Almost 20 years ago, shortly after India’s protectionist economy was liberalized, I moved to Mashobra, a small village in the North Indian hill state of Himachal Pradesh. The rent on my cottage was low. Food was cheap; the climate, mostly good; and -- an unexpected bonus in India -- the air and water were clean.

Then, there was the vastness of the sky, and the immensity of the Himalayan ranges, ideal for long days of daydreaming and reading.

The rhythms of life in the village were slow -- revealingly, the big clock in the local post office never worked. Shops closed for long siestas during summer months. At night, the lights in the village went out as early as 9 p.m., exposing a wide, bright firmament. Occasionally, there were sightings of a leopard or two in the nearby dense forest, and I was often woken early in the morning by the screeching of monkeys.

Mashobra wasn’t the right candidate for the Indian government’s many “rural uplift” programs. As in the rest of Himachal, literacy was uncommonly high; the village also scored well in all the human-development indices. Apart from the handful of (absentee) owners of British-built villas, most people belonged to what economic statisticians would call a low-income group. But there was no destitution or garish signs of inequality of the kind you saw on the plains.

Small Land Plots

Almost all the people I knew -- running small shops, working in government jobs or in the tourist trade -- had small plots of land where they grew some food for themselves (mostly vegetables, cereals and apples) and had enough left over to sell in the local market.

Helped by a strong agricultural sector, the state’s economy had begun to do well in the years before liberalization. After 1991, there was much big talk by local politicians about industrializing and urbanizing Himachal. But for many years the explosion of entrepreneurial energies on the plains had no discernible effect on the village’s long row of houses and small grocery stores, most still built in the indigenous style with stone and clay packed into wooden beams, topped by galvanized-iron roofs.

In the mid-1990s, I travelled around India for a book on small towns stirred into forceful ambition by the nation’s new politics and economy. These were some deeply unsettling months. Long exposure to the murderous politics of Hindu nationalism and the ruthless individualism of the nouveau riche left me with a profound ambivalence about India’s post-1991 modernity.

New Inequities

While promising liberation from India’s cruel hierarchies of class, caste and religion, it often seemed to introduce new forms of violence and inequity. I returned to Mashobra exhausted from each of these travels and grateful for my village’s relatively high quality of life, as well as its continuing immunity to the moral and physical dereliction that had begun to afflict the plains.

I realize all this sounds a bit romantic, as though I were wishing that clock in Mashobra’s post office would never work again. But there were harshly realistic, rather than sentimental, reasons why a village like Mashobra couldn’t aim to participate in India’s newly globalized and increasingly urban-oriented economy.

There were built-in limits even to economic growth in Himachal, which had been traditionally dependent on agriculture and tourism. The mountainous terrain made large-scale industrialization difficult, if not impossible. And higher education wasn’t of a quality that could push Himachal into the software and back-office revolution of South Indian states.

Small places like Mashobra had to find their own equilibrium in the midst of national upheaval: While preserving much of the old, they had to embrace the new with caution.

Real Estate Bubble

And Mashobra seemed to do so for a long time. Its balance wasn’t disturbed until the early 2000s, when real-estate speculators -- among the major contributors to India’s gross domestic product -- reached Himachal. I began to hear stories about small farmers in nearby areas. Tempted by amounts of cash they had barely imagined, much less seen, they sold off cultivable lands to property developers, and then used up their capital in either ill-advised business ventures or extravagant consumption.

One day, Najku, an old woman in the village who made a living by selling firewood, told me of a realtor who had expressed interest in her densely forested property. I tried to warn her to hold off, or at least to drive a hard bargain. But it seemed already too late when she informed me, proudly, that the realtor had helped plug the leaks in her roof and bought some new clothes for her.

Sprouting Condominiums

Not long afterwards, she died, still virtually penniless, and too early to see a multimillion-dollar condominium rise on her land. This turned out to be just the beginning of Mashobra’s transformation. Within a couple of years, concrete apartment buildings, neat and blank, began to take shape upon the hillsides systematically denuded of their tree cover.

