The Elephant becomes a Tiger
and flies to the Moon:
India’s Political Economy
October 26, 2009
Quiz: How much does India’s
mission to the moon cost?
Kalavati, Shashikala and
India’s Nuclear Deal
• Background: What is the Indo-US Nuclear Deal?
• Who is Rahul Gandhi? Not related to Mahatma
Gandhi. Grandson of Jawaharlal Nehru, first PM
of India; son of Indira Gandhi who was PM for 14
years
• Rahul Gandhi’s speech (1)
and (2)
• Kalawati, the woman Rahul spoke of in Lok
Sabha (house of the people in the Indian
Parliament)
2
Main questions
I.
What was the nature of India’s
‘elephant’ phase?
II. What is the nature of India’s ‘tiger’
phase?
III. How did this transformation come
about?
IV. How does it affect different social
groups in India?
3
The change (1)
1950-80
• “Hindu” rate of growth
• Big state and state
interventionism
• License-permit-quota
Raj
• No corporate growth,
low corporate
profitability
• No global role
1980-present
• ‘Miracle’ rates of
growth
• State less
interventionist
• End to license Raj
• High corporate growth
& profitability
• Spectacular global
role
4
India now:
The Corporate Sector
• As of 2004-05, about 836 million or 77 %
were living below Rs.20 per day; the 10
richest Indians were worth $43.8 billion
• As of 2007-8, 40 richest Indians are worth
$351 billion; 4 richest Indians are worth
$180 billion
(Forbes)
5
Poverty and Hunger
• Under $1 a day: 34.3%
• Under $2 a day: 80.4%
• Under national poverty line: 30% (debated
figure)
• Ranks 66 out of 88 on the Hunger Index (23%
hungry, down from 32% in 1990); still worse than
Nepal and Pakistan
• Farmer suicides –182,000+ suicides since 1997
(according to some, one suicide every 30
minutes)
6
Two questions &
standard answers
Why this miracle?
• “freedom” from the
state
• Less regulation
• High consumption
• Globalization: free
trade, more foreign
investments, more
active stock market
Why such inequality?
• Still a lot of regulation
• High dependence on
agriculture
• Not enough skills
• Bad governance
• “People are not able
to take advantage of
globalization”
7
Quote from Nayyar
“This wonderful story about economic growth in India
is not quite a fairy tale. And everybody does not live
happily hereafter. Both phases of economic growth
had something in common.
Economic growth in independent India, respectable in
the first phase and impressive in the second phase,
was not transformed into development, for it did not
bring about an improvement in the well-being of
people. Independent India did make significant
progress during the second half of the 20th century,
particularly in comparison with the colonial past. But
poverty and deprivation persist. In fact, there are more
poor people in India now than the total population at
the time of independence. And, in terms of social
development, India has miles to go”.
8
Drivers of Growth
• Historically, big business has been very profitable in
India. How were profits generated? In the context of
World War I, a well-known Indian historian writes:
“While the war meant misery . . . for the majority
. . . it also contributed to fabulous profits by
business groups taking advantage of the War
demand, the decline in foreign competition, the
price differential between agricultural raw materials..
and industrial goods, and the stagnation or
decline in real wages (Sarkar, 1983, pp. 171–172).”
9
The famines of 1943
“Yet war and famine also meant super profits for
some, and as in 1914–18, a major step forward for
the Indian bourgeoisie. . . . The really fantastic
increase was not in production but in profits,
particularly speculative gains through profiteering
in food, share market operations and the black
market in general. The Indian bourgeoisie was a
specific kind of bourgeoisie, characterised by a
‘ravening greed’, and a mania for speculation rather
than initiative or efficiency in production” (Sarkar,
1983, pp. 406–407).
10
Big business in Independent India
• State-business collaboration
• Cheap inputs provided by the state for
development of business
• Nationalized banking gave control over the
savings of the common person to the
government which could then be
channeled to big business
11
Big business: 1950-85
• General feature: high corporate profits but
low output, low growth
• large oligopolies
• No domestic competition
• No global competition
12
Since 1980: Globalization
• Rajiv Gandhi, the PM, and a number of
other politicians and business leader see
opportunity
• Division within Indian business
re:globalization
• Globalizers win, lots of profit to be made
• Foreign companies eye large domestic
market
13
1991: turning point
•
•
•
•
Deepening fiscal crisis
Acute foreign exchange crisis
In 1991 in takes a loan from the IMF
Beginning of the process of structural
adjustment and neoliberal reforms
14
What are the neo-liberal reforms?
