Fewer than 40 million of its 470 million workforce are employed in the "organized sector", which offers job protection and other benefits. The government and the public sector are the biggest employers, employing 25 million people. The big Indian companies we hear about such as Infosys and Reliance Industries employ far fewer people. Less than 1 per cent works in the IT industry and yet India has become a software giant.
Edward Luce aptly calls his book In Spite Of The Gods: The Strange Rise Of Modern India. India is a deeply religious, largely superstitious country, he says, where most people continue to live in the villages because there are not enough jobs in the cities. Unlike America or Britain, India has not industrialized on a large scale before setting up high-tech industries.
Luce knows India inside out. He was the Financial Times' South Asia bureau chief based in New Delhi from 2001 to 2006 before becoming the newspaper's Washington bureau chief. And his wife is an Indian.
Luce traces India's lopsided growth to the policies set by India's first prime minister, Jawaharlal Nehru. He promoted capital-intensive industries and poured as much money into higher education as in primary education. The result: India produces about a million engineering graduates a year but only 65 percent of the population is literate.
India has to change into a more urban, industrial economy, says Prime Minister Manmohan Singh, and Luce agrees with him. Yes, they have met, not once but several times.
This is a tight, well-written book which describes the country, its people and politics with interesting details and anecdotes.
Luce recalls an interview with Sonia Gandhi in 2004:
"You know politics does not come easily to me," she said. "I do not enjoy it. I do not even think I am very good at it. Politics killed my mother-in-law and it killed my husband. But when I saw what they were doing to India's secular culture, I felt I could no longer stand by and watch it happen without doing something," she said (referring to the Hindu-Muslim riots in Gujarat in 2002). "Secularism is the most important legacy of my family. I had to stand up and defend it. I could not watch them tear it." Sonia's eyes were brimming with tears. She was not sobbing. But there was an intense sadness in her face.
He visits the house-proud opposition politician Amar Singh, whose renovated, opulent government bungalow in New Delhi has a retractable ceiling in the main dining room. The ceiling slides back at the push of a button to reveal a small glass pyramid at the top that looks out to the garden.
Hindu nationalists and Muslim fundamentalists
Fascinating, too, is his account of the Hindu nationalist who lectured him on the differences between the Indian and the Western brain.
At the other end of the spectrum are the Muslim fundamentalists he met in Deoband, the madrasa which inspired the religious practices of the Taliban.
As a journalist, he gets to hear both from the underworld and the law.
He visits the Mumbai mafia don Arun Gawli — and meets a police officer in the city who admits killing criminals in cold blood because they could not be convicted in court.
Yes, this is an interesting book – and thought-provoking too.
Luce covers a lot of ground. He stays with the social activist Aruna Roy, who left the elite Indian Administrative Service to lead a simple life among villagers in Rajasthan, and talks to villagers and slumdwellers cheated by corrupt government officials. The social activists are wrong in trying to preserve the village way of life, he says, though he admires their idealism.
Lower caste and union power
On the political front, he notes the growing power of the lower castes. They have elected their own party to power in India's largest state, Uttar Pradesh, and half the government jobs are now reserved for them. That means the best candidate does not always get the job, which is open only to a particular community, he says.
Meanwhile, union members, just over a million strong, are holding up economic reforms that would make it easier to hire and fire workers. The unions want job security but that is preventing others from getting jobs, says Luce. Employers are reluctant to hire workers because they can't be easily dismissed under the existing labour laws.
Middle class and technology
Despite all the problems, however, Luce is struck by the self-confidence of the growing middle class. They don't blindly ape the West, he says, but are proud of their own heritage and optimistic about the future. And they are reaping the benefits of technology.
Luce describes how an Indian Administrative Service officer is using Indian space satellite imagery to locate and restore disused, silted-up "tanks" (small reservoirs) in the countryside to provide water supply.
Some Indian companies can hold their own against the best in the world thanks to their skilled workforce, says Luce and mentions:
- Gokaldas Exports, which makes luxury garments with fashion software
- Intimate Fashions, which makes underwear for Victoria's Secrets
- TNQ, started by The Hindu newspaper editor-owner N Ram's wife, Mariam Ram, which edits and produces international academic journals.
The 21st century will be shaped largely by India, China and America, says Luce, describing their relations as a "triangular dance".
But, he adds, "there will be many opportunities to trip up".