DALLIPUR, India -- The hip young Indians working inside this country's multinational call centers have one thing in common: Almost all hail from India's upper and middle castes, elites in this highly stratified society.

India may be booming, but not for those who occupy the lowest rung of society. The Dalits, once known as untouchables, continue to live in grinding poverty and suffer discrimination in education, jobs, and healthcare. For them, status and often occupation are still predetermined in the womb.

While some Indians had hoped urbanization and growth would crumble ideas about caste, observers say tradition and prejudice have ultimately prevailed.

"There's talk of a modern India. But the truth is India can't truly move ahead with caste in place," said Chandra Bhan Prasad, a Dalit writer and specialist on India's caste system. "In all ways, it's worse than the Jim Crow laws were in the American South because it's completely sanctioned by religion. Despite so many reforms, the idea of untouchability is still very much a part of Indian life."

As India's economy surges, one of the country's most serious and stubborn challenges is how to combat entrenched caste prejudice. Dalits, along with other "backward" castes, make up the majority of India's 1.1 billion people, and social scientists worry that these groups are being left behind.

The contrast between the gleaming call centers of rising India and the abject poverty that is the reality for many Dalits is all too obvious in Dallipur, an impoverished village on the outskirts of Varanasi in Uttar Pradesh state.

Without electricity, paved roads or running water, the hamlet is home to landless Mushars, the lowest social stratum of Dalits, who work as shoe shiners, trash pickers, toilet cleaners, and street sweepers.

Amid the straw and mud villages, two children died of starvation last year -- not for lack of food in the area, but as a result of prejudice.

Amid the straw and mud villages, two children died of starvation last year -- not for lack of food in the area, but as a result of prejudice. Chandrika, a 24-year-old Dalit mother, recalled carrying her crying 2-year-old son and her weak 20-month-old daughter to a nearby health center. There, she pleaded for a card that would allow her malnourished children to receive free milk. But before the nurses could examine her children, she was mocked and shooed away by doctors, who told the young mother to go beg in the market.

"They said again and again, 'We don't want to see you Dalits here bothering us,' " said Chandrika, a thin, dark-skinned woman who wept as she recounted how her children died. "My milk had dried up from stress. There was no work for me. There was no one to hear my plight."

Local government leaders who came to investigate her children's deaths insisted that the shy mother and her fellow villagers build a raised concrete stage -- Dalits could be addressed by upper castes only from a higher platform, Chandrika and other villagers were told. The 3-foot-tall dais remains in Dallipur today, the only outcome of the investigation.

By virtue of birth, some castes inherit wealth; the Dalits inherit debt.

Caste often determines Indians' spouses, friends, residence and, most important, occupation -- part of a Hindu belief that people inherit their stations in life based on the sins and good deeds of past lives.

Some Indians believe that the spread of capitalism in urban areas has in some ways dissolved caste by creating new occupations and eliminating obsolete ones. For instance, with the growing use of flush toilets in Indian cities, the disposal of human waste, once a job for Dalits, is now done with a simple pull of a lever.

In booming evening bazaars in Mumbai and New Delhi, lower castes sell cellphones, leather tennis shoes, and grooming kits from small shops and curbside pushcarts alongside higher castes, with everyone "in a capitalist rush to make money," said Prasad, the writer. "A lower-caste businessman may even enjoy an evening cigarette with a higher caste, completely taboo even 50 years ago."

Prime Minister Manmohan Singh recently compared India's caste system to apartheid in South Africa, calling it not just prejudice but "a blot on humanity."

Critics say that such statements are simply meant to garner votes from lower castes and that any gains made by Dalits have been marginal.

"India is not a true democracy," said Anup Srivastava, a researcher with the People's Vigilance Commission on Human Rights in Varanasi who is investigating complaints filed by Dalits about discrimination among neighbors, in schools, at hospitals and at work. "The country is independent. But the people aren't. How can there be a democracy when there are still people known as untouchables who face daily discrimination?"

Emily Wax