Economic Boom Fails To Generate Optimism In India

NEW DELHI, Aug. 15 — Prime Minister Manmohan Singh cautioned Indians against hubris in his annual Independence Day speech on Wednesday and promised a spate of antipoverty measures that hinted at the vulnerabilities facing his government and the nation.

Prime Minister Manmohan Singh after his speech on Wednesday. His tone reflected the fragility within his governing coalition.

India cannot become a nation with islands of high growth and vast areas untouched by development, where the benefits of growth accrue only to a few, said Mr. Singh, speaking from behind a bulletproof glass shield at the historic Red Fort.

His speech signaled the peculiar paradox facing Mr. Singhs coalition government, led by the Congress Party, three years into its term in office.

On the one hand, his government has presided over sustained economic growth, amassed record government revenues, avoided conflicts with rival neighbors and stepped closer to securing a landmark deal with the United States that would allow energy-starved India access to additional nuclear technology and fuel.

And yet, after 60 years of independence, nearly 30 percent of Indians still live below the official poverty line and close to half of all Indian children under the age of 3 are malnourished. A government study released last week found that the majority of Indians live on 50 cents a day.

Those deficits mean that the Congress Party and its wobbly coalition are hardly impervious to the pressures of a demanding democracy, and it is rare to find a Congress politician in the capital these days who is not worried about the future.

The party has suffered badly in key elections this year, including in Uttar Pradesh, the home state of the partys ruling Nehru-Gandhi family, and Punjab, the prime ministers home state, and it is facing another crucial poll later this year in western Gujarat.

The party has been dogged by inflation, particularly in the prices of food, and by fierce opposition from its Communist Party allies to deepening ties with Washington, particularly around the nuclear accord.

It is unlikely this disagreement will prompt the collapse of the coalition before its term expires in 2009, though the stridency of the argument suggests a clear vulnerability.

The governments principal challenge lies in convincing Indians that economic growth can uplift the struggling countryside. Inequality has long prevailed in Indian society, but compared with other countries, including China and the United States, that gap is relatively modest.

Still, in a giant democracy, where aspirations are soaring for many, even the perception of a widening divide can be politically dangerous. That pitfall was amply reflected in the caution of Mr. Singhs speech and the new measures he pledged.

The prime minister promised new investments in rural irrigation projects, health care and schools. He urged water conservation, and said the government would devise health insurance and pension plans for the poor.

Mr. Singh also pointed to what is arguably the governments trickiest challenge: how to industrialize and move people out of the lagging agricultural sector.

Making that transition particularly difficult is the countrys poor record in educating its people. One in three Indians is illiterate, according to official figures.

India has faced sometimes violent protests in recent months over proposed industrial projects, from car factories to steel plants to dams, that would displace farmers and farm workers. Its efforts to establish Chinese-style special economic zones have been hotly contested, and for Mr. Singhs party, a political lightning rod.

Though the soaring economy has generated many jobs, most of the work force remains in the unorganized sector, laying bricks or harvesting crops or operating corner stores, according to the government study last week, by the National Commission for Enterprises in the Unorganized Sector.

The transition from an agrarian society to an industrial economy has always been a difficult one, Mr. Singh said in his speech. But industrialization offers new opportunities and hope, especially for people in rural areas displaced by agrarian change.

The government, he said, will soon announce a rehabilitation package to ensure no one is worse off.

He made the same pledge in his Independence Day speech last year. But the tone of this years speech was far more cautionary. Last year, there was a litany of figures on economic growth, this year, none.

Last year, he praised the erection of vast industrial estates and special economic zones; this year, he simply advised that industrialization is the most effective means to create new job opportunities.

We must not be overconfident, he said.

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