Poverty rate dives from 41% to 29% as millions join the middle class

03:53 PM EST on Friday, November 11, 2005

By JIM LANDERS / The Dallas Morning News

NEW DELHI, India – Families in shopping malls are buying clothes, household furnishings, and frothy coffees and teas. They're going to the multiplex to see movies. They're in auto showrooms to trade in the motorcycle for a car.

Billboards urging husbands to take out bank loans to buy their wives a diamond necklace loom over the plastic tarp sidewalk homes of the urban poor. Yet the aspirations are shared.

In the decade from 1993 to 2002, the poverty rate among India's 1.1 billion people dropped from 41 percent to 29 percent. Every year, 30 million to 40 million Indians cross into the middle class.

This started in the depths of an economic emergency in 1990. Manmohan Singh, then the finance minister, directed a set of reforms that opened Indian firms to global competition. Dr. Singh is now the prime minister, and Foreign Secretary Shyam Saran says his boss remains a believer.

"The prime minister is very much focused on sustaining the dynamism of the Indian economy. He sees globalization as an opportunity for India to really lift itself," Mr. Saran said.

The wish to join this boom extends into the region as well. India and Sri Lanka have a free trade agreement. Bhutan, with a 10,000-megawatt hydroelectric plant feeding an India starved for electricity, has the highest per capita income in South Asia. The South Asian Association for Regional Cooperation is forging a free trade agreement.

The question mark hanging over South Asia is Pakistan, which lags far behind India and faces enormous problems – a catastrophic earthquake, a broken education system, religious fundamentalism, terrorism and trafficking in arms and drugs.

Jehangir Karamat, Pakistan's ambassador to the United States, says his government has seen the light.

"We were not going to be part of the global economy. We needed to pull ourselves up," he said.

Politicians and generals have come to power saying such things many times before, but Mr. Karamat argues that this time it's both genuine and imperative.

"This time, the stakes are so big, it's a question of Pakistan's survival and emergence as a state," he said. "We for the first time have tasted the fruits of economic revival."

India and Pakistan have slowly opened up to each other over the last four years. Two-way trade was $600 million last year and may surpass $1 billion this year. Military commanders and political leaders share hotlines across the border. Families are talking and trekking across the divide to reunions delayed by nearly 60 years of hostility.

"This today is much more people-driven. The people are far ahead of their governments," Mr. Saran said.

The province of Kashmir, divided through war between India and Pakistan, remains a nigh-unsolvable problem between the two nuclear-armed countries. A 16-year-old insurgency among Muslim militants seeking independence from India still flares up, which India believes is directed by Pakistan.

"The obsession with Kashmir is an incinerator that will burn everything else down," said Parvez Malik, director of external affairs with "South Asian Radio" KZEE-AM (1220) in North Richland Hills.

Just two weeks ago, three bombs killed 69 Indians shopping on the eve of the Hindu year's biggest celebration in New Delhi. A group tied to the Kashmir insurgency claimed credit for the blast. Pakistan President Pervez Musharraf condemned the bombings, but most Indians say Pakistan at the very least still tolerates groups responsible for such terror.

Among these believers is Usman Majid, a former leader of the insurrection who did a complete turnabout to become Kashmir's planning minister until recently.

If the violence stopped, he said, Kashmir could be a source of 20,000 megawatts of hydroelectric power and return to its alpine tourism heritage.

"Without Pakistan's support, the insurgency would stop," Mr. Majid said. "We have enjoyed the fruits of destruction. Now we want the fruits of development."

E-mail jlanders@dallasnews.com