Political economy and social transformation in India

Political economy and social transformation in India

Social science engagements with contemporary India have mostly been around the question of change –social,economic,cultural or political  M.N. Srinivas, India’s most celebrated sociologist, for example, identified three core processes of social change – westernization, modernization, and secularization – through which social scientists ought to make sense of the changing Indian society. Industrial development and urbanization were seen to be essential if such changes were to materialize in a largely rural and agrarian society that India was at the time of its independence from the colonial rule. The political process, i.e., India’s experiment with democratic polity was but an aspect of these broader processes.
3.  The political process underway in contemporary India has not been completely independent or autonomous of the social and economic changes, instrumented by state intervention or by the expanding market. The two (democracy and the experience of socio-economic change) have of course reinforced each other, but the outcomes have not been entirely in conformity with any of the so-called classical models of social change/transformation.
4. POST 1947 PARTITION  At the time of its independence from colonial rule in 1947 India was confronted with many challenges. Division of the sub-continent in Pakistan and India resulted in large scale migrations and blood-shed.  Partition of the subcontinent remains the single largest episode of uprooting of people in modern history. According to available estimates as many as 12 to 14 million people left their homes to take up residence across the borders. The estimates of people who died in the “communal” violence during the period vary immensely, generally hovering in the range of 0.5 to 1.5 million.
5. Communal violence and the influx of refugees were not the only problems that the new state of India was confronted with at its “birth”. Unlike the nation-states of Western-Europe, India had not evolved as a homogenous “political community”. It was primarily the experience of participation in the freedom movement against the colonial rule that had brought the people from different walks of life together.  The diversity of India was not confined to visions of India’s selves and futures that its elite had. Diversities also had some concrete social and historical dimensions. Culturally and linguistically Indian people differed quite significantly. There were more than a dozen well-developed linguistic regions and languages with a sense of independent identity and culture.  Caste and Religion were yet another source of diversity that made the Indian society complex.
It was in this context of the challenges posed by partition and existence of significant diversities that India chose to follow the path of parliamentary system of democracy.  After prolonged deliberations, the Constituent Assembly under the leadership Dr. B.R. Ambedkar, framed a Constitution for independent India, which acknowledged most of these diversities, reflected diverse visions of India’s elite, granted limited rights to different communities to regulate their “personal” lives as per their cultural traditions, and made provisions for dealing with historically inherited disabilities of certain underprivileged groups, the Scheduled Castes (SCs) and Scheduled Tribes (STs).
7.  Inspired by the successes of socialist countries of Eastern Europe, particularly the erstwhile Soviet Union, and without compromising on the liberal form of democratic polity, India chose ‘mixed economy’ as a path for economic development. The State was to not only provide a regulative mechanism for the economy and markets to function in a manner that would bring growth and prosperity but was to also invest in building economic infrastructure and industrial production.
8. The Constraining Structure:  In the language and ideology of development, India at the time of its independence from the colonial rule was largely a backward country, with low level of national income and stagnant economy. In terms of demographic distributions only around 17 percent of its population lived in urban centers. Of the 83 percent or so who lived in rural India were dependent, directly or indirectly, on agriculture. Apart from agriculture, nationalist leaders and social scientists also wrote a great deal on the Indian village. Indian village has been an important ideological category in the modern imagination. As Beteille pointed out, the village ‘was not merely a place where people lived; it had a design in which were reflected the basic values of Indian civilization’
10. The Political Economy of Growth in India, 1950-1980 .When the British quit India in 1947 they left behind an economy scarred by two centuries of policies that aimed to put the empire first.  British invested heavily in a railway system that linked most of the major towns and cities in South Asia. They also sank considerable sums of money into the canal colonies of Punjab and provided new systems of property rights and commercial law in both rural and urban areas