• Easing entry of foreign corporations
• Easing labour and environmental
regulations (especially in export
processing zones)
• Less state regulation
• More competition
• Privatization of public sector companies
15
The ‘miracle’ arrives
Drivers of the ‘miracle’:
• Outsourcing and growth of service sector
• Sell-offs of Indian companies
• Low cost production
• Lay offs and restructuring
• Growth of the middle class with
phenomenal growth in salaries
16
More ‘miracles’
• Spectacular growth of the ‘informal sector’
• Inequality across caste, gender and
religion
• Issues such as female infanticide
17
The agrarian sector
• Green revolution Phase 1 in the 60s
• Green revolution Phase 1 in the 90s
• Currently, highly intensified pace of
corporatization of agriculture
• Big question: could such inequality and
depravation be avoided?
18
India’s Society and
Social Relations
Main questions
• How diverse is India? Is it diversity or
inequality?
• What is the caste system? Does it still
exist?
• What is the relationship between different
religious communities in India?
• What is the meaning of secularism in
India?
20
Deeper questions
• Is India a democracy? How much
inequality can a democracy tolerate and
still remain a democracy?
• How does India’s social fabric compare
with the US and Canada?
21
India’s society:
some basic facts
• 1. 3 billion people
• 8 different religious groups. 82%
Hindus,13% Muslims
• Hindus have a hierarchical social
organization, known as caste
• 122 recognized languages; many other
dialects
• 672 million voters, 230 parties
22
Basic economic facts
•
•
•
•
•
70% survive on agrarian incomes
80% live in under $2 a day
42 million live in slums
2 million are homeless
90 million are marginal workers
23
The tradition of caste
Brahmin
(producers of knowledge, particularly theology and
interpretation of religious texts
Khsatriya (ruling classes/ political elites/warriors)
Vaishya (business classes)
Sudra (manual and menial labourers)
Untouchables, now called Dalits (the downtrodden)
24
Traditional role of caste
• prevent social mobility
• ensure a supply of manual workers
• prevent social equality
25
Caste in colonial India
• Fairly strong reformist movements started with respect to
the question of untouchability
• British referred to them as “depressed classes”
• Gandhi popularised the issue of untouchability by calling
them Harijans (the children of God). He argued for the
end to untouchability
• B.R Ambedkar argued for the end to caste altogether
(and if necessary, end to Bramhinical Hinduism) . Read
his seminal essay Annihilation of Caste
26
Who was Ambedkar?
• BHIMRAO RAMJI AMBEDKAR (1891-1956)
• Born into a Dalit family
• By virtue of his brilliance became a Barrister at
Law
• Was the first Law Minister of Independent India;
drafted the constitution; major disagreements
with Congress leaders, Nehru and Gandhi
• Converted to Buddhism in 1956 (along with
thousands of other Dalits)
27
Ambedkar’s theses on caste
• He disproved both dominant theses on caste
• The orthodox thesis that Sudras were born out
of the feet of ‘God’
• The modern thesis that they were non-Aryan
indigenous peoples inferior to the other three
castes who were of Aryan descent
• He argues that they are of the same ethnicity
and the Sudras were pushed to a lower status
because of their growing power and conflict
28
Ambedkar’s philosophy
His two main thesis were:
• The issue is not only to accept inequality and
end discrimination, but to establish political and
social structures which are premised on the
fundamental equality of all
• Justice can not be given from above (i.e. those
who are privileged). It has to be secured by
those who were victims of injustice
29
What happened at Independence
• The constitution was drafted by Dr.
Babasaheb Ambedkar.
• It became illegal to discriminate on the
basis of caste or religion
• Untouchability was abolished by law
• Untouchables came to be categorized as
Scheduled Castes
More faces of discrimination
30
ST and OBC
• Another category of Scheduled Tribes were also
recognized by the constitution. These are
primarily indigenous communities known as
Adivasis
• A third category called the Other Backward
Classes (OBC) – communities listed by the
government who have suffered systematic
patterns of disadvantage but are not included in
the Scheduled Castes or Tribes. They can be in
any religion.
