"Hey," asked Gandhi, "Is this how the money is being used? Distributing free bags to everyone?"

The new economy, the Internet, the great leap forward? India still has 72,000 villages without electricity. A thousand Indians share three computers. And a country of a billion people has no more than 3.7 million Internet subscribers, which is roughly 8 million net users-still a joke.

But to say the Internet was a bubble is the easiest thing-and the stupidest. Every revolution in human history claims its victims, forces them to spend time in that trough of disillusionment. This is that time, that trough. The Internet in India, argues Samar Halarnkar in his forthcoming book, is at about the same stage in history when George Stephenson fired up the first locomotive, the Rocket, in the early-nineteenth century.

As in the rest of the world, the dotcom boom claimed its victims in a country not yet ready. It forced some humility and accountancy lessons on the garrulous, get-rich-quick kids who occupied column inches and mugged for the cameras for nearly two years.

Yet, some of India's dotcom frontiersmen survive, and grow. Yet, a new bunch of high-tech-but unprofitable-companies in Bangalore find new multimillion-dollar funding. Yet, we still struggle to understand why the Internet and the wired world it is spawning continues to grow. Using the stories of people, cities, technologies-and a rain tree-Halarnkar whimsically chronicles the unfolding of a revolution. Exclusive extracts from Nirvana Under The Rain Tree, to be released in late April by Books Today.

Who would invest millions in a company run by essentially brash, young kids, in a market that barely exists? Pravin Gandhi for one. A precise, wry man with the manner of a school teacher, Gandhi is a director at Infinity Investments, a venture capital fund that has Rs 110 crore available to invest in people like (Vishal) Gondal. The money has been collected from a slew of investors-mostly from the great Indian infotech diaspora in Silicon Valley.

"So when will you get money in the bank from your investments?" I ask.

"I will probably see the first rupee come back a year from now."

Nirvana Under The Rain Tree Stories Of Fortune And Flameouts From India's Internet Revolution By Samar Halarnkar

It's still only a hope. The Internet might become a part of daily life one day, but it might take half a lifetime -at least. Gandhi, like most angels and VCs, understands this, and consequently, he wants the companies he's investing in to realise this. And he's suddenly wary about the god of the World Wide Web.

"Anything completely Internet dependent," says Gandhi firmly, "is out of the question."

The pundits say the near future is in the companies that will help make the Internet easier to use, the pure technology companies who will help create the tools to truly universalise the Net. Gondal's idea is still unique, still workable, but for now, he must continue to use his gaming talents to make money every possible way.

Despite the Internet shakeout, young hopefuls still stream in to see Gandhi at his utilitarian cubicle-filled office in Parel, firmly in Mumbai's old mill lands, a decayed neighbourhood of rusting textile factories, and the moldy chawls. These crumbling homes still house the forlorn families of industrial workers. Today the empty, blackened chimneys, rusting looms and silent burnt-brick buildings mingle uneasily with the gleaming new glass and concrete office blocks that sporadically soar up from the old mill lands.

As I get up to leave, Gandhi escorts me out. Waiting in the lobby is Gondal, called in to discuss staffing, financing-and the future itself. Should they go ahead with second-round funding? Should they look at a "strategic alliance"? Should they simply avoid the hassle of teaching Gondal management and merge with another company?

As he walks behind me, Gandhi suddenly notices my sling bag with the logo indiagames.com emblazoned on it.

"Hey!" Gandhi turns to Gondal sternly. "Is this how the money is being used? Distributing free bags to everyone?"

Foxed only momentarily, Gondal grins impishly. "But, sir, this was an investment. He's from the press. We have to make sure the media are happy, right?"

"And the media are very happy with this." I show Gandhi the mean-looking, pellet-shooting plastic Colt that Gondal has given me. Gondal's grin widens further. Gandhi grimaces, and shakes his head.

His boys, he knows, will be boys.

A portal, it seemed, was the pathway to the pot of gold. In the first quarter of 2000, six major portals-indya.com, chaitime.com, eIndia.com, 123India.com and go4i.com-were funded, and uncountable other web sites cropped up. The lack of prescience was amazing. Sure, many of the 3,000-odd web sites set up at the peak of the dot com craze were self-funded. But nearly 100 of those were given first-round funding by VCs who simply followed the US-a country where half the population had computers at home, compared to India's measly five million for a billion people-without bothering about the specifics.

By the time 2001 rolled in, second-round funding was becoming a mirage, and each of the six was in serious trouble across the country. Indya.com was struggling to stay the course, laden with highly paid talent and an idea whose time had clearly not come.

Go4i.com, a brainchild of the Hindustan Times group in Delhi simply folded when it was clear that its burn rate-money being expended in staying alive-of a couple of crore of rupees a month, was simply too far removed from the reality of negligible profits. Like so many dot coms, its salaries made no sense.

