NEARLY one-and-one half million American Indians live scattered across the country, about half in urban poverty and the other half on desolate reservations in the scrawniest parts of several Western states. Basically forgotten by the general public, the Indians have suffered the ravages of hard times economically and deep federal budget cuts in aid, which together threaten what hope they might have left for self-sufficiency and a decent kind of life.

Funds for Indian programs will likely be no more than $2.3 billion for the coming year, $353 million less than 1983 and $500 million less than 1982. Even the ugly alternatives for economic gains--large scale mining and exploitation of gas and oil reserves held on tribal lands--are becoming less and less reliable as world energy prices drop.

Against this background a letter came East last month from Porcupine, South Dakota--from a bitter Lakota Indian. Russell Means. Means is running for president of his tribal council with a slate of candidates representing a program known as TREATY--an acronym for the True Revolution for Elders. Ancestors, Treaties and Youth His platform is utterly revolutionary--complete and immediate severance of relations with the United States.

"It we get elected we will become an independent nation," Means said in an interview this week. "We wouldn't be breaking away from anything. We would be reaffirming our freedom under United States law and international law."

As backing for his rather extreme view, Means cites Article Six of the Constitution, which dictates that the U.S. can only enter treaties with sovereign nations, and he cites the fact that the government has signed four treaties with the Lakota nation. Means says that his tribe "is a sovereign nation, and it is time we started acting sovereign."

The frustration implicit in Means' words is not unique. Indians around the country are rightly angry over years of shabby treatment at the hands of the government. They are rightly dismayed over their powerlessness, and the double-edged sword of development. Companies like Union Carbide, working with the Reagan Administration's blessing, are moving to get rights to strip-mine the Lakota land, one of the poorest in the country, a bare plot of 4500 square miles in southwest South Dakota. Their goal is the fantastically lucrative uranium bed that sits under the land and that could, if properly cultivated, prove a panacea to the tribe's poverty. It could mean, among other things, hundreds of thousands of dollars for education and jobs. It could also scatter acres of carcinogenic dust and toxic uranium across the tribe's reservation.

BUT THE hazards of development only hint at the complexity of the questions facing Indians like Russell Means. In the Reagan Administration's drive for a new "federalism," the Indians appear to be regaining a tremendous-many say overwhelming--amount of jurisdiction over their economic and governmental affairs. But it is not clear that this independence, which would appear to be precisely what many Indians want, will do much to get at their fundamental problems of alcoholism, poverty, and isolation.

On the face of it, the rhetoric and general aims of Reagan officials appear laudable. "Indian tribes must become more self-sufficient and less dependent on the federal government," says assistant secretary of the Interior Kenneth L. Wasco, who is a Wasco Indian from Oregon himself. "Sometimes when, you're pressed, that's when you make your best decision." While that new power has meant hard choices, for some tribes Reagan's four years have been successful.

*The White House has worked to pass legislation to establish "free-enterprise zones" on reservations, permit tribes to issue their own tax-free bonds to raise capital for development projects and give the tribes greater flexibility in deciding how they will manage their own mineral deposits.

*The Jicarilla Apaches in New Mexico now have 100 percent ownership of oil and gas wells on their land and won a 1982 Supreme Court ruling which allowed them to impose so-called "severance taxes" on oil, gas and minerals extracted from their lands.

*Navaho Indians in Arizona and New Mexico successfully negotiated with Atlantic Richfield to turn an initial $300,000 ARCO offer for right-of-way to build a pipeline across their land into a contract that will bring the tribe $78 million over the next 20 years.

*Indians across the West are asking for--and getting--hiring quotas at mining and drilling sites, special training programs, and education funds from the corporations they sell their resources to. In coal-rich Wyoming, tribes are renegotiating leases to get a larger share of the selling price for coal.

On top of all this the Bureau of Indian Affairs has been steadily contracting out to the tribes more and more of its police, job-training, education and social programs every year. In 1983, BIA handed over control of $235 million of these projects to the tribes, up from $50 million in 1976. Congress last year appropriated $5 million in "seed money" to attract light industry and business to the reservations.

The surface of things, then, seems rosy. The tribes own, altogether, 52 million acres of land with 5 percent of the nation's oil and gas reserves, 470 billion tons of high-quality coal and half of the nation's uranium supply, valued at $400 billion. The southwestern Navahos, with 160,000 members, are making $55 million a year from mining and pumping petroleum.

BUT THE numbers aren't adding up everywhere. Oil and gas production brought the Indians $169 million nationwide in 1980, but with 400,000 Indians living on energy-resources land, that amounted to only $422 per person, a drop in the bucket. Almost 37 percent of all Indians families earned less than $10,000 in 1980, and half of those earned less than $5000. Less than 20 percent are earning more than $20,000 yearly, compared to about 40 percent for the rest of America.