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Poverty. Riches. The world's largest democracy. An ancient caste system. Bollywood. India is a land of contrasts, a booming new power that remains baffling to outsiders and insiders alike. The Shiva Rules is a year-long GlobalPost series that decodes the many mysteries of India's uneven rise in the 21st century.

India economy growth 2012 01 03
Indian women work at a construction project in New Delhi on Feb. 1, 2010. (Daniel Berehulak/Getty Images)
India

The Shiva Rules: Is growth enough?

India's economic boom has widened the gap between rich and poor – and now it's slowing down.

Editor's Note: The Shiva Rules is a year-long GlobalPost series that examines India in the 21st century. Correspondents Jason Overdorf and Hanna Ingber examine the sweeping economic, political and cultural changes that are transforming this nascent global power in surprising and sometimes inexplicable ways. To help uncover the complexities of India's uneven rise, The Shiva Rules uses as a loose reporting metaphor Shiva, the popular Hindu deity of destruction and rebirth.

NEW DELHI, India — For the past two decades, policymakers have been banking on rapid economic growth to lift millions of Indians out of poverty.

But even as the boom has made it easier for the country's poorest people to afford refrigerators, televisions and mobile phones, the spending power of the rich has grown many times faster.

Now, the widening gulf between those at the top and those at the bottom is steadily increasing the pressure on the many fissures in this highly fractured society — and a looming slowdown could hit the poor harder than anybody.

“We have to see this in the context of a country that already bears a huge burden of stratification, but also caste and gender and all these things compounding each other,” said development economist Jean Dreze, who played a key role in designing and implementing India's largest social welfare scheme.

“The fact that there's a new, rising dimension of inequality, that is income inequality, reinforces something that's already a big issue for Indian society and the Indian economy,” Dreze said.

Despite boasting the world's second-fastest economic growth, India has made little progress in eradicating poverty since it began liberalizing its economy in 1991, according to a new study by the Organization for Economic Cooperation and Development (OECD). Instead, the gap between the incomes of the rich and poor has doubled, so the top 10 percent of workers now earn 12 times the amount earned by the bottom 10 percent — while 42 percent of the country's 1.21 billion people survive on less than a dollar a day.

More from GlobalPost: Lessons from India's largest slum

Consider 36-year-old Indu Devi. Only semi-employed, she works from home sewing dupattas — the scarf-like complement to a woman's salwar kameez, or loose pajama-like trousers — for a local factory.

In a good month, she earns $30; in a bad one, only $10. In the past 10 years, she's acquired luxuries like a television and a mobile phone — partly because she “owns” her tiny room in an illegal structure in one of New Delhi's many “unauthorized colonies.”

Devi shares a space the size of an American bathroom with a man and four children. There's no bathroom or sink. Water comes from a hand pump outside, shared with the neighborhood. The stove is a burner attached to a gas cylinder, and everything the family owns is hanging from half-a-dozen hooks on the wall: two sets of clothes for the adults, one to wash and one to wear; four sets for the kids, along with their school uniforms.

Her thoughts about India's economic boom?

“Sometimes I feel frustrated, as I can cannot meet the demands of my kids all the time."

Nobody will be surprised to hear that India's new wealth has been slow to trickle down. But as debate rages over government programs designed to provide more equal opportunities to the poor — or simply to ease their suffering — the bald facts beg the question: Is growth enough?

Many economists point out that an increase in inequality is inevitable with rapid economic growth — though the OECD found this was not the case for Argentina, Brazil or Indonesia over the past decade or so. In those three countries, the economists found, income growth of the bottom and middle groups outpaced that of the highest earners. And at least in Brazil — where inequality remains much higher than in India in absolute terms — higher taxes and a new focus on social programs seems to have been a factor in making the difference.

Some argue, as well, that rising inequality is not an evil in itself, so long as life also improves for the country's poor. The real problem is absolute, not relative poverty, they say. And the best way to address that is to make the pie

http://www.globalpost.com/dispatch/news/regions/asia-pacific/india/111230/india-economy-wealth-gap-poverty-shivas-rules