India's most pressing problem in the 1950s was to feed its poor, who made up roughly half of its then burgeoning population of 350 million people. My father, one of the first Indians to come to America to study after India gained its independence in 1947, was working on a degree in soils analysis at Oregon State University. This was the era of the "green revolution." Fueled by a mixture of Gandhian idealism and American can-do spirit, his plan was to complete his degree, return home, and do his part to help "Young India"—as it was often called in those days—improve agricultural production. But the attractions of making a decent living were irresistible. He decided to stay in America, switched his career to aeronautical engineering and got a job with one of the cutting-edge companies of the time: Boeing. My father became part of the "brain drain" that subsequently brought thousands of engineers, scientists, doctors and other professionals from India to America in search of a standard of living their country of origin could not afford to give them.

India's Poor

Half a century later, India's most pressing problem is still how to deal with its poor. The green revolution did allow India to dramatically increase crop yields and become self-sufficient in food production. But India's population more than kept pace with the country's economic growth, which ambled forward at the so-called "Hindu rate" of 3.5 to 5 percent for many decades. Only after a balance of payments crisis forced India to take steps to liberalize its economy in 1991 did the country begin to achieve consistent growth of between 6 and 7 percent. But even this was not enough. Today, more than fifty years after independence, India remains a country where 350 million people—a number equal to the entire population of the country in 1950—live in absolute poverty.

India's poor make up fully one third of its total population, which passed the billion mark on May 15, 2000. And India's population is increasing by 15.5 million people each year. This means the country will need 125,000 new schools, 373,000 new teachers, 2.5 million new homes, and 4 million new jobs every year to meet the needs of its new citizens. With its current rate of growth, India cannot possibly hope to keep pace.

More alarming, even were India to move forward quickly with the next round of economic reforms and push growth up to the 8 to 10 percent range, and even if it were able to sustain this high level of growth over the next ten years, the lives of the poor would remain substantially unchanged. In fact, in this best-case scenario, per capita income in India would rise from the current $300 per year to all of $500 per year a decade from now. India cannot simply grow its way out of poverty.

The cost of the poor to India is inestimable. First and foremost, of course, there is the wasted human potential and the very real human suffering due to preventable, contagious disease, lack of access to basic health care, education, or even sanitation and clean drinking water. Mass poverty is having a devastating impact on India's environment, which is under attack from accelerated deforestation, overgrazing, and extremely high levels of air and water pollution, especially in urban areas. Mass poverty also affects India's ability to compete against countries with better physical infrastructure and more educated populations for foreign direct investment, which India badly needs to face a fiscal deficit the IMF has recently deemed "unsustainable" and to jump-start badly needed infrastructure development in transportation, communications, and power. Finally, mass poverty and the growing gulf between haves and have-nots poses a looming threat to India's internal security and to its political and social stability.

The Failure of 20th-Century Development Paradigms

A succession of state-directed five-year-plans for development, the injection of billions of dollars of foreign aid and loans, and the dramatic improvement in agricultural production following the green revolution did have positive effects. Despite a tripling of its population, India has been able to reduce the total percentage of the poor from 50 to 35 percent; to nearly halve illiteracy, reducing it from 81.7 percent in 1950 to 48 percent today; to reduce the birthrate from 40 per thousand to 26 per thousand; and to increase life expectancy from 32 years to a little over 62 years. India can be proud of its many successful domestic industries in manufacturing, information technology, textiles and many other sectors.

For all that, India remains a "developing" country. With one-sixth of all humanity living within its borders, India is still playing catch-up to the world's great economic and political powers. During this time, it has seen countries in Southeast and East Asia no better off than India was after World War II achieve phenomenal improvements in their economies and for their people. And India has watched China transform itself into one of the biggest global economies. Time and time again, whether in those heady days following independence in the 1950s or in the euphoria following economic liberalization in the early 1990s, India's aspirations to overcome mass poverty and create opportunities for all its people to realize their potential have gone tragically unfulfilled. Three generations after independence, India's poor are still waiting for their lives to improve. Their patience is wearing thin, especially in a world where they can now easily see on television what others have, how others live.