11. The British could even maintain in 1947 that they had built India into the world’s tenth largest industrial power. There were large textile industries in Ahmedabad and Bombay, and an iron and steel industry in Bihar and Orissa (thanks mainly to Jamsetji Tata).
12. The loss in 1947 of the jute economy of east Bengal (first East Pakistan, now Bangladesh), as well as the loss of the major port city of Karachi, it is not surprising that India’s first plans for economic development took shape in an atmosphere of crisis. The First Five Year Plan (1951-56) was something of a damp squib and remained broadly neutral as between the agricultural and non-agricultural sectors.
13. By the early summer of 1991, India’s fiscal deficit stood at nearly 9% of GDP and the country had sufficient foreign currency reserves to finance only two weeks worth of imports. Moody’s and Standard and Poor had downgraded India’s international credit rating. Finance Minister Manmohan Singh’s budget was designed first and foremost to stabilize this situation.
14. By definition, this first wave of capital-goods based production would not be labor intensive; it would not create large numbers of goods for the under-employed peasants who wanted to leave the countryside to find more productive jobs in the modern sector.
15. Nehru believed that he could square this circle in two main ways: firstly, by making use of food aid from the USA, and secondly by means of land ceilings legislation that would break up unproductive estates and enfranchise efficient small farmers.
16. In a country where more than 75% of the people still lived in the countryside— agriculture’s share of GDP was as high as 58% in 1950, and not much less than 50% in the mid-1960s—it made little sense to waste capital on inefficient urban and industrial projects. The need instead was to fund new irrigation systems and off-farm employment growth in the countryside.
17. The Political Economy of Reform in India .The governments of Indira Gandhi and Rajiv Gandhi(1980-89) began to tilt economic policy more clearly in the direction of big business. The courting of foreign direct investment was still not a priority through the 1980s, although a few joint ventures were brokered in the autos sector.
18.  In place of garibi hatao (end poverty), the political platform on which Indira Gandhi made her name in the early 1970s, the Congress governments of the 1980s retired those parts of the Monopolies and Trade Practices Act which made it hard for big business to expand in core sectors like chemicals and cement. Some efforts were also made to liberalize credit for large companies.
19. Indira and Rajiv Gandhi took steps to tame labor activism in the organized sector, and to encourage private sector investments with limited tax concessions. Now, it was the private corporate sector that now began to contribute more to economic development, while capital formation in the public sector stabilized after a period of rapid growth in the 1970s.
20. Poor people in the countryside generally escape from poverty by migrating to towns or cities, or by winning more work in the countryside at higher real wage rates. There is some evidence that labor markets tightened in the 1980s in several states, including West Bengal, Andhra Pradesh and Karnataka.
21. India had some of the highest rates of effective protection anywhere in the world. These barriers encouraged Indian business to provide goods and services that were increasingly unwelcome at home and that no one else in the world would buy. Early proponents of reform wondered aloud why Indians at home were condemned to poor service and poor jobs at the hands of the Permit-License-Quota Raj while Indians abroad were acclaimed for their hard work and innovation.
22. By the early summer of 1991, India’s fiscal deficit stood at nearly 9% of GDP and the country had sufficient foreign currency reserves to finance only two weeks worth of imports.  Moody’s and Standard and Poor had downgraded India’s international credit rating. Finance Minister Manmohan Singh’s budget was designed first and foremost to stabilize this situation.
23.  The government of Narasimha Rao made efforts to liberalize India’s trading regime, but tariffs in India still averaged close to 30% and the ratio of international trade to GDP remained under 25% (low by global standards). More progress was made with industrial policy.
India is still less dependent on world market conditions than many other emergent developing countries, but that dependence is set to grow. India is not immune to global crises, whether stock market crashes, rising energy prices or adverse climate change. Internally, the GOI has major political issues to negotiate in future, not just with regard to forms of cultural nationalism, including a possible backlash against “Westernization,” but also in regard to gender issues (the role of women in the workforce, most notably) and the management of urban poverty or the containment of urban unrest.
25. The privatization of space in India’s cities surely hints at another future as well: that of the Latin America city, with all its glitz, crime, segregation and violence. Whichever way it goes, the future for economic development and social change in India is intimately bound up with its cities, and with the politics of urban management.

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