The owners of these apartments remained invisible. They were, I heard, respectable judges, politicians and businessmen, all parking their untaxed income -- part of India’s massive “black” economy -- in real estate.

Laborers in rags came from places as far as Bihar, Madhya Pradesh and even Andhra Pradesh to help build these unused playgrounds of the rich. Huddled under tarpaulin shacks, their children displaying all the signs of chronic malnutrition, they brought to Mashobra some of the desolation of mass poverty in the plains.

Water Shortage

As demand for water increased, the village began to experience shortages. In response, the builders bore ecologically and geologically unsound wells into the rocky mountainside. Mounds of trash -- mostly consisting of discarded construction materials -- grew, until they covered entire hillsides.

An article on this environmental devastation that I helped publish in the local daily the Tribune brought a sheepish-looking government official to my cottage one morning. But the trees continued to be felled; plastic bags still littered the hillsides.

Small armies of bewildered monkeys driven out of their habitats periodically invaded the village in search of food, announcing their arrival with a staccato drumbeat as they raced from one galvanized-iron roof to another. Twenty years after liberalization, the “monkey menace,” as local newspapers call it, seems an apt metaphor for its effect on Mashobra.

Industrial Zones

Himachal’s own “development” in these years barely conforms to linear notions of progress. Despite lavish subsidies, the state’s new industrial zones haven’t worked. In 2010, Lenovo Group Ltd. closed a manufacturing plant after less than three years in the state. Meanwhile, food production has declined.

Busy erecting dams in the Himalayas -- with all the environmental hazards and the earthquake-prone zones -- the state government now profitably makes up North India’s terrible energy shortfalls. The GDP figures are also boosted well above the national average by close alliances between the state and private business, a nationwide trend that recently prompted the Financial Times to compare India’s oligarch-based economy to Russia’s mafia capitalism.

Politicians haven’t just sold off prime land at dirt-cheap prices to businessmen; they also now double as realtors themselves. And, after the moribund industrial sector, building private universities -- an unfeeling way to exploit the anxiety of ill-educated parents concerned about their children’s prospects -- is the latest moneymaking venture.

Private Universities

Sparkling-new and bland, they squat on once-pristine mountaintops, offering in exchange for high tuition fees mostly useless degrees, which, needless to say, are far from addressing the Indian economy’s severe skills shortage. There are many more incongruities -- borne of the conjunction of easy money with a culture of aspiration -- yet to come.

In Mashobra last week, I met Monu, the young son of a grocery owner, whom I have known from the time he used to walk past my house on his way to school with a heavy bag strapped to his back. He told me about the extortionate rent paid by the new Tommy Hilfiger store in Shimla -- the shop was bound to fail in any case. The flood of real-estate speculators and “black money” into Himachal, he said, had distorted many people’s idea of local purchasing power.

Food Inflation

He couldn’t see how he could expand his own grocery-store business in Mashobra. The apartments of the rich hadn’t helped at all. Their occasional occupants -- mostly holidaymakers -- denied him even a small bit of business by bringing their own groceries, as well as servants, from the plains. As for the locals, tormented by food inflation, most of them could barely afford their only consumerist vice: mobile phones.

Monu seemed to be saying that the local economy, trapped by the imperative to grow, could now only chase its own tail. In his mid-20s now, part of India’s much-vaunted “demographic dividend,” Monu turned out to have already gone through the range of options his education -- the best available in Himachal -- had entitled him to. He had worked for a private bank for two years before moving back, unsatisfied by his job and salary, to Mashobra.

He was convinced that he could only make money in real estate and construction. And that’s what he would do. He already had enough land; and he could get cheap credit.

And what, I asked, would he build in Mashobra?

His reply, seemingly without irony, was: “A shopping mall.”

(Pankaj Mishra, the author of “Temptations of the West: How to Be Modern in India, Pakistan, Tibet and Beyond,” is a Bloomberg View columnist, based in London and Mashobra, India. The opinions expressed are his own.)

To contact the writer of this article: Pankaj Mishra at pmashobra@gmail.com

To contact the editor responsible for this article: Max Berley at mberley@bloomberg.net