Growth in India's Industrial Hub Leaves Many Behind

Article excerpt

Bhan Sai makes about $1.40 a day. The minimum wage is almost twice that, but if he complains, he says, the steel mill will fire him.

Squatting by the roadside after a shift, his hands chalk-white from work, he says he came from the neighboring state of Jharkhand for this job, leaving his home to live in a tent camp outside town. The bus fare from there is one-fifth of his daily salary.

But among India's more than 300 million unskilled rural laborers, he is fortunate. He has a job.

Far from the call centers and air-conditioned malls that characterize the New India, the Old India has labored on almost unchanged. Increasingly, India is hoping industry will help lift India's poor. Yet at the center of India's industrial heartland here in Korba, the hoped-for flood of jobs has not yet come.

India's capital-intensive approach to development, combined with the leadening effect of overregulation and corruption, is spreading India's newfound wealth down the economic ladder slowly, say experts. The gap between rich and poor is actually widening, economists say.

"The sectors that are doing well in India tend to be capital- intensive," not labor-intensive, says Ashish Narain, an economist at the World Bank in New Delhi.

In many respects, India's sudden economic growth has come from its "inspiration" businesses - like back-office operations and software development - rather than the "perspiration" heavy industries that characterize China's success story.

That is slowly changing with India's new emphasis on industry. But unlike the industrializing Chinese countryside, this part of India does not make Spider-Man action figures or cotton trousers. Instead, it produces electricity and steel - desperately needed fuel for a country that is plagued by power shortages and building as fast as brawn and bulldozers will allow.

In this way, Korba is a portrait of the emerging industrial India. Sitting on the country's richest coal seam in the remote state of Chhattisgarh, it is a Pittsburgh of the subcontinent - a thicket of smokestacks amid a landscape of rice paddies.

Earlier this year, seven power companies agreed to establish new plants in state of Chhattisgarh, where Korba is located. Two of India's largest conglomerates - Tata and Essar - are building new steel mills. In all, Chhattisgarh attracted more foreign investment than any other state in India during the first half of 2006.

This will surely bring jobs. By 2015, investment in India's coal belt - comprising Chhattisgarh, Jharkhand, and Orissa - could create jobs for 700,000 people "the majority of whom would be from the rural and small town population," according to a survey by McKinsey, a consulting firm.

But the gap is enormous. Nearly two-thirds of the country is still caught in the agricultural sector, which is growing at a negligible 2 percent annually. …