, their three children and his mother. In the Dharavi slum, a 30-minute drive to the north, an estimated 12,000 people live in about the same amount of space, often without running water, toilets or electricity. In fact, more than 60 percent of Mumbai's 18 million residents still live in slums. But aside from a little grumbling in the local press (the Indian Express described the house as "obscene"), there is little evidence of outrage.

The poorest of the poor would seem to view Ambani's Villa Megalomania with indifference, while it is even a source of pride for some members of the Indian middle class, who apparently see it as evidence of India's growing importance in the world. "The Palace of Versailles is a poor cousin by comparison," writes columnist Shobaa De, brimming with national pride.

A Power on the Rise

There is no doubt that India feels that it has arrived. Some of its politicians and business leaders believe it has reached a status as a third superpower, alongside the United States and China. On August 15, the country celebrated the 65th anniversary of its independence from British rule with elaborate parades. Prime Minister Manmohan Singh, 79, promised: "No power in the world can stop our country from achieving new heights of progress and development."

Reasons for the growing pride are not hard to find. Based on purchasing power parity, the economy is the world's third-largest. High-tech centers, such as Bangalore and Hyderabad, have given rise to IT companies like Infosys and Wipro, which are among the international elite in their industry and are now bringing back the computer experts who once left Indian for California to chase higher salaries.

Almost no other country has as many cell phone users; almost nowhere is the communications industry growing faster. Today, Indians can choose from among more than 400 private television channels. The subcontinent is also making great strides in renewable energy. Indeed, Suzlon, the world's fifth-largest wind turbine manufacturer, headquartered in the western city of Pune, recently enlarged its ownership stake in the German wind turbine company REPower and now plans to create more than 100 new jobs in Germany.

India is now the world's largest weapons importer. It has become a self-confident player among leading nations and is now aggressively seeking a seat on the United Nations Security Council. It's also a nuclear power that has expanded its arsenal of warheads and has no intention of signing the Nuclear Non-proliferation Treaty. The Indians sent satellites into space some time ago, and only last week did they announce plans for a mission to Mars. Prime Minister Singh described it as "a giant step for us in the field of science and technology."

The Elephant vs. the Dragon

That's the one India, the high-tech powerhouse of a rising global power, backed up by numbers and proof of its prowess. But then there is the other India: where one in three of the world's malnourished children lives; where two-thirds of the population lives on less than $2 a day; where half the population has no access to toilets and 25 percent still cannot read and write. It's also a country where the power supply is so scandalously unreliable that, in late July, almost 700 million people were without lights and electricity for two days, the railroads stopped running, factories stood idle and some hospitals were crippled.

Is India on the road to becoming a superpower? Or is it condemned to forever remain a developing-world power, on the outside looking in?

The country certainly can't complain of being ignored. A stop in New Delhi has become de rigueur for top world politicians: US President Barack Obama, British Prime Minister David Cameron, German Chancellor Angela Merkel and Chinese Premier Wen Jiabao have all paid their respects to Prime Minister Singh.

It is also the world's largest democracy, with a free press and an independent judiciary, an alternative to the successful Chinese didactic dictatorship and one-party state. India offers innovative private enterprise versus China's model of state capitalism, and creative chaos versus prescribed progressive thinking. The elephant has taken on the dragon, entering into a serious competition in the battle of the systems.

British historian E.P. Thompson wrote that India is "the most important country for the future of the world." Shashi Tharoor, a former United Nations Undersecretary-General for Communications and Public Information and now a member of parliament in New Delhi, says: "India, with its successes and failures, offers lessons for all of mankind, and, with its sustainable development, can outpace its Chinese competitors in the long run."

Lately, though, there has been cause for concern. The Indian economy, which grew at a healthy rate of 10.6 percent in 2010, has slowed, with just 6 percent growth expected for 2012. Even Prime Minister Singh warns that India's security will be in jeopardy unless the country achieves higher growth rates again soon. In addition, foreign investment is weakening, the budget deficit has grown and the Indian rupee has lost a substantial amount of its value.

Can the elephant really dance?

The Upper Crust

Until Indian independence in 1947, Hyderabad was a princely state for more than 220 years, ruled by some of the richest men in the world. The diamonds owned by the Muslim monarchs, the Nizams, were legendary. The most famous, the 184.5-carat Jacob Diamond, was used as a paperweight by the last Nizam for many years. The legacy of the Nizams includes structures that have been named UNESCO World Cultural Heritage sites, including the massive fortress of Golkonda and the tombs of the ruling dynasty.

But when a local resident is asked for directions to the center of the city, he will not lead a visitor through the maze of twisted streets that extend outward like spider webs from the Charminar monument in the historic part of the city, but to Hyderabad's new section, with its shopping malls, universities and the headquarters of IT, biotech and genetic-engineering firms. Hyderabad, a city of 7 million people, has acquired the nickname "Cyberabad," and it is second only to Bangalore, India's high-tech capital.

