A new era dawns for the Indian economy.

ERIC ELLIS, New Delhi

03/14/1994

INDIA is in a revolution.

In a transformation quieter but no less profound than that sweeping China, it is replacing decades of Marxist-style central planning and bloated bureaucracy with the free markets of Adam Smith. It is a revolution that is also casting off many of the most sacred vestiges of Indian and Hindu nationalism, such as the Gandhian tenets of self-reliance and denial, and spawning big-spending conspicuous consumers with new political muscle.

While large swathes of India still fit the stereotype of grinding poverty, two years of radical reforms are beginning to touch even the lowliest of peasants. The 240 million-strong middle class has promoted another 5000 dollar millionaires since the architect of this transformation, India's popular Finance Minister, Dr Manmohan Singh, took the chair in the turbulence following Rajiv Gandhi's assassination in 1991.

Singh last month brought in a budget, his third, that aimed to bring isolationist India even further into the international economic mainstream.

Vowing to 'deepen and accelerate' the economic mainstream, he said: 'We should have gone further, faster in the past.' Political and social will in India for reform was 'irreversible', he said, urging support for India's bid to join the Asia-Pacific Economic Co-operation forum.

While Singh claims the first seeds of reform were planted in ruling Congress Party manifestos of the early Eighties, the process really got under way in July 1991 in the turmoil that followed Gandhi's death and the subsequent election of the current Prime Minister, PV Narasimha Rao.

Since then, the change has been little short of remarkable. The rupee has been made near fully convertible, foreign reserves have risen tenfold to dollars 10 billion, inflation has been halved and halved again to 8% and domestic investment is rising at 10% a year. Foreign investment is booming and the share market has tripled.

From a standing start, the economy is growing at an annual rate of between 4% and 5%, which Singh expects will accelerate to at least 6% over the next two years and, he forecasts, soon to China-style double digits.

Singh spent many of his formative years as a loyal technocrat advising Indira Gandhi on how to create the command State he is now committed to dismantling.

With Indira's legacy now widely dismissed as having held India back, it is a role Singh diplomatically explains as 'appropriate for the times, as these reforms are now'.

Now he is hailed around the world as an economic revolutionary.

Easily India's most popular politician, the softly spoken Singh is mobbed whenever he visits Bombay, India's fast-tracking business city which, as its residents like to say, 'has survived despite Delhi'.

Moreover, he is regarded as an incorruptible cleanskin, a description few Indian politicians can claim in a democracy that regards its rulers with more cynicism than most.

It is a reputation he and Prime Minister Rao deftly exploited last month when he offered his resignation over the 'Big Bull' stock market scandal that has ensnared ANZ Grindlays and other foreign banks in a market manipulation scam. While Singh was not personally involved, he offered to resign as a symbol of the Rao government's new accountability.

The offer rejected, he returned with his mandate strengthened, India's reforms back on track and Congress watchers savouring a political masterstroke.

But, foreign investment remains relatively puny. Where China received

pledges last year for almost dollars 580 billion in foreign investment and about dollars 515 billion in actual money, India attracted only dollars 2 billion.

Even that was a tenfold increase on the inflows of the late Eighties when about the only foreign items available in India were cricket scores.

The world has largely yet to catch up on the Indian transformation.

Although near full convertibility has strengthened a rupee backed by foreign and gold reserves of almost dollars 15 billion, India labours under a BB credit rating unchanged since February 1991, before the reform process got under way.

'We are of the belief the rating is unsatisfactory and out of date,' said Reserve Bank of India Governor C Rangarajan. 'We urge these ratings agencies to come and take a look at what is happening here. These reforms are irreversible.'

But there remains a deep-seated resistance to reform from opposition political parties who campaign that India is succumbing to a different kind of foreign imperialism, their stance backed by local businessmen fearful of competition. Some facts are: 60 million Indians speak fluent English and another 200 million are almost as comfortable in the language; India is the world's sixth biggest economy on a purchasing power parity basis.

Half of India's population is under 25, a third 18; the Indian middle class is measured at 250 million, equal to the population of the US, and there are as many as 10,000 dollar millionaires in India, a fifth in Bombay alone.

These pearls drip easily off the tongue of Alyque Padamsee, the dynamo behind South East Asia's biggest advertising agency, the US-controlled Lintas.

Alyque is riding a massive boom at Lintas that has seen his billings rise 35% year-on-year to dollars 75 million since Singh introduced his reform package.

It is a boom mostly built around consumer goods and centred very much on India's moneyed middle class and their children - the Zuppies as Alyque had dubbed them for their fanaticism for Zee TV.

This is the hip Hindi-language satellite channel watched by 30 million that goes out in India as part of Rupert Murdoch's Hong Kong-based Star TV.

'Star has redrawn the social and political landscape in this country,' says Alyque. 'Through soap operas like Santa Barbara and The Bold and The Beautiful, it has awakened Indians to aspiration and ambition. It has liberalised the mindset.

'The Gandhian ethic of thrift and sacrifice and self-denial is completely and utterly out of the window.'

Alyque says sacred tenets of Hinduism, such as Karma, the belief in reincarnation, that you may suffer in this life but you may not in the next, are less and less valid.

'Young Indians with their slicked-back hair and flash clothes are waking up and saying 'Hey, what's this Karma nonsense, I'm not handcuffed to my Karma',' he says.