The issue of class and privilege has been in the news in the US lately, with The New York Times running a series on the topic and the Wall Street Journal carrying some stories as well. The discussion has touched on how the traditional markers of class have become a little less useful for identification purposes in the US, as things like air travel, once the preserve of the elite, have now come within the grasp of many at lower levels in society.

However, nobody is arguing that class doesn't matter any more. It certainly does, and the scions of the upper classes still continue to disproportionately populate the elite colleges and the ranks of high-income professionals. In fact, if one looks at the Gini coefficient, income disparity has increased in the US over time, and the gap between the very top and the very bottom of the scale has worsened.

There are two interesting case studies of gentrification in India as well; one, based on individual initiative has taken place in the state of Kerala [Images] over the last fifty years; the second has been more broad-based geographically, and has come as a result of liberalisation and globalisation in the information-technology (IT) industry.

The conventional wisdom in the West about India is based on the 'caste, curry, cows' stereotype, and India is painted as an ossified society in which one's status at birth determine one's life completely. The dreaded caste system is blamed for this; since this portrait serves the vested interests of certain groups, this portrayal has gained currency.

The truth of the matter is that India is a relatively flexible society, and this is reflected in the comparatively good Gini coefficient: India has consistently been more equitable than both the US and China over the last fifty years, and despite some fluctuations, the general trend has not been towards sharply widening gaps.

In this context, the two cases mentioned above are quite interesting, and show the power of individual free enterprise: how, given half a chance, individuals in a relatively free society make the best of their endowments and improve their lives and those of their families.

The state of Kerala has specialised in the export of educated people; and these expatriates have, in turn, sent home very large amounts of money. Kerala's competitive advantage has been an education system that produces almost universal primary education, and a relatively good secondary and tertiary education, which produces large numbers of college graduates with basic skills and in some cases technical skills as well.

Unfortunately for the state, it has been unable to absorb these graduates locally: the pace of job generation has been slow partly because of labour militancy. Therefore, the state has suffered from severe unemployment and under-employment, prompting its citizens to seek greener pastures elsewhere, all over India for one. But this didn't stop there: there have been successive waves of migration overseas.

The first group went to Singapore in the 1930s and later, when it was a large British naval base. Unlike previous groups of South Indian migrants who had gone to, say, Malaysia, as indentured plantation labour, the Kerala migrants were skilled: they ended up working as teachers, technicians, architects and engineers in Singapore. Their families back in Kerala, formerly peasants, suddenly found themselves entering the landed middle classes. But after the British left Singapore, opportunities generally dried up.

The next wave was in nurses from Kerala going abroad in the 1960s and later. This trend has continued to the present day, as there appears to be an insatiable demand for nursing care in the West. Most nurses came from the lower socio-economic strata, and their earnings sent home have helped lift their families to the middle class; they have also attracted higher-status husbands with the appeal of emigration.

A nurse, say in the UK, can save 100,000 rupees a month with overtime, and that is a substantial sum. As a result, you find Kerala nurses working in hospitals all over Europe, the US, and West Asia, despite persistent tales of racism and discrimination.

Another large wave of migration from Kerala has been to West Asia's oil-rich kingdoms. Semi-skilled and unskilled labour found its way there, and got employment in various sectors: real-estate, trading, manufacturing. Skilled workers such as engineers, doctors and teachers followed. The large numbers of expatriates in West Asia send back so much money that it has led to land speculation and conspicuous consumption back home.

The effect of all this prosperity has been dramatic: an entire generation of people has moved up in the social scale. Of course the most spectacular change has been for the lower classes. For instance, the lady who worked as a maid in my parents' home: her son went to West Asia, and over a few years, she has become middle-class, built a nice house, and nobody would dream of asking her to be a menial again. This is a remarkable transition: her family had always been landless tenant farmers.

These were all changes that happened just in the state of Kerala, and it has in a way been revolutionary: erstwhile feudal landowners who did not participate in this rush to export labour have become marginalised, and their lands have been purchased by the formerly lower-class nouveau riche with their petro-dollars. Free enterprise in action: Shumpeter's creative destruction as the bold and the entrepreneurial win the race.

The second phenomenon is not confined to Kerala. It has had an impact on many parts of the country, even though the changes are most visible in the major cities of Bombay, Madras, Bangalore, Hyderabad and Delhi/Gurgaon. This is the IT-outsourcing revolution. As is wellknown, a large number of information technology jobs have migrated to India based on the low-cost, high-skill labour force.

Where does this labour force come from? All over the country, although the southern states have an edge. And all these engineers are not from the middle classes; large numbers are from the lower-middle classes: their parents are tenant-farmers, low-level bureaucrats etc. They are not necessarily the children of privilege, and did not go to the snobbish private schools or the best-known colleges. Many are from small towns and villages, and are the first generation in their families to move away from their roots.

Given the substantial salaries earned by these youngsters, as well as access to aspirational things like overseas trips, the latest gadgets like iPods and digital cameras, and fancy vacations, they have moved into the upper-middle classes. Their willingness to spend puts them on par with the old-money elites of the country.

It is interesting to note that the only relevant government policy in both these cases has been benign neglect. By taking advantage of globalisation and the opportunities it creates for individual enterprise, the expatriates from Kerala and the IT workers in the big cities have both managed to bootstrap themselves and gentrify their families in a single generation: they have become solidly middle-class.

This gentrification is a quiet revolution that is transforming the face of Indian society: it is now possible for the child in a remote village to aspire to the good life that he sees on television. It is not by any means beyond his grasp.

If only the government could bear to keep its central planners away, they might manage to not kill the golden goose. Given the socialist leanings of India's politicians, it remains to be seen if they can restrain themselves from interfering.