Soaring alcoholism and domestic abuse accompany influx of cash to area which will host country's first grand prix

Until a year or so ago, Narangpura was a small village like thousands of others in northern India. Its roads were muddy troughs in the rainy season and dust in the baking summer heat. There were no toilets, no sanitation, electricity for a couple of hours of day, no clinic and only a basic primary school. Most of its few thousand inhabitants were barely literate and many of the children were malnourished.

Then came change, in the shape of India's first Formula One track.

The £270m, three-mile circuit is part of a vast, multibillion-pound project to develop a huge swath of land around New Delhi and kick-start development in the neighbouring state of Uttar Pradesh, where poverty levels are on a par with sub-Saharan Africa.

The track – one of the fastest in the world with state of the art stands and a 150,000 capacity – is part of a 2,500-acre "Sports City" along with a hockey stadium, a cricket ground and a tennis academy. In the next weeks it is expected to be inspected and get the go-ahead given for India's first Formula One grand prix in October.

"The track is almost ready. It will be a major economic boost to the entire area," said Askari Zaidi of Jaiprakash Associates Ltd, the construction firm involved.

The development has certainly changed life in Narangpura and the surrounding villages. The roads remain in an abysmal state, electricity is a rare occurrence and the school is as decrepit as ever.

But, with huge sums of cash paid by the construction company in compensation for their land, many villagers have built themselves large and often gaudy homes or bought at least one, sometimes several, expensive cars.

"My family earned 70m rupees [£1m] and it was split between five brothers," said Mahahi Nagar, 40. "I spent all my share on my house."

Nagar's new home is a five-bedroom, two-storey white and green cement edifice which he admits is "a bit big". Standing outside is a £15,000 four-wheel drive SUV which was a dowry gift from the family of his 20-year-old son's new bride. She came from a neighbouring village where many farmers have also been compensated for the loss of their land for the Formula One track.

Though proud of his house, Nagar is worried about the future. He has no skills and no job and is "eating money".

"I don't know what I'm going to do when it's gone," he said.

Women in the village say alcoholism – long a problem in such communities – has reached new levels. So too has domestic violence.

"It's really bad now,"said Kishan, 36. "They have nothing to do and lots of money so the men spend all their time drinking. And they treat their wives badly. Why should they care? They have enough money to get themselves another wife in a single day only."

Others talk of drunk teenagers brawling in the streets.

Experts say that the tidal wave of cash has meant social change that normally takes decades has occurred overnight.

"There is a natural process by which rural communities become part of a city and its economy," said Dr Rajiv Kumar, an eminent Indian economist. "But when it is accelerated there is more risk of social disruption."

The villagers of Narangpura have now launched a court action in a bid to get more compensation for their lands. They say they have been underpaid.

Such claims are common all over India as the economy continues to grow at up to 8% annually and millions of pounds are poured into infrastructure or commercial schemes or flagship projects such as the Formula One track. Conflicts often turn violent.

Close to Narangpura is the village of Atta Gujram. Here there are fewer big houses but the same problem. "A lot of people have already spent all their money, basically on cars or drinking," said village head Lajja Ram, 68.

Once, hundreds of teenage girls from the village attended a nearby school, walking to class from their homes. The Formula One track has been built between the school and the village. To reach the school now involves an hour's journey in a bus organised, after consultation with the villagers, by the construction company.

"F1 has made a difference for these villages but not in the positive sense. The girls are not coming to college regularly. Even if they are, they have to leave early get the bus home," said Dr Ramesh Choudhury Gupta, the headmaster.

Preeti Nagar, 17, is one of those from Atta Gujram who still makes the daily journey "because there is nothing in life without education". But her friend Monika, 14, is among the majority who have dropped out. "The bus is so crowded. And it comes late or at the wrong time. And my parents don't want me travelling alone with boys," she said.

The developers of the track says there is huge enthusiasm for motorsport in India and that the new facility will bring out local talent. India already has the Force India team run by beer and airline tycoon Vijay Mallya, a staunch supporter of the Delhi track.

Though few of the villagers have heard of motor racing, the men do like their new cars.

Nagar's son recently drove his new SUV from the village to the beaches and bars of Goa and back, a total distance of 2,500 miles, to "have fun with friends".

"We had a great time," he said. "It was a fantastic drive."