The Imperative for a New Development Paradigm

It is clear that for India to make real gains in alleviating poverty a radical solution must be found. The development paradigms of the post-war 20th century worked some wonders but failed, overall, to solve the problem of mass poverty in India. In fact, the digital revolution has made the imperative for dealing with mass poverty in India—and elsewhere in the developing world—a critical priority demanding immediate action. Indeed, there may be no issue facing humanity at the beginning of the 21st century of greater importance than finding solutions to the yawning divide between the world's rich and poor.

The new millennium has brought with it a new geoeconomic reality. The forces of globalization, propelled by rapid advances in information, communications and bio-technologies, are deepening divides between haves and have-nots, creating, on the one hand, a transnational class of people who move competently in a knowledge-driven economy and, on the other hand, masses of people with no knowledge of, no access to, and no skills to exploit this new economy. Fortunately, these very same forces offer unprecedented opportunities for creating entirely new approaches to alleviating world poverty and closing the inequality gap.

Backlash

The rage being focused against such institutions of world order as the World Trade Organization, the International Monetary Fund and the World Bank, and the attendant backlash against globalization arises from feelings that a market-driven global economy is being deliberately directed in favor of transnational corporate interests; interests that are perceived to be inimical to the interests of individuals, local organizations, and even national governments and to their control over the planet's resources and economic opportunities. Corporate interests are perceived to be particularly adverse to the needs of the poor. Indeed, they are seen to be the direct cause of the growing gap between haves and have-nots.

Globalization, however, is not a process that can simply be turned off no more than the new information, communications and bio-technologies can be made to "go away." And, it is quite true that the market as it exists has little incentive to take into consideration any factors beyond its own short-term profitability. At the same time, the ability of nation-states—much less local organizations or individuals—to control global market forces is increasingly limited. The world's poor must also face a general state of "donor fatigue" in the rich industrialized world that has reduced international aid to historically low levels, aid which, in any case, has largely failed the world's poor.

Digital Partners: Bridging the State vs. Market Development Divide

The radical response of Digital Partners to this alarming state of affairs is to seize upon the transformative dynamic of market-driven changes in the nature of the global market itself and to harness this momentum to create new development paradigms that can be effective in the new global economy as it evolves forward. The central, and very exciting, notion is to move beyond the divide between the market and its profit-driven incentives on the one hand, and governments, NGOs, philanthropic foundations and international aid organizations, on the other hand that has characterized development paradigms in the 20th century. This is possible because of Digital Partners' vision that the nature of the market is itself being transformed by the advent of digital technologies. By forming working partnerships across governmental, non-governmental, business and entrepreneurial, philanthropic, and grass-roots divides, Digital Partners seeks to intervene into the process by which the market is evolving so that poverty alleviation, better health and education, greater participation and empowerment, enhanced equity, and environmental protection become imperatives of market-driven profitability.

India: A Unique Case for a New Development Paradigm

Of all the developing countries in the world, India offers a unique opportunity to launch a new development paradigm that harnesses global market dynamics. India's economy may be growing overall at a modest rate of 7 percent but its information technology sector is booming at an explosive 50 percent rate of growth. Already a $5 billion-a-year undertaking, India's information technology sector is expected to reach $87 billion by the end of this decade. Bangalore alone is home to 300 technology firms that employ 40,000 people. Among the largest of these companies are Infosys, which employs 6,000 people and writes and maintains sofware for companies all over the world, and Wipro, which grossed $310 million last year and has made its CEO Azim Premji's net worth somewhere in the neighborhood of $9 billion. Bangalore's most famous son in America may be Sabeer Bhatia, who created the Hotmail e-mail service and then sold it to Microsoft in 1997 for $400 million.

