The Promise of India’s Nascent Economy

The Promise of India’s Nascent Economy

Letter from India, The International Herald Tribune


KOOT ROAD, INDIA — This is the kind of dusty crossing that might once have been referred to as a farming town.

A couple of decades ago, it was surrounded by fields of rice and sugarcane. Agriculture was the lifeblood of the economy. Farmers clogged the streets with ox carts and gunnysacks, hawking their crops in makeshift stalls.

The stalls are still there, spilling over onto the roads and holding up traffic. It’s possible to see an occasional ox cart lumbering between flashy new cars and motorcycles. But over the years, agriculture has become less important to this town in the southern state of Tamil Nadu. Many of the fields have been sold, turned into housing projects or other real estate developments. Young people no longer become farmers; they move to the cities, in search of new opportunities.

Since the 1990s, when India shed its socialist past and began introducing market reforms, the structure of its economy has changed dramatically. Agriculture, which in 1990 accounted for about 30 percent of gross domestic product, now accounts for only 17.5 percent. Industry has declined from more than a quarter of G.D.P. to a just a fifth.

The most striking change has been the growing importance of services, a broad category that includes banking, communications and real estate. From 1990 to 2009, the share of services in India’s economy grew from 44.7 percent to 62.6 percent.

Many factors are at play in this transformation. One of the most important is the rise of what India calls its ITES (or information technology enabled services) industry. Over the last two decades or so, this industry has been one of the fastest growing in the country.

The impact of this rapid growth was first apparent in the cities — in the shiny technology parks and office complexes that housed the new software companies, and in a sense of optimism and self-confidence that was born from the success of those companies.

More recently, that optimism has been trickling down to the countryside. In towns like this and in the surrounding villages, the old agricultural economy is dying.

But the promise of a new economy beckons. For the young, in particular, technology offers the prospect of both personal and national salvation.

On a recent morning, I visited a computer training center here. It was run by a couple in their 20s. They were small-town entrepreneurs; they owned a couple of cellphone stores.

In a freshly painted room, about 20 young men and women sat in front of flat-screen monitors.

Two boys and a girl struggled with an HTML file. They had recently graduated from the equivalent of high school, and they were looking to the future. They told me of their ambitions to study engineering, to make money, to start their own businesses.

All of these goals, they said, depended on one thing: computer literacy. That’s why they were sitting in that room on a hot vacation morning, paying anywhere from 1,500 to 5,000 rupees, or up to $107, for their lessons.

The students spoke excitedly about the fortunes to be made in technology. They talked about Bill Gates, and about Infosys, HCL and Tata Consultancy Services, three of India’s most successful companies. It was clear that they saw technology as a path to riches.

But while their interest in computers was driven in part by personal ambition, I was struck, too, by the sense of collective purpose, even nationalism, they seemed to attach to the lessons they were taking.

K. Selvakannan, a skinny boy with a pen clipped to his shirt pocket, said that in another era, he might have been a freedom fighter. Now, he said, a technical education was “the new patriotism.”

“In my village, I am one of the few who knows computers. We have to learn for the country,” he said, adding that he planned to return to his village to create jobs and prosperity.

This entanglement of personal ambition and national purpose is in many ways typical of India’s relationship to its technology industry. Ever since the ITES sector emerged to prominence in the late 1990s, it has come to represent a vehicle for both individual and collective aspirations.

A generation has grown up seduced by promises of stock options and venture capital. The same generation has been inspired, too, by visions of “leapfrog development” and India as a “knowledge society.”

In truth, the relationship between the ITES sector and India’s broader economy remains somewhat unclear.

For all its contributions to G.D.P., the technology industry is directly responsible for less than two million jobs, a pittance in a nation where the labor force numbers almost half a billion. Some economists worry about the specter of “jobless growth”— the prospect that India’s development will be led by skill-intensive services while labor-intensive industry and manufacturing lag.

Such worries continue to dog an otherwise ebullient sector of the economy.

But in places like this, where a new generation is leaving behind the professions (and the poverty) of their parents, there is little sign of such anxiety. At the computer training center, I sensed only a deep faith in the future, an almost serene confidence that the technology-led boom experienced by urban India is finally spreading.

Before leaving, I spoke to M. Aparna, who had started the training center with her husband. She was optimistic about the future. She said the number of students kept growing. Even the older generation was coming into the center now, with farmers now trying to learn how to use computers.

Outside the center, under the cellphone store Ms. Aparna owned with her husband, a tractor was parked by the side of the road. The owner, a shirtless farmer, was barefoot. His feet were caked with red earth.

Once, I thought, this would have been his town. Now he just looked out of place.

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