India has many outstanding minds and a reputation for producing world-class engineers. But a review this month of a three-year government program called INSPIRE, which offered scholarships to about 10,000 top science students, found that 85% of the scholarships went unused. The suspected reason: Students are increasingly bypassing science for business in search of a quick buck.

Prime Minister Manmohan Singh, an economist by training, this month criticized the grip that he said vested interests have on scientific innovation in India.

"Liberate Indian science from the shackles and deadweight of bureaucratism and in-house favoritism," he said.

India's high-tech corridors may be world class, but many rural areas, where 70% of its population lives, lag far behind.

Late last year, Subho Ray, the head of a Mumbai-based Internet trade group, commissioned a study on rural awareness in seven Indian states, including Maharashtra, which includes Mumbai. The results: 84% of villagers had never heard of the Web.

"Sixty years ago, they would've said they didn't know what a bus was," Ray said. "For Obama, yes, there's Bangalore. But equally true are people who don't know what the Internet is."

Many in India consider government reform, with an emphasis on streamlining, key to generating widespread improvements.

"India is world's red tape superpower" read a headline in Thursday's Hindustan Times after India, followed closely by China, topped the list of the most "overregulated countries in the world" in a survey this week. About 1,370 executives surveyed by the Hong Kong-based Political and Economic Risk Consultancy complained of complex Indian regulations, onerous standards and cumbersome rules for changing money or securing tourist visas.

Rajiv Kumar, head of the New Delhi-based Indian Council for Research on International Economic Relations think tank, offered a personal example of what he considered intrusive government. Late last year, his 80-year-old mother found herself paying fines to avoid imprisonment and settle a complaint that she had left water sitting in a planter after she refused to pay bribes to anti-malaria officials, Kumar said.

"They're trying to rid the city of malaria and the people implementing it turn it into an income generator," Kumar said. "There's a desperate weakness of governance."

A joke making the rounds is that "Bangalore grew while Delhi was sleeping," suggesting that high-tech companies have prospered in spite of the government. Businesses can expect to wait nearly 200 days to secure a construction permit, four years to enforce a contract and seven years to shut down a company, a World Bank assessment found.

India and the United States both face slower decision-making in a democracy compared with an ascendant China. Autocratic governments are able to bulldoze homes overnight to build a railroad, Obama said Tuesday.

Here in the world's biggest democracy, vested interests, an 1894 land acquisition act and raucous politics mean even basic infrastructure projects can take decades.

Whereas the U.S. suffers with 9.4% unemployment, India would be delighted with such numbers in a country where 93% of workers are in the "informal sector," off the government radar and often scraping by with odd jobs.

"The U.S. talks about India's advantage relative to China on democracy," said Harinder Sekhon, a U.S.-India specialist at the New Delhi think tank Observer Research Foundation. "But if young Indians don't have access to jobs, it could be a very serious problem."

The nation has waged a successful "Incredible India" image campaign, presenting the land stereotypically associated with poverty, Mother Teresa and spiritual gurus as a high-tech bastion, said Santosh Desai, former head of the McCann Erickson advertising firm in India. "Of course, this is a vast simplification," he said.

India should be seen as a partner who can provide the U.S. with back-office help, some analysts said.

"I get alarmed when I see India bracketed with China, it's just not in the same league," Kumar said. "This elephant and tiger business, at best we're a very junior elephant that's ensnared itself."

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Anshul Rana in The Times' New Delhi Bureau contributed to this report.