India's prestigious Indian Institutes of Technology, which only accepts about one out of every thousand applicants, turns out some of the most sought after workers in the world. IIT graduates, such as Rakesh Gangwal of U.S. Air, or Rajat Gupta of McKinsey, are among the chief executive officers of some of the world's largest and most powerful corporations. They, and other highly skilled Indian engineers and technical graduates, are a strong presence in the executive offices of digital technology companies in the high-tech corridors of Silicon Valley, Seattle and New York's Silicon Alley. In fact, Indians were the helm of 385 high technology start-ups in Silicon Valley between 1995 and 1998 alone. In his book The New, New Thing, Michael Lewis goes so far as to say that the "definitive smell inside a Silicon Valley start-up was of curry."

The Indian Diaspora

Indian immigrants in the United States, as a group, have been highly successful, earning the highest incomes per family of any immigrant group and enjoying, in general, a standard of living well above the American norm. The incredible success of Indian information technology entrepreneurs and country where there are only 0.21 personal computers and 1.86 telephones for every 100 people. But then 71 percent of India's people do not have access to basic sanitation.

Under these circumstances, simply dropping a computer into a remote village will do nothing to help India's poor. At the same time, the market status quo is perfectly capable of continuing to churn out internet millionaires in Hyderabad while villagers fifty miles away have no toilets or running water. Fortunately, new initiatives that make creative use of digital technologies to meet practical development needs, and that offer market-friendly incentives for doing so, are possible. Consider the following scenarios:

Bhaiji, a farmer in one of India's poorest states, Madhya Pradesh, used to have to accept whatever price a local middleman would pay for his grain because he had knowledge of current market prices. His family barely eeked out a living. Their lives had not improved in several generations. As if that wasn't bad enough, the local patwari, or land records man, was threatening to take away their land, claiming it really belonged to a neighboring landowner. Thanks to a scheme introduced by the government of central Madhya Pradesh, Bhaiji was able to get a copy of his title to his land from the local intranet center for an affordable 5 rupees. He is also now able to check grain prices on the current market and negotiate fair prices for his grain. His family is now secure on their land and confident of their ability to hold onto their livelihood.

Shah Banu is a widow who used to have no source of income to feed herself or her five children. Like most women in her village, she is illiterate. Like most widows, there is an insuperable stigma against her remarrying. She lives in a remote village with no telephone. A representative of the Grameen Bank, well known for its micro-lending schemes to the poor in Bangladesh, especially to poor women, approached her with a proposal: They would give her a cellular phone on loan. She could use it to charge her fellow villagers for calls, repay the cost of the phone, and keep the balance. Now Shah Banu has a reliable source of income for herself and her children, and she has become a respected and singularly important person in her village.

The Gujarat milk cooperative system is well established. Producers bring their milk to a central collection point where it is measured and its butterfat content evaluated. Volume was easily determined. Butterfat content was less easily determined, and producers complained they were being cheated by fraudulent assessments. Moreover, they were not paid until the butterfat assessments were made, a lengthy process, and often had to wait for long periods without knowing exactly how much they would be paid. Then, computer-based assessment equipment was introduced allowing the milk's butterfat content to be accurately assessed on the spot. The corrupt middlemen were eliminated, and the producers were issued a payment chit within a few minutes of delivering their milk.

Like many pregnant women in Dharavi, Mumbai's biggest slum, Shalini suffers from anemia. Her meager diet is simply too low in iron. Shalini is now getting iron supplements thanks to a UNICEF program supported by WebMD. Outreach medical workers at Mumbai's Sion Hospital are tracking Shalini's and others' response to the iron supplements program for WebMD's internet service linking health care workers across the digital divide. They are also able to access data from similar efforts to improve maternal health around the world, and integrate it into their own local initiative.

Hari, 12 years old, lives in one of Delhi's worse slums. He attended school up to third grade, then dropped out to help his family eek out a living collecting and selling recyclable plastic discards. His father is in poor health, and may soon have to give up his job driving a three-wheeler rickshaw in the far suburbs. His mother died soon after the birth of Hari's 2-year-old sister. If his father has to stop working, there is no way Hari can provide for the family. Luckily, Raj Shah, a successful software engineer settled in Austin, Texas, has started a computer programming training school in Hari's slum, using donated used computers from American companies upgrading their systems. Hari has enrolled in the school, where he receives free training and a hot lunch every day. He is also learning English, and improving his reading and writing in Hindi as well. His new skills will be in high demand in India's booming information technology sector.

