PAUNA, INDIA -- Shivaji Singh, a powerful upper-caste landlord who lives in this squalid village, is preparing for war with India's lower castes. "The situation is rising beyond tolerance," he said, because of an affirmative-action plan proposed by the faraway government in New Delhi that would set aside about half of all public jobs for lower- and lower-middle castes.

Enraged by the plan, rival upper- and lower-caste landlords with private armies are stockpiling weapons in this lawless region of Bihar state. "We're just waiting for the other side to come onto the battlefield," Singh said. "There are about 17,000 people in this area who will die for me."

All across India's densely populated north, an emotional debate over affirmative action is igniting ancient hatreds over caste, the countless separate social classes into which Hindus are born that affect virtually all aspects of their lives. The debate began in erudite courtrooms and political halls but now threatens to trigger mass violence.

"Because of {affirmative action}, the backward classes want to finish the forward castes," said Sahjanand Sharma, an upper-caste school principal who had four fingers chopped off last week when a lower-caste private militia attacked a train in which he was riding in Bihar. "I think there will be a civil war."

Behind such fears in rural areas lies a divisive struggle over economic power and national identity in modern India, a stratified society that encompasses the feudal countryside and cosmopolitan cities.

Immediately at issue is the proposal announced two months ago by Prime Minister V.P. Singh to more than double the number of public-sector jobs now set aside for lower castes. Members of certain tribal groups and some of the lowest castes already benefit from such job quotas. Singh's plan would extend them to other lower castes, lower-middle castes and possibly some underprivileged non-Hindu groups.

Implementation of the plan was suspended temporarily by India's Supreme Court after riots and protest suicides by upper-caste students. But caste violence has only accelerated since then, claiming more than 100 lives.

Arrayed on one side of the issue are those from India's privileged classes who oppose setting aside jobs on grounds that the country cannot afford it. Quotas, they say, entrench caste divisions and retard economic progress by rewarding people on the basis of birth, rather than merit.

"How are we going to break the shackles of poverty, ignorance and disease if we are going to institutionalize mediocrity?" asked Karan Singh, an upper-caste prince and former ambassador to the United States.

He and others argue that India's public sector already is bloated, inefficient and corrupt. More quotas for lower castes will discourage individual enterprise and bequeath the country incompetent doctors, pilots and scientists, they say.

Lower-caste activists counter that the country's biggest social and economic problem is rampant caste discrimination that strips a majority of Indians of personal dignity and the opportunity to improve their lives. Government job quotas may not be a perfect way to end such discrimination, they say, but setting aside jobs will encourage assimilation of the lower castes and quickly correct inequities.

The opposing camps disagree about how to promote American-style social and economic mobility in a country in which for the majority of people all actions of daily life -- with whom you eat, how you bathe, where you live and what job you do -- are heavily influenced at birth by caste, Hinduism's divinely ordained assignment of worldly worth.

There are thousands of castes and sub-castes in India, but they can be sorted roughly into three groups. An estimated 15 to 20 percent of the population belong to the dominant upper castes, including priestly Brahmins and martial Rajputs. At the bottom are the lowest castes, also about 15 to 20 percent of the population, including the destitute "untouchables" whose cause was championed by Mohandas K. Gandhi.

In between is India's impoverished majority, the so-called "other backward classes," lower and lower-middle castes ranging from landless laborers to subsistence farmers, fishermen, goldsmiths, potters and non-Hindu minorities such as Moslems and Christians. This great laboring mass is the target of Singh's new affirmative-action plan, which could affect as many as 500 million people, depending on how the final quota lists are drawn.

Some upper-caste quota opponents argue that caste barriers will only be broken by the spread of capitalism and the growth of a middle class that prides itself on the privileges of wealth, not of caste. They say that caste identities already are dissolving in the consumerist flotsam of partially Westernized cities such as Bombay and New Delhi. Since caste has long been tied to land ownership, they say that what is needed is rapid industrialization, urbanization and the nation's integration with the world economy.

There is evidence for this view. While some Brahmins still wear saintly sashes, and some peasant castes don distinctive turbans or other styles of dress, nowadays caste is not always easy to determine on India's chaotic city streets. In the north, upper-caste members tend to have lighter skin and more Aryan features than members of lower castes, a fact that contributes to widespread prejudice against dark-skinned Indians, even those of high birth.