I was offered a look at go4i's internal papers. The annual salary figures were revealing. Chief Marketing Officer: Rs 19 lakh. Chief of Staff: Rs 16 lakh. Financial controller: Rs 16 lakh. Head of web advertising: Rs 11 lakh. Head of Business Development: Rs 14 lakh. Chief Human Resources Officer: Rs 19 lakh. Chief Content Officer: Rs 9 lakh.

With extravagance like this, it wasn't surprising when the expenditure flow chart for November 2000-probably one of the dot com's highest spending months-showed that expenses had crossed Rs 3 crore. The revenues were insignificant.

It couldn't last.

As 2000 drew to a close, the CEO, Piyush Gupta, put in his papers and returned to his plush job at Citibank. Other employees were not so lucky. Many left in droves, but some are still on the job market, trying to find a job that will keep their dignity-not salaries-intact. Formally, the owner of Hindustan Times, the Bhartias, pulled the plug within six months of launch, but not before the dot com had consumed Rs 20 crore. Go4i.com has crumbled to nothing more than a web site. It's kept alive today for only one reason: it's there.

Venture capitalists similarly pulled the plug on the India operations of chaitime.com, a South Asian portal that started in New York but spread to London and Mumbai, like indya.com and indiainfo.com, pulling in the cream of Indian marketing and creative talent on multilakh, even multicrore salaries.

Chaitime.com's problem according to the VCs-mainly eVentures of Mumbai-was it expanded too much, too fast. True, insiders say in private comments, but that happened because the VCs told them too! In the easy come, easy go world of dot coms, details like this don't really matter.

"It was bleeding badly," an industry expert recalls hearing from one of the VCs. "So we slit its throat."

In keeping with the name, the impeccably maintained building called 'Broadband Hub' in Bangalore houses three transnational companies working with broadband Internet technologies. 'Broadband Hub' sits in the old conservative residential area of Basavangudi-a place where cerebral middle-aged and retired folk flock to religious discourses, evening lectures on everything from scientific temper to economic theory, and Carnatic music recitals-where old rain trees still form magnificent tunnels of shade.

Amber Networks is helping shape the optical Internet, where its products will help transform telecommunications into a new era of communication through the rays of light that now scream through the fibreoptic cables rapidly replacing old copper wires. Simply put, if broadband applications are to make a huge splash on the Internet, then communications companies will need to continue purchasing optical networking products to make the Web faster and more robust.

Building the capacious fibreoptic core of the new, emerging networks is the easy part. The bottlenecks emerge on its edges where customers link to the network. Amber is developing an "edge router device" that lends next-generation networks the speed and reliability they need to move voice and data more efficiently.

This is something that greatly interests those who are building the next-generation Internet. So much so that Amber executives who set out to corral about $60 million in funding, were inundated with interested investors during the four months they were raising money. All told, the company was offered more than $100 million. They settled at taking in $91 million- from investors that include the US government institutions, investment banks, telecommunications firms and an electronic maker.

The edge router device market is projected to be around $22 billion in 2003, up from $ 3.6 billion in 2000. In April 2001, Amber Networks was named by Red Herrring magazine in a list of 100 companies that represent the future, companies that ''despite the downturn are either disrupting existing markets or creating new ones altogether''.

It's already happening. In a remarkable deal that bucked the downturn and illuminated the path ahead, Amber Networks was bought out by Finnish telecom giant Nokia for a comfortable $421 million in August 2001. Amber's tale is of particular relevance to the tech sector. If India's Net-dependent companies are to go beyond their sweathouse-coding rep, they must occupy the myriad niches made available by the process of communications evolution. That is just what Amber did with great vision and skill.

For Amber's 230 employees spread across Bangalore and California, it is a time of celebration. "I'm going to spend more time with my family, visit India and improve my golf game."

There is laughter at the other end of the line.

(Sam) Mathan is speaking to me from Fremont, California, a week after he and his board decided to sell out to Nokia.

So did living in the time of a tech abyss affect their decision to make the sale?

"In this time (of the downturn), it was an irresistible offer," says Mathan frankly. "It's great for our employees, our shareholders, but it also showed that our technology was so refined that it fitted in with the future of a company like Nokia. Without them, our technology could not have hoped to access the kind of markets it now can."

Amber's windfall is an indicator that all is well with companies serving the Internet as it continues down what experts believe are the early stages of its evolutionary path. "What this deal says is that the opportunity to build the infrastructure exists in both the wirelines and wireless markets," explains Mathan, an alumni of Osmania University in Hyderabad. "I think the world has just cracked the Internet. We are just starting to stabilise."