In polls, the Indian School of Business (ISB) in Hyderabad is routinely named as India's top business school, while the Financial Times ranks it among the top 20 in the world. It's the new jewel of Hyderabad.

The campus, with its airy, pink buildings surrounded by carefully tended, park-like grounds, feels like an island. "This cheerful serenity is deliberate. We like to see ourselves as a temple of learning," says Dean Ajit Rangneker, who worked in Hong Kong for more than a decade before coming to Hyderabad. "But don't be deceived. Our students work extremely hard, and 16-hour days are perfectly normal for them."

Entrance examinations and costs ensure that only India's elites can attend the ISB, where tuition runs to $40,000 a year. Besides, only those applicants who already have a college degree and business experience even stand a chance of being accepted. The roughly 600 students at the ISB are a temporary community of purpose, united by their determination to succeed and bound together in an elite institution.

The school was established in 1996 by Indian business experts at McKinsey, the international consulting firm, "in cooperation with the Indian state." But the students view the government in New Delhi with nothing but contempt and cynicism. In the eyes of these young people, corruption and nepotism are "endemic," while political parties and their representatives are nothing more than obstacles to doing business. "If something works in India, it isn't because of politics but despite politics," says ISB graduate Kumar. Nevertheless, dispensing with voting altogether is not an option for him. Like everyone we interviewed, he votes regularly.

"We have advantages because of our pool of well-educated, innovative experts, and also because of our demographics. Our society isn't aging as quickly as societies in China and the West," says Sunil, a student. The new industries, with their data highways, rely less heavily on classic infrastructure, he adds, so that the disastrous state of Indian roads becomes less of a limiting factor than one might suspect.

When asked whether India's progress is sufficient to catch up with China and the West in the long term, the elite students aren't quite as confident. They are quick-witted, fun and cosmopolitan. And yet none of the budding business professionals has any idea what the words "red sorghum" mean. "Red sorghum? Never heard of it," they say. And what about "Protex?" The students shake their heads.

These are terms from another world, a world with which the ISB graduates will probably never be confronted. They will soon become members of the top echelon of society, people who will remain largely insulated from ordinary Indian life in the rest of the country. They will have drivers and air-conditioned cars, and they'll live in guarded, gated communities. One of these developments, near a downtown highway in Hyderabad, is advertised as a place "where the gods are envious of humans."

Desperation and Despair

For people who work 100 kilometers (62 miles) north and east of "Cyberabad" in the same state of Andhra Pradesh, "red sorghum" and "Protex" are terms that relate to their fight for survival. They live in the other India. They slave away as migrant workers in chemical plants and steel mills, usually without protective clothing. Not even China has such a horrendously high rate of industrial accidents. The current accident rate on construction sites is 165 in 1,000. Or they farm on barren land and are often unable to say whether they will be able to put food on the table for their families in the coming week.

Any trip through the vast Indian countryside is a journey through time, back to era of bonded labor and Manchester Capitalism.

The village of Hasakothur, a three-hour drive from Hyderabad, is a case in point. Farmers there experimented with seeds sold to them at rock-bottom prices by international corporations. Red sorghum and the pesticide Protex, which was applied to the fields at the same time, were seen as miracle products because of the initially high yields. But, today, the villagers view them as a curse.

After three or four harvests, the soil is depleted and requires more and more fertilizer. By artificially pushing down sorghum prices and thereby forcing the farmers to take on more and more debt, distributors were the only ones to profit from the higher crop yields. Thousands of farmers committed suicide out of sheer desperation, many taking their lives by drinking the highly toxic pesticide that they had once hoped would bring them economic success.

More than half of Indians work in agriculture (generating about 14 percent of the gross domestic product), while some 2.5 million people work in information technology (generating about 6 percent of GDP). "We send our children to the city. Any job there is better than here," says Kiran, a farmer.

Kiran believes that he is about 60, but he doesn't know his exact age. He looks very old. Like everyone in the village, he is in debt to his distributor, and any farming profits are offset by the interest on the debt. "It's like a race against a clock that's ticking faster than you are," he says. Indian farmers are also harmed by New Delhi's policy of allowing major Indian corporations to lease agricultural land in countries like Ethiopia. For someone like Kiran, democracy doesn't translate into having an effective and competent government, nor does strong economic growth mean that he and millions of other people in rural areas are better off by an iota.

This realization has prompted others in the village to join the Naxalites. The Maoist insurgent groups, who use violence to combat large landowners and big industry, are currently active in about a third of India's more than 600 districts. In its July report, the organization Human Rights Watch accuses both the government and the Naxalites of violating human rights.

In the "red corridor" extending from the north all the way to Andhra Pradesh, insurgents repeatedly attack police officers and engage in firefights with the authorities. More than 600 people died in these conflicts last year. It is an irony of history that, in the 21st century, Mao Zedong could very well have more supporters in democratic India than in communist China.


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