This is a great post - "moral suffering" exactly captures the feeling I have as an educated and affluent Indian. Yet, I keep going back, keep doing more in India.

I have thought about this quite a bit, and here is an interlocking set of problems that cause this "moral suffering". The phrase "private wealth and public squalor" captures the present situation in urban India very well. A city like Chennai or Bangalore is not that poor anymore on a per-capita basis, but they looks much poorer. The contrasts are just shocking. You can find apartment complexes where flats cost $150-200K and up (yes that is in USD) , sitting on potholed roads, surrounded by trash. Here is an explanation of how the system doesn't work in India:

* Taxation system is irrational - the $200K apartment would pay next to nothing in property taxes, probably as little as $100 a year (legally). Local governments require state or central assistance to run themselves. Consequence: there is no way for a local government to plan ahead, it has to rely on entities at a much higher level. Even the state government doesn't have much of a tax base, so it relies on grants from the center. This is a completely broken over-centralized public finance system, but there is absolutely no political will to tackle it.

* Relentless concentration of economic activity in major cities, because smaller cities and towns are even more starved of resources (on a per capita basis) and lack any local tax base at all, so both investment and people migrate to large cities like Chennai or Bangalore. This self-reinforcing dynamic has resulted in ridiculously overpopulated big cities. At Zoho, 70-80% of our employees come from smaller towns who have migrated to Chennai, so we are part of the problem of this over-concentration of economic activity.

* Increasing private wealth and non-existent urban infrastructure combine to produce some of the most extreme valuations in real estate in the world. Right next to Zoho office in formerly suburban Chennai, land goes for $10 million an acre (there are no acre-sized parcels, of course) simply because as a close-in suburb, this has a nominally functioning infrastructure, which far out places would lack.

Note that I don't mention a world about corruption because that exists in so many other countries without producing the same urban squalor and "moral suffering" that India produces.

The solution I have come up with, something we intend to adopt in Zoho, is to abandon major cities, and move to much, much smaller towns. At the level of about 50-100K population, there are many towns that offer a decent quality of life, particularly when you bring in the kind of jobs and economic activity a company like Zoho can bring. This is the plan we are working on.

Now I will mention some good news, because some posters here are so pessimistic. In my life time, I have seen massive improvements, massive reduction in human suffering in South India. I routinely saw sights as a kid that I don't see anymore: train stations full of emaciated, sick people begging, severe malnourishment everywhere, higher education serving 1-2% of the population (now in the Southern states, it is closer to 20-30%), and a general mood that life would never get better. Today a lot of smart young talent coming on stream that is a capitalist's dream in India. Yes, you have to invest in training and skill building, but if you do, the rewards are immense. The monetary rewards are very good, but the psychic rewards are immeasurable.