Apologists for capitalism tend to assume rising growth must automatically lead to falling poverty and quote various official statistics showing a decline in the proportion of people living in absolute poverty by 10 percent in the 1990s. But in the same decade there was a fall in food consumption per head in the rural areas, where two thirds of Indians live. Abhijit Sen, re-analysing the official figures, concluded that the total number living in poverty probably grew in the 1990s, that the proportion below the poverty line only fell very slightly, and this was a "lost decade" in terms of fighting poverty.66 The number below the poverty line in 2002 was 35 percent of the Indian population, some 364 million people. But even this underestimated the degree of suffering. Half of all Indian children are clinically undernourished and almost 40 percent of all Indian adults sufer chronic energy deficiency.67 Even in the supposedly prosperous states of Gujarat, Karnataka, Kerala, Maharashtra and Tamil Nadu, "more than 70 percent of the rural population consumed less than 2,200 calories per day". 68
India's insertion into the world system means that industrial investment, like that in China, has been overwhelmingly capitalintensive, with the capital output rising substantially in the 1990s. Employment growth was stuck at about 1 percent a year; 0.87 percent in the "organised" (ie formal) manufacturing sector,69 even if growth was a little faster in the "unorganised" informal sector where average firm size is less than two people.70 Most of the people flooding from the countryside to the cities have ended up trying to make a livelihood in the service sector, doing unskilled labour at very low levels of productivity in return for the 50 rupees ( \$ 1 ) a day needed to just about keep a family alive-sweeping and cleaning, working as domestic servants, washing clothes, pushing barrows, peddling cycle rickshaws, hawking goods, portering, waitering, guarding. The much publicised call centres employed only 400,000 people or 0.008 percent of the country's workforce in 2006.71
India's growth, like China's, means that by the mid-2000s it represented a much bigger portion of world capitalism than 50 or even 20 years earlier, and this had important implications for the system as a whole. But it was still quite small by the standards of the US or even Japan, Germany and China. This could change if the rates of growth of the mid-2000s were sustained for another two decades: in dollar terms the Indian economy would end up being bigger than the UK. But the most modern centres of industrial society in Mumbai, Hyderabad or Bangalore would still be separated by stretches of rural poverty bigger than most European countries. And long before that the whole process of rapid growth could be thrown off balance both by internal factors and by the impact of instability internationally.
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The New Age of Global Instability