Inequality in India:
A Historical Perspective
Kunal Sen
IDPM and BWPI, University of Manchester
Outline of Presentation
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Inequality in Mughal India (1600-1757)
Inequality in British India (1757-1947)
Inequality in Independent India (1947-)
Globalisation and Inequality
Social Structure and Inequality
Conjectures on the Future Path of Inequality
Mughal India, 1600-1757
(source: Osamo Saito, The
Economic History Review Lecture
2012)
“The Great Mughal Consumes
Everything”
• An economy based on the extraction of vast revenues from
the countryside to the centre for redistribution down to the
chain of military and civilian officials of the regime, each with
his own retinue of retainers to be supported.
• “The Mughal empire was an insatiable Leviathian, defined …by
its unlimited appetite for resources” (T. Roychaudhuri).
• But (not so) surprisingly commerce was promoted.
• Payment of land tax in cash.
• Lower taxation of cash crops.
• Very high inequalities.
Class differentials in per capita
household income
Chōshū's Lower class = English
agricultural labourers = 1
30
Elite
Middle
Lower
20
10
0
India
5
England
Chōshū
British India
Inequality, British India
• Slight decline in Gini from 0.35 to nearly 0.30 (Atkinson).
• Two counteracting forces.
• One, deindustrialisation, leading to wage stagnation and rise
in rural poverty.
• Two, with rise of commerce, size of the middle groups
increased – lower level officials, commercial elites – bankers
and money lenders, middle to rich peasants.
• (source: T. Roy, AEHR, 2007).
• This was unlike Mughal India where a few hundred families of
mansabdar (military officer) rank had access to one third of
the gross produce of the land, persisted in the early years of
British India.
Independent India
Inequality in India, 1950-
Inequality in China, 1981-
Globalisation and Inequality in
India
• The first period of globalisation, 1780-1914 (Findlay and
O’Rourke)
• Ratio of Trade to Income increased from 1-2 per cent in 1800
to 20 per cent in 1914 for India.
• International flow of capital also higher than pre or post
colonial period.
• Inequality did not show an increase or decrease in this period.
• Trade collapsed in the inter-war period, and then after
Independence, India disengaged with the world economy, to
an inward looking economy.
• Second period of globalisation, 1985 onwards, as India
liberalised its trade and investment regime.
• No clear sign of inequality increasing or decreasing in this
second period too.
Social Structure and Inequality
in India
• The caste system – a system of elaborately stratified social hierarchy –
implied a hereditary caste hierarchy that prescribed individuals’
occupations.
• Provided by the jajmani system, which is a system of hereditary patronclient relationships between the jajman (the patron) -- usually, landed
proprietors from the upper and middle castes – and the kamins or
balutedars (the clients) – usually, unfree agricultural labourers from the low
castes, who were expected to provide labour and other specialised services
to the landed upper and middle castes.
• Significant endogamy within castes and religions.
• Perhaps the most distinct example of inequality of opportunity.
• Radical affirmative action programmes since Independence, and significant
political mobilisation and empowerment of the Dalits (SCs) since the 1980s.
Social Structure and Inequality
(from Clark and Landes 2012)
Conjectures on Future Path of
Inequality in India
• Slow increase in inequality of outcomes (particularly around
regional inequality), as some regions take advantage of
globalisation more than others.
• But inequality of opportunity may decrease, again very slowly
(due to persistence of endogamy, and weak provision of
education to the disadvantaged), as economic change allows
socially disadvantaged castes to move out of their castedetermined occupations (agricultural labourers) in rural areas,
and as India urbanises.