Bangalore, April 23:

The recent riots in Bangalore cost technology firms over $160 million in lost revenue.

Bangalore, touted as the Silicon Valley of India, houses important software companies like Microsoft, IBM, Infosys and Wipro. To outsiders, the violent reaction to the death of a film icon is puzzling. Why were the rioters burning buildings and businesses including a Microsoft research facility in the fourth largest technology hub in the world? The violence raises important questions as to who benefited from the IT boom and outsourcing. Have Karnataka locals reaped the rewards of transfer of jobs from the West? The riots demonstrate two sets of divisions: between the haves, who tend to be outsiders, and have-nots, who tend to be locals; and between rural Karnataka and urban Bangalore.

In the early 1990s Bangalore transformed, almost overnight, from a sleepy provincial capital into a hub for global IT industries. Low wages, English speaking skills and competence in low level computer design, programming and maintenance beckoned American companies to set up business process outsourcing also known as call centres. Today Bangalore accounts for a third of India’s total software exports and jobs (265,000 workers) in the IT sector.

However, the success created social inequality between rich and poor, and town and country. Local urban and rural Kannadigas did not benefit from the boom. As Solomon Benjamin points out in his study of poverty in Bangalore, the software expansion masked the shrinking of the public sector, manufacturing and agriculture in the state. In 2001, the IT industry created 75,000 jobs for professionals but simultaneously more than 100,000 workers in engineering and ancillary units lost their jobs in Bangalore. Even in call centres, the difficulty of neutralising south Indian accents meant that more jobs went to outsiders.

Bangalore is split between glitzy malls, sprawling high-tech campuses and residential enclaves catering to a thin strata of the super rich in contrast to dense slums, housing a third of the population. Some activist groups estimate the total number of poor in Bangalore to be at least 40 per cent of the six million residents. Almost a third of the population has little or no access to piped water or to low cost housing — since the government has not planned any. Contrast this with the announcement that the government was planning to give 3,000 acres gratis to the software industry.

“Locals are not getting their share of the development process. MNCs are using our electricity, water and land and giving jobs to outsiders,” said noted Kannada writer U R Ananthamurthy in an interview. As another historian Ramachandra Guha points out, whoever is succeeding is an outsider. Azim Premji of Wipro and Kiran Mazumdar-Shaw are non-Kannadigas.

In rural areas, an agrarian crisis exploded, caused by the import of cheap edible oil that impacted groundnut farmers and cheap cotton from the US, hurting cotton growers. There was also a drought. By 2004, unable to pay their debts, over 12,000 farmers in Karnataka committed suicide. The per capita income of rural Karnataka is only $650, half of Bangalore’s. Thus Karnataka locals face the same problems as their American counterparts — lack of jobs.

What caused these problems? Neglect by politicians is a key factor. The software revolution happened so quickly that the governments failed to plan adequately in terms of the skill levels and infrastructure required to sustain the expansion. This is reflected in the decrepit airport, high pollution levels, narrow roads choked with ever increasing numbers of cars and three wheelers, and increasing water and electricity shortages. From the airport, one has to travel at a snail’s pace on potholed roads past half constructed abandoned flyovers to the hotel room, which costs over $400 per night, that is, if one can get a room at all.

Local resentment has taken different forms such as linguistic nationalism of the middle class, riots by the poor, and a ‘sons of the soil’ rural movement championed by the party heading the current state government. In December 2005, Bangalore changed its name to ‘Bengaluru’. A ‘Karnataka for Kannadigas’ movement, Karunada Sene, emerged in March 2006, with demands that Kannada should be spoken in public places, that call centres stop giving Anglicised names to their staff and locals be given preference in jobs. The man who inaugurated the movement was Rajkumar, the star whose death sparked the riots.

In the last state elections, locals rejected a politician who was the face of the IT industry, for H D Deve Gowda, a former prime minister, who called himself a son of the soil.

However, the current chief minister, who is Deve Gowda’s son, has continued in the tradition of doing little to remedy the ills.

If Bangalore wants to remain a leader of the knowledge revolution, the politicians had better wake up and redress grievances.