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India's growth provides uneven benefits

Friday, February 22 08:41:18

Yards from the site of India's worst industrial disaster, Majid Khan is welding a door grill in a shop on the narrow streets of Bhopal's old city, where pigs forage for food amid the garbage.

For two decades after a 1984 chemical leak from Union Carbide Corp.'s plant killed more than 3,000 people, the capital of Madhya Pradesh struggled to throw off its image as a backwater in one of the nation's poorest provinces. Now, the regional government has attracted industry and boosted agriculture with policies that have lifted the state's economic growth to more than twice the national pace according to a Bloomberg report.

"Life has improved," said Khan, 32, wearing overalls as sunglasses protected his eyes. "No government will feed us, but at least we're able to earn our wages. Infrastructure in the city is better; power supply is much more dependable. We can feel the change."

Progress includes a new highway to the commercial city of Indore, investment from companies such as Volvo AB and a surge in agricultural production. The government of the state, which is larger than Italy and more populous than the U.K., forecasts expansion of 12 percent in the year ending in March, even as India's pace slips to 5 percent, the slowest in a decade.

"Without investments and factories, we will neither be able to create jobs, revenues, nor will we be able to get the growth needed to remove poverty," said Chief Minister Shivraj Singh Chauhan. "We have made industrial policy more investor friendly, and where processes need to be overhauled, we act."

While the state of Karnataka attracted call centers and software services to propel development in the past decade, Madhya Pradesh, in the center of India, and states such as Gujarat and Uttarakhand are taking a different path: boosting farm output and targeting labour-intensive manufacturers.

"The combination of industry and agriculture bodes well for balanced growth," said Laveesh Bhandari, a director of Indicus Analytics, an economics research company in New Delhi. The government "has been helped by a surge in agriculture, leading to a rise in rural demand" for goods.