The village of Kizhur in India's southern state of Tamil Nadu is home to a community of weavers going back untold generations. Their traditional product is handwoven lungis, the traditional male garment of South India. In recent years, as wearing trousers has become more popular, it has become more and more difficult for the weavers to sell their cloth. Then they were approached by a representative of PEOPLink, an internet e-commerce initiative that links producers around the world directly to market, about supplying a nearby sewing cooperative with their handwoven cotton cloth for making placemats, napkins and tablecloths for sale on the internet. The sewing cooperative is doing a brisk business on PEOPLink's web site and needs more cloth to keep production up with increasing demand. A deal was struck, and the weavers of Kizhur are now able to sell as much cloth as they can produce.

The village of Warna Nagar in rural Maharashtra state had no school, no clinic, and no telephone. It did have television, thanks to a satellite receiver put up by a couple of the more prosperous farmers in the village. Satellite television brought the villagers images and information about the world beyond Warna Nagar for the first time in their lives, but gave them no way to interact with it or access it. A project by the Government of Maharashtra State has set up the first rural network project in India. Villagers are now using networked 'facilitation booths' or kiosks to access agricultural, medical and educational information on the Internet. Development Alternatives Group is taking this effort one step further and launching a national effort. Development Alternatives aim is to set up a TARA kiosk in every village. Modeled on the PCO telephone booths common throughout India, the TARA kiosk—or TARAdhaba as the locals call it—will give everyone in the village the opportunity to connect via the internet with the world beyond. The man who runs the TARA kiosk as a franchise has the possibility of making a good living and can hire village youths to help him out, while the villagers gain access to all kinds of information, from weather reports to courses at Indira Gandhi National Open University. They also have a means to sell their products to distant markets. The service is capable of communicating in the local language, both on the screen and with audio, as well as through basic picture symbols, insuring that everyone in the village can use it. Royalties, commissions on sales, service fees and other earnings underwrite the cost.

Reinventing India

The current critical juncture in world history presents India—a country that supplies 35 percent of the world's software engineers but accounts for 25 percent of the world's poor—with both a challenge and an unprecedented opportunity. India must seize this opportunity to reinvent itself if it is to assume a place in the world commensurate to its size, its great civilizational heritage, and its commitment to democratic ideals and institutions.

Reinventing India does not mean jettisoning existing political and social institutions to create a new national framework. It does not mean doing away with India's formidable civilizational legacy. Together these constitute India's greatest strength as a nation. Reinventing India means creating a new paradigm for development that harnesses the irresistible market forces driving the transformations in the global economy. It means creating new partnerships between government agencies, NGOs, philanthropic institutions and grassroots entities created by the poor themselves.

India has hardly tapped the tremendous intellectual, entrepreneurial and financial capital of an Indian diaspora that has everything to gain from a prosperous India whose citizenry is equitably empowered to seize new opportunities to better their lives. Not satisfied with simply investing capital in individual companies or with making donations to individual temples, schools or clinics back home, a growing number of Indian diaspora leaders are looking for practical, effective ways to "give back" that will have broad impact at the national level.

In the 1950s, my father felt he had to choose between helping the poor in India and making a good living for himself and his family in America. The digital revolution's impact on the global economy is giving members of the Indian diaspora new opportunities to do both. But even highly creative solutions to specific, localized problems will have a limited effect on the alleviation of poverty in India as a whole unless they are deployed in concert with a massive effort involving alliances across traditional development divides. This is the fundamental challenge of the India Initiative.

Mira Kamdar is a Senior Advisor with Digital Partners and a Senior Fellow at the World Policy Institute. Her book, Motiba's Tattoos: A Granddaughter's Journey into her Indian Family's Past, was recently published by Public Affairs

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