31
SC, ST, OBC
• Scheduled Castes (SC)
16.8%
• Scheduled Castes (ST)
8%
• Other Backward Classes 27% (or more)
Even with conservative estimates, it appears
that more than 50% of India’s population
suffers systematic disadvantage and
depravation
32
Quotes from Ambedkar (1)
– It is mischievously propagated by Hindu scriptures that by serving the
upper classes the Shudras achieve salvation. Untouchability is another
appellation of slavery. No race can be raised by destroying its selfrespect. So if you really want to uplift the Untouchables, you must treat
them in the social order as free citizens, free to carve out their destiny.
•
–
What you have lost others have gained. Your humiliations are a matter
of pride with others. You are made to suffer wants, privations and
humiliations not because it was pre-ordained by the sins committed in
your previous birth, but because of the overpowering tyranny and
treachery of those who are above you. You have no lands because
others have usurped them; you have no posts because others have
monopolised them. Do not believe in fate; believe in your strength.
– From ambedkar.org
33
Quotes from Ambedkar (2)
• Caste cannot be abolished by inter caste
dinners or stray instances of inter caste
marriages. Caste is a state of mind. It is a
disease of mind. The teachings of the Hindu
religion are the root cause of this disease. We
practice casteism and we observe Untouchability
because we are enjoined to do so by the Hindu
religion. A bitter thing cannot be made sweet.
The taste of anything can be changed. But
poison cannot be changed into nectar.
from ambedkar.org
34
Ambedkar on the Constitution
On the 26th January 1950, we are going to enter into a life of
contradictions. In politics we will have equality and in social and
economic life we will have inequality. In politics we will be
recognising the principle of one man one vote and one vote one
value. In our social and economic life, we shall by reason of our
social and economic structure, continue to deny the principle of one
man one value. How long shall we continue to live this life of
contradictions? How long shall we continue to deny equality in our
social and economic life? If we continue to deny it for long, we will
do so only by putting our political democracy in peril. We must
remove this contradiction at the earliest possible moment else those
who suffer from inequality will blow up the structure of democracy
which this Constituent Assembly has so laboriously built up.
from ambedkar.org
35
Inequality across religion
• The British left a highly communalized
polity, scarred by the partition
• In India, the Muslim community found itself
depleted of its middle class (who left for
Pakistan)
• The community was left with a rather
sharp divide between its upper classes
and its lower classes
36
Situation of Muslims (1)
• The literacy rate among Muslims is substantially
below the national average (59% as opposed to
65%). Only 3.4 per cent of the Muslim population
obtains graduate degrees
• In the elite civil services, comprised of the Indian
Administrative Service (IAS), the Indian Foreign
Service (IFS) and the Indian Police Service
(IPS), Muslim representation was at 3 %, 1.8 %
and 4 %
37
Situation of Muslims (2)
• Muslims have the second highest levels of poverty with
31 % below the poverty line. Incidence of poverty among
urban Muslims is the highest (31%), followed closely by
SC/ST categories 36.4%.
• Worker Population Ratio for Muslim women are the least
from among all communities, more so in urban areas;
the participation of Muslims in regular jobs in urban
areas is quite limited compared to even the traditionally
disadvantaged SCs/STs.
• Other Backward Classes (OBCs) constitute 40.7 per
cent of the total Muslim population. In the total OBC
population, Muslim OBCs have a share of 15.7 per cent.
38
Structural Inequality
• Caste and religion-based inequality in
India are structural, i.e. they arise from
underlying social, political and economic
structures (rather than factors such as
lower access to education or jobs).
How did India try to address them?
39
Addressing Inequality
• Secularism: non-discrimination and
separation of state and religion (i.e. state
has no official religion
• Affirmative action (called reservation in
India): creating quotas for admission to
educational institutions and
Did they work?
40
Solutions?
• Secular democracy fulfilled a very
important role but generated
contradictions: it did not reduce the
structural inequality between different
religious communities, particularly Muslims
• Rise of communal politics and
fundamentalist politics
41
Dalit Muslims
• Muslims got some protection for language,
separate educational institutions, freedom
of religion etc. but not affirmative action
• The Dalit Muslim movement claims that
80% of India’s Muslims gained nothing
from these changes. They demand
affirmative action based on religion and
socio-economic situation
42
Politics of Affirmative action
• Affirmative action resulted in some progress of
individuals but has done little to change the
social location of disadvantaged groups
• Upper castes and classes have reacted strongly
against these reservations
• At present major social conflict exists over
whether SC/ST/OBC should have reserved
seats in elite institutions (such as the top
engineering, business and medical schools).
The fear is that this may lead to admission of
students with less merit and destroy the
credibility of these institutions
43