Themes > Current Issues
03.10.2007
Incorporation and Exclusion by the Indian State
Jayati
Ghosh
Despite
six decades of independence, the development project is nowhere near completion
in India. In fact, some elements of that project seem even less likely
to be achieved than in the past, despite fairly rapid economic growth.
This necessarily raises questions about the relationship between the state
and economic development, and requires some assessment of the class character
of the state as well as the kinds of changes this has undergone over this
period.
Taking a long view, there are some clear achievements of the Indian economy since Independence – most crucially the emergence of a reasonably diversified economy with an industrial base. The past twenty five years have also witnessed rates of aggregate GDP growth that are high compared to the past and also compared with several other parts of the developing world. This higher aggregate growth has thus far been accompanied by some degree of macroeconomic stability, with the absence of extreme volatility in the form of financial crises such as have been evident in several other emerging markets.
However, there are also some clear failures of this growth process even from a long run perspective. An important failure is the worrying absence of structural change, in terms of the ability to shift the labour force out of low productivity activities, especially in agriculture, to higher productivity and better remunerated activities. Agriculture continues to account for around 60 per cent of the work force even though its share of GDP is now less than 20 per cent. In the past decade, agrarian crisis across many parts of the country has impacted adversely on the livelihood of both cultivators and rural workers, yet the generation of more productive employment outside this sector remains woefully inadequate.
Other major failures are in many ways related to this fundamental failure: the persistence of widespread poverty; the absence of basic food security for a significant proportion of the population; the inability to ensure basic needs of housing, sanitation, adequate health care to the population as a whole; the continuing inability to ensure universal education; the sluggish enlargement of access to education and employment across different social groups and for women in particular. In addition there are problems caused by the very pattern of growth: aggravated regional imbalances; greater inequalities in the control over assets and in access to incomes; dispossession and displacement without adequate compensation and rehabilitation.
Seen in this light, it becomes apparent that a basic feature of the process of economic development thus far has been exclusion: exclusion from control over assets; exclusion from the benefits of growth; exclusion from the impact of physical and social infrastructure expansion; exclusion from education and from income-generating opportunities. However, exclusion from these has not meant exclusion from the system as such – rather, those who are supposedly marginalised or excluded have been affected precisely because they have been incorporated into market systems.
Thus, peasants facing a crisis of viability of cultivation have been integrated into a market system that has made them more reliant on purchased inputs in deregulated markets while becoming more dependent upon volatile output markets in which state protection is completely inadequate. The growing army of "self-employed" workers, who now account for more than half of our work force, have been excluded from paid employment because of the sheer difficulty of finding jobs, but are nevertheless heavily involved in commercial activity and exposed to market uncertainties in the search for livelihood. Those who have been displaced by developmental projects or other processes and subsequently have not found adequate livelihood in other activities, are victims of the process of economic integration, though excluded from the benefits.
This then leads to the question: how is it that an apparently democratic polity, where there is no question that electoral participation and even other forms of political voice are entrenched and growing, can continue to tolerate and even encourage such processes of exclusion? The issue of the class character of the Indian state is one that has been widely debated for decades, although in recent times the debate has become more muddy. One reason for the greater muddiness may be that the simple categorisations such as "bourgeois-landlord alliance" which were earlier used with great abandon, are no longer adequate to capture the complexity and change that characterise these relations. The past two decades have been particularly dramatic in changing both economic and political landscapes in ways that reflect dynamic class configurations and social changes.
Therefore, a consideration of the nature of the Indian state must now incorporate a number of new elements: the entry of finance capital and its complex relationship with productive capital; the emergence of regional bourgeoisies with national and even international aspirations; the greater impact of a new category of capitalists – middlemen in not just finance but also in trade, arms deals, government procurement and sale of public assets; the significant role of the middle classes, both urban and rural; the political and economic impact of the diaspora; the more vocal demands of social groups that still remain excluded from various economic spoils of the system; and of course, the essential requirement of legitimisation which is even more incumbent upon a state subject to electoral democracy.
The sheer complexity of the task of analysing the nature of the current Indian state does not make it any less urgent. Indeed, such an understanding is especially important in the current conjuncture when the economy is entering into a phase which may be characterised as "rampant capitalism". This phase of rampant capitalism is necessarily dynamic, that is to say it involves more confident private capitalist activity and creates more rapid and pervasive effects upon workers and citizens in general. It is also a phase in which various new forms of primitive accumulation emerge, as well as the creation of new markets through various means ranging from the privatisation of public services to the legal enforcement of intellectual property rights.
To manage such dramatic changes, domestic and international capital may well desire a more centralised and authoritarian polity which can control dissent and prevent messy obstructions to this process of rapid accumulation. Yet socio-economic changes in India are typically too complex to allow for such straightforward imposition of control. Responses to this can range from the less desirable forms such as divisive communally inspired tendencies, caste-based identity politics and regional strife, to the more progressive democratic movements that force the state to shift the direction of economic policies and processes to a genuinely more inclusive pattern of economic development.
Taking a long view, there are some clear achievements of the Indian economy since Independence – most crucially the emergence of a reasonably diversified economy with an industrial base. The past twenty five years have also witnessed rates of aggregate GDP growth that are high compared to the past and also compared with several other parts of the developing world. This higher aggregate growth has thus far been accompanied by some degree of macroeconomic stability, with the absence of extreme volatility in the form of financial crises such as have been evident in several other emerging markets.
However, there are also some clear failures of this growth process even from a long run perspective. An important failure is the worrying absence of structural change, in terms of the ability to shift the labour force out of low productivity activities, especially in agriculture, to higher productivity and better remunerated activities. Agriculture continues to account for around 60 per cent of the work force even though its share of GDP is now less than 20 per cent. In the past decade, agrarian crisis across many parts of the country has impacted adversely on the livelihood of both cultivators and rural workers, yet the generation of more productive employment outside this sector remains woefully inadequate.
Other major failures are in many ways related to this fundamental failure: the persistence of widespread poverty; the absence of basic food security for a significant proportion of the population; the inability to ensure basic needs of housing, sanitation, adequate health care to the population as a whole; the continuing inability to ensure universal education; the sluggish enlargement of access to education and employment across different social groups and for women in particular. In addition there are problems caused by the very pattern of growth: aggravated regional imbalances; greater inequalities in the control over assets and in access to incomes; dispossession and displacement without adequate compensation and rehabilitation.
Seen in this light, it becomes apparent that a basic feature of the process of economic development thus far has been exclusion: exclusion from control over assets; exclusion from the benefits of growth; exclusion from the impact of physical and social infrastructure expansion; exclusion from education and from income-generating opportunities. However, exclusion from these has not meant exclusion from the system as such – rather, those who are supposedly marginalised or excluded have been affected precisely because they have been incorporated into market systems.
Thus, peasants facing a crisis of viability of cultivation have been integrated into a market system that has made them more reliant on purchased inputs in deregulated markets while becoming more dependent upon volatile output markets in which state protection is completely inadequate. The growing army of "self-employed" workers, who now account for more than half of our work force, have been excluded from paid employment because of the sheer difficulty of finding jobs, but are nevertheless heavily involved in commercial activity and exposed to market uncertainties in the search for livelihood. Those who have been displaced by developmental projects or other processes and subsequently have not found adequate livelihood in other activities, are victims of the process of economic integration, though excluded from the benefits.
This then leads to the question: how is it that an apparently democratic polity, where there is no question that electoral participation and even other forms of political voice are entrenched and growing, can continue to tolerate and even encourage such processes of exclusion? The issue of the class character of the Indian state is one that has been widely debated for decades, although in recent times the debate has become more muddy. One reason for the greater muddiness may be that the simple categorisations such as "bourgeois-landlord alliance" which were earlier used with great abandon, are no longer adequate to capture the complexity and change that characterise these relations. The past two decades have been particularly dramatic in changing both economic and political landscapes in ways that reflect dynamic class configurations and social changes.
Therefore, a consideration of the nature of the Indian state must now incorporate a number of new elements: the entry of finance capital and its complex relationship with productive capital; the emergence of regional bourgeoisies with national and even international aspirations; the greater impact of a new category of capitalists – middlemen in not just finance but also in trade, arms deals, government procurement and sale of public assets; the significant role of the middle classes, both urban and rural; the political and economic impact of the diaspora; the more vocal demands of social groups that still remain excluded from various economic spoils of the system; and of course, the essential requirement of legitimisation which is even more incumbent upon a state subject to electoral democracy.
The sheer complexity of the task of analysing the nature of the current Indian state does not make it any less urgent. Indeed, such an understanding is especially important in the current conjuncture when the economy is entering into a phase which may be characterised as "rampant capitalism". This phase of rampant capitalism is necessarily dynamic, that is to say it involves more confident private capitalist activity and creates more rapid and pervasive effects upon workers and citizens in general. It is also a phase in which various new forms of primitive accumulation emerge, as well as the creation of new markets through various means ranging from the privatisation of public services to the legal enforcement of intellectual property rights.
To manage such dramatic changes, domestic and international capital may well desire a more centralised and authoritarian polity which can control dissent and prevent messy obstructions to this process of rapid accumulation. Yet socio-economic changes in India are typically too complex to allow for such straightforward imposition of control. Responses to this can range from the less desirable forms such as divisive communally inspired tendencies, caste-based identity politics and regional strife, to the more progressive democratic movements that force the state to shift the direction of economic policies and processes to a genuinely more inclusive pattern of economic development.
© MACROSCAN 2007