Plague Scars Image, Economy of Modern India : Asia: Epidemic reminds trade giant that social change hasn’t kept up with business strides.

For a country that has come to see itself as the next global economic superpower and a regional force meriting the same U.N. status as the United States, the images and events of recent weeks have been frightening and humbling.

They have served as a reminder that India, one of the emerging giants of international trade and a trove of scientific and business talent, remains a Third World land of widespread poverty, filth and disease.

“I think the events of the past two weeks have certainly done a lot of harm to India,” said R.C. Bhargava, managing director of Maruti, one of India’s top auto makers.

This autumn’s outbreak of plague, the “Black Death” that decimated Europe and Asia centuries ago and hadn’t been detected in India since the mid-1960s, has seriously hampered trade, transportation and tourism between India and other nations. But the most durable consequence may be to this country’s view of itself.

“The image of India was never so badly tarnished,” said Saeed Naqvi, a columnist who flew home from Britain last week to find India in the throes of plague hysteria. “The country that was to march into the 21st Century with all the blueprints for technological advance finds itself gripped in a primitive, medieval epidemic. Even the glorious contrasts of India cannot explain away the current tragedy.”

Those glum sentiments lingered even as the illness that gave rise to them appeared to recede. The National Institute of Communicable Diseases reported 5,130 suspected plague cases nationwide Tuesday, but Chief Medical Officer Dr. N.J. Kar said the word “suspected” was misleading because in New Delhi 90% of the patients admitted to hospitals with symptoms of the disease, such as high fever, cough and chest pains, have tested negative.

Bubonic plague cases were first reported in the state of Maharashtra, east of Bombay, in August. Pneumonic plague broke out Sept. 19 in the western city of Surat, 160 miles north of Bombay. In the last 48 hours, only one new confirmed death from plague was reported, raising the nationwide death toll to 52.

“We are now on our way to recovery,” Health Secretary M.S. Dayal said this week.

Although some parents were furious and thousands of pupils wore cloth masks to class as a health precaution, newly confident New Delhi authorities Tuesday reopened the public schools they had closed Thursday. The panic that gripped many residents of the capital also seemed to be dissipating, with fewer people covering their faces with handkerchiefs, masks or scarves as they walked along the streets near the bustling business district of Connaught Place.

Dreading the possible spread of the disease to their territories, a long list of countries last week clamped curbs on travel and trade with India. There were glimmers Tuesday that some of those restrictions might soon be lifted, and shipments of Indian commodities to the Persian Gulf countries, suspended because of the epidemic, were allowed to resume.

But from Australia to the West Indies, restrictions on air travel and trade or stepped-up health monitoring of passengers arriving from India remained in effect.

Among India’s neighbors, authorities in Bangladesh proclaimed a “high health alert” and offered citizens a tempting incentive to kill rats: a color television in exchange for 10,000 dead rodents, which can carry the fleas that transmit the plague bacillus to humans. Nepal closed a border crossing and hospitalized three nationals who returned from India with possible plague symptoms. In Karachi, Pakistan, five ships arriving from India were placed under quarantine.

Indian business sources said fearful Swedish customers had canceled orders for Indian textiles, the country’s largest earner of foreign exchange, while all garment orders bound for Germany are supposed to be quarantined and fumigated.

Commerce Secretary Tejendra Khanna predicted that the “panic reaction of some of our trade partners” would result in a 2% decline this year in India’s exports, or the equivalent of $453 million in lost foreign earnings.

India’s exports posted a 20% growth rate last year but were already slowing down before the epidemic hit. Bombay-based analysts predicted the plague will only reinforce that trend.

For some Indian public figures, the resurgence of a disease they had thought vanquished by medical science and general social progress forced them to contemplate the balance sheet of economic reforms now in their fourth year. Like many U.S. critics of “supply side” economics, some concluded that the blueprint followed by Prime Minister P.V. Narasimha Rao and Finance Minister Manmohan Singh falls woefully short of ensuring a better life for all.

“The poor have finally taken their revenge against India’s economic reform process, and in the only way they know--by dying,” fumed Editor M.J. Akbar of the Asian Age newspaper. “The great contradiction in the whole economics reform program has been the belief that change for the better can take place in a collapsing environment, that you can have a leap forward in industrial excellence and growth even while there is regression in the quality of life all around you.”

Although India’s slow dismantling of its bureaucratized economy has been a boon for tycoons, investors and a middle class that may be as large as the entire U.S. population, the reappearance of the plague has reminded India and the world that hundreds of millions here still live in squalid conditions without access to the most rudimentary services such as clean drinking water and prompt medical care.

Maruti’s Bhargava said the epidemic showed that economic and social change must be more uniform, or the reforms will be so shaky they might all come tumbling down. When officials in Surat allowed garbage and rats to accumulate after monsoon downpours struck their heavily industrialized and polluted city, it was enough to cause a health crisis of national and international dimensions, he said.

“The lesson is, there’s no point trying to put through an economic reform program if you’re not going to see that implementation at the grass-roots level of certain functions is carried out,” Bhargava said. “You can damage everything by some silly thing like one city not cleaning up after a flood.”

As chance would have it, the epidemic was in full swing as India was celebrating the anniversary of the birth of Mohandas K. Gandhi, the Mahatma or “Great Soul,” who would have turned 125, the age he said he wanted to reach, Sunday. That led to deeper soul-searching about where India is headed.

On Monday, this country staked its claim in the U.N. General Assembly for a permanent seat on a reorganized Security Council. “Given any criteria--population, size of economy, contribution to the maintenance of international peace and security and peacekeeping, or future economic potential, India qualifies,” Commerce Minister Pranab Mukherjee said in New York.