THE ECONOMY

Nehru’s answer to the social and economic inequality that had long afflicted the subcontinent was socialism. He instituted a series of five-year plans, which led to the creation of a relatively large and reasonably efficient industrial sector, centered on steel, vehicles, and textiles. Industrial production almost tripled between 1950 and 1965, and per capita income rose by 50 percent between 1950 and 1980, although it was still less than $300 (in U.S. dollars). By the 1970s, however, industrial growth had slowed. The lack of modern infrastructure was a problem, as was the rising price of oil, most of which had to be imported. The relative weakness of the state-owned sector, which grew at an annual rate of only about 2 percent in the 1950s and 1960s, versus 5 percent for the private sector, also became a serious obstacle. India’s major economic weakness, however, was in agriculture. At independence, mechanization was almost unknown, fertilizer was rarely used, and most farms were small and uneconomical because of the Hindu tradition of dividing the land equally among all male children. As a result, the vast majority of the Indian people lived in conditions of abject poverty. Landless laborers outnumbered landowners by almost two to one. The government attempted to relieve the problem by redistributing land to the poor, limiting the size of landholdings, and encouraging farmers to form voluntary cooperatives. But all three programs ran into widespread opposition and apathy. Another problem was overpopulation. Even before independence, the country had had difficulty supporting its people. In the 1950s and 1960s, the population grew by more than 2 percent annually, twice the nineteenthcentury rate. Beginning in the 1960s, the Indian government sought to curb population growth. Indira Gandhi instituted a program combining monetary rewards and compulsory sterilization. Males who had fathered too many children were sometimes forced to undergo a vasectomy. Popular resistance undermined the program, however, and the goals were scaled back in the 1970s. As a result, India has made little progress in holding down its burgeoning population, now estimated at more than one billion. One factor in the continued growth has been a decline in the death rate, especially the rate of infant mortality. Nevertheless, as a result of media popularization and better government programs, the trend today, even in poor rural villages, is toward smaller families. The average number of children a woman bears has been reduced from six in 1950 to three today. As has occurred elsewhere, the decline in family size began among the educated and is gradually spreading throughout Indian society. The “Green Revolution” that began in the 1960s helped reduce the severity of the population problem. The introduction of more productive, disease-resistant strains of rice and wheat doubled grain production between 1960 and 1980. But the Green Revolution also increased rural inequality. Only the wealthier farmers were able to purchase the necessary fertilizer, while poor peasants were often driven off the land. Millions fled to the cities, where they lived in vast slums, working at menial jobs or even begging for a living. After the death of Indira Gandhi in 1984, her son Rajiv proved more receptive to foreign investment and a greater role for the private sector in the economy. India began to export more manufactured goods, including computer software. The pace of change has accelerated under Rajiv Gandhi’s successors, who have continued to transfer state-run industries to private hands. These policies have stimulated the growth of a prosperous new middle class, now estimated at more than 100 million. Consumerism has soared, and sales of television sets, automobiles, videocassette recorders, and telephones have increased dramatically. Equally important, Western imports are being replaced by new products manufactured in India with Indian brand names. Nevertheless, Nehru’s dream of a socialist society remains strong. State-owned enterprises still produce about half of all domestic goods, and high tariffs continue to stifle imports. Nationalist parties have played on the widespread fear of foreign economic influence to force the cancellation of some contracts and the relocation of some foreign firms. A combination of religious and environmental groups attempted unsuccessfully to prevent Kentucky Fried Chicken from establishing outlets in major Indian cities (see the box on p. 280). As in the industrialized countries of the West, economic growth has been accompanied by environmental damage. Water and air pollution has led to illness and death for many people, and an environmental movement has emerged. Some critics, reflecting the traditional antiimperialist attitude of Indian intellectuals, blame Western capitalist corporations for the problem, as in the highly publicized case of leakage from a foreign-owned chemical plant at Bhopal. Much of the problem, however, comes from state-owned factories erected with Soviet aid. And not all the environmental damage can be ascribed to industrialization. The Ganges River is so polluted by human overuse that it is risky for Hindu believers to bathe in it. Moreover, many Indians have not benefited from the new prosperity. Nearly one-third of the population lives below the national poverty line. Millions continue to live in urban slums, such as the famous “City of Joy” in Calcutta, and most farm families remain desperately poor. Despite the socialist rhetoric of India’s leaders, the inequality of wealth in India is as pronounced as it is in capitalist nations in the West. Indeed, India has been described as two nations: an educated urban India of 100 million people surrounded by over 900 million impoverished peasants in the countryside.