India is rising, but at a social cost
Weekly Pulse
June 2-8, 2006
India is changing, and changing fast. The Western world, and, for that matter, the Indian elites, may be excited about it, but I tend to see this change differently: Capitalism is surely developing the country economically, but its social consequences are turning out to be quite grave. Social cleavages in India’s ethno-religiously diverse polity are widening, simply because the fruits of economic transformation are uneven.

It was surely a different India I had visited 11 years ago, the time when the country was in the budding stage of its capitalistic march that began in 1991 under the stewardship of the then Finance Minister and present Prime Minister Manmohan Singh. The middle class was there, but it lived a relatively simpler lifestyle. As always, the mass of poor Indians could celebrate life even amid poverty. They still do, but you have a different, quite expanded middle class these days. It is a middle class produced primarily by India’s IT success, and it is hooked on to the mega mall culture.

Whether it is the so-called Silicon Valley in Bangalore, or its emerging rivals in other cities, such as in Delhi’s Gurgaon or Noida areas, the IT success is paralleled by growing consumerism. No surprise that Koramangala, the IT hub in Bangalore, also has Asia’s largest Adidas store. Name any Western brand in garments, shoes and the rest that is not available there, or in and around places in other Indian cities, from Hyderabad to Pune, where tens of thousands of young software engineers outsource for primarily US firms.

They work overnight at call centres, get hefty salaries and then spend much of that over the weekend buying Western products. One Western hand gives the money, the other one takes it away. It is as simple as that. The West, therefore, has a stake in India’s IT growth, because its capitalists enjoy double benefits: outsourcing cheaply and marketing expensively. Their excitement about India’s IT revolution, which finds so much mention in the Western media, is, thus, understandable.

Capitalism’s Consequence

But then this is in the very nature of capitalism, which may have cruel social consequences but it is the only system that really generates economic growth at the end of the day. In India’s case, however, the tale about the current economic success will be half told if we fail to answer what we mean by success in the first place. Does this mean improvement in infrastructure, lessening of social tension, or reduction in poverty?

It is true that tens of thousands of young Indians have made a huge difference by making India the world’s largest software exporter, but has this fact alone made a commensurate difference in furthering infrastructural development, social cohesion or the reduction of poverty?

Infrastructural development at least in Bangalore is ages behind its globally projected Silicon Valley status. However, this is not the case in Delhi, a section of which now has a modern subway, and Hyderabad, which is the most attractive place now for IT investors and workers. But what about rural India, where nearly two-thirds of people reside? Or, for that matter, what about scores of other Indian cities untouched by IT? Or, what about 90 per cent of the cities undergoing IT revolution, where people by and large still live a sub-human existence?

The IT revolution in fewer cities and the diversion of development funds there is creating social grievances in states which remain outside their domain. India’s ethnic, religious and regional fissures remain the same as they were over a decade ago during my last visit to India. For instance, people I then met from India’s north-eastern states such as Assam were over a decade ago were complaining about the central government’s neglