Indian policymakers have essentially focused on rural income support and rural development to achieve the avowed goal of inclusive growth. This approach recognizes that the rural-urban divide is the central economic fault line in India (indeed, in any developing country), and that the vast majority of the country’s poor are in its villages. Rural Indians lag in education, health, incomes and consumption levels. Lacking the right capabilities, they are at a disadvantage in competing in a market-oriented, open economy. They may not be worse off in absolute terms, just shut out of the new opportunities that have arisen for India’s urban, educated elite.
Another social and economic divide may be more pernicious, though. Even within India’s villages, there are haves and have-nots. At the bottom of the heap are India’s Dalits, whose traditional social status is so low that they are outside and below the country’s complex caste hierarchy. Even when government spending reaches down into villages, the Dalits, living in segregated neighbourhoods, with the worst access to health and education facilities, may see little of the benefits.
In this situation, one has to sit up and take notice when Chandra Bhan Prasad, an influential Dalit thinker and writer, says, “Capitalism is beginning to break the caste system.” Prasad, in collaboration with Devesh Kapur, director of the Centre for Advanced Study of India at the University of Pennsylvania, is conducting a survey of 20,000 Dalit households in Uttar Pradesh, in some ways the heartland of India. Already, the survey is yielding evidence of economic progress among Dalits, supported by the country’s rapid growth.
One can argue that the examples of economic improvement are trivial compared with the gains of those now working for multinationals. But in rural Uttar Pradesh, this is at least a start.
The market-oriented economy, and the investment and growth that it has spurred, have finally created a pathway to progress for more Dalits. Migration to cities is one key aspect of this process. Not only does migration give access to urban opportunities, but it has the potential to destroy the basis of caste itself. Unlike African Americans in the US, who cannot escape their appearance, Dalits in cities far from home have the opportunity to change their names and reshape their identities. This may be the first step in getting an education, participating in stronger social networks than their own, and eventually climbing the economic ladder.
Famed social anthropologist M.N. Srinivas observed the identity shift part of this phenomenon for many lower caste groups several decades ago, and labelled it “Sanskritization”. Migration has a positive knock-on effect as well. As Dalits leave villages, rural labour becomes scarcer and commands higher wages.
If one accepts the value of capitalist dynamics for the bottom of the caste pyramid, then the policy prescription should be not just rural development, but faster development of India’s towns and cities. Regional towns, in particular, could be growth poles with the right infrastructure investments, taking the pressure off the big metropolitan areas, which are often the political capitals as well. Job creation for the unskilled and semi-skilled, which will require labour market reform as well as other changes in government regulation and taxation of small and medium enterprises, also becomes a policy imperative. Essentially, the government must speed up the Schumpeterian process of creative destruction, which can sweep aside inefficient social systems as well as outmoded techniques of production and firms.
Of course, capitalism is not a guaranteed destroyer of discrimination. The US and Latin America provide stark examples of both persisting side by side. But capitalism matched by some degree of social democracy can do the trick. As long ago as the 1920s, southern India was swept by a social movement which gave the lower castes political clout and “self-respect”. Democratic politics, giving weight to numbers, solidified the gains. Access to education was achieved not just by quotas, but by expanding supply. But the total pie was always too small. Liberalization and rapid growth have begun to change that. India’s pioneer software firms, based in the south, cared for your programming skills, not your caste or accent, as they sought to compete in global markets.
In the end, Prasad is circumspect: “Economic expansion is going to neutralize caste in 50 years. It will not end caste.” One could qualify that to “economic expansion and good public policy”. One can also argue that the direction public policy needs to take in health and education will be shaped by economic expansion and judicious use of market incentives. Policymakers need to think about how to hasten the process of undermining discrimination, by expanding the supply of, and access to, health, education and jobs, not perpetuating struggles over quotas. Maybe neutralizing caste is good enough: Caste can remain like the markers of national origin (Irish-, Italian-, or Indian-American)in the US, without being a basis foroppression.
Nirvikar Singh is a professor ofeconomics at the University of California, Santa Cruz. Your comments are welcome at eyeonindia@livemint.com