But some urbanized youth say that while their parents could decipher caste with a few subtle questions about family names and geographical origin, they often cannot even guess at caste status without asking directly -- a query they regard as impolite.

Because of all the confusion, city counterfeiters do a brisk business in false lower-caste certificates that allow upper-caste applicants to take advantage of job or education quotas.

As India's urban middle class grows -- its size is now estimated at between 40 million and 80 million people -- the cities have attracted large numbers of lower-caste members who have escaped their birth status to compete as equals with the upper castes in business and education, without the benefit of quotas.

Consider Chanchal Shekar, an honors anthropology student at prestigious Delhi University born to a lower-middle caste in Bihar, where upper-caste feudal warlords hold the strings of power. Shekar's illiterate father broke with generations of caste tradition to start a small trucking business with money raised by selling the family's jewelry. Through hard work, he parlayed the business into land and made enough money to send his children to boarding schools.

Now the younger Shekar is a hero at home -- the only person from a lower-caste town of about 10,000 ever to attend a university. "It was due to the sheer efforts of my father," Shekar said.

Shekar won scholarships by excelling at competitive examinations. He says job quotas are essential to improve the lot of those he left behind. The problem, he said, is that in India "all kinds of mechanisms for controlling society are concentrated among the 12 to 13 percent" who belong to the highest castes. Only the rapid social change that quotas attempt to engineer can break that grip, he said.

Indians of lower birth say caste barriers -- grounded in religion and social prejudice as well as in economics -- are too strong to be broken in a significant way by individual effort alone. Even a rapid spread of market capitalism, itself a dubious prospect given the socialist outlook of most Indian politicians, would not erode the power of the highest castes, they say.

In the rancid villages and tent cities that are home to most of the subcontinent's estimated 100 million "untouchables," that argument acquires fresh power.

A few miles from Shekar's university, Om Prakash and his family have been living in a garbage dump for 20 years, working as shunned ragpickers -- freelance trash collectors. "This is the place for us. We can't get out of here," Prakash said, flicking flies off a friend. "There's always hope, but we never reach anything. I'm sure my grandfather hoped, too."

Why doesn't Prakash's family take advantage of the educational and employment quotas available for untouchables?

Prakash answers coldly. His brother did that, earned a college degree and is now working as a ragpicker in Haryana state. "Even if I work hard, if I go forward one step, there are 10 people pushing me back again," he said.

Prakash's story suggests that India's oppressed classes do not necessarily see quotas as the key to success. Indeed, while Prime Minister Singh is widely accused of springing his quota plan to win support from the populous lower castes, it is not clear that affirmative action is a vote-winning idea in India.

Polls taken by The Policy Group in New Delhi before last year's national elections found that only about half of the members of India's lowest castes, called scheduled castes, favored more job quotas, while a strong majority of non-scheduled castes wanted existing quotas reduced or eliminated.

In dozens of conversations with upper- and lower-caste Indians held in city universities and villages populated by illiterates, not one upper-caste member supported quotas and not one lower-caste member opposed them.

Such polarization is being exploited by political leaders and feudal landlords on both sides of the issue. Not all lower-caste members are impoverished, and in states such as Bihar, Haryana and Uttar Pradesh, the fight in favor of quotas frequently is being led by economically powerful landlord-thugs who command sizable private militias. The presence of such private armies is one factor feeding fears of an open caste war in the countryside.

Quotas such as the ones now being proposed by New Delhi were imposed decades ago in some southern states following mass agitations by lower castes. But while quotas bought peace in the south, they have increased polarization in the north. Millions of upper-caste members locked out of government jobs in the south have migrated north, carrying resentments with them and increasing caste competition for jobs.

One complication is the high prestige attached here to jobs in the central government. India's massive federal bureaucracy wields wide powers over everyday life and offers privileged officials innumerable chances to line their pockets illegally. Despite tentative steps recently to liberalize the economy, businessmen are frequently looked down upon as vultures tainted by relatively low-caste status. These factors endow India's debate over government job quotas with a power it would not have in the West.

Free-market economists say the answer is to eliminate the government's role, forcing more competition on the playing field of economic merit. But Indian politicians depend on the bureaucracy's grip for influence and money, as do the largest government-sanctioned business houses. Nobody expects that interlocking complex of government and business, which is overwhelmingly dominated by upper castes, to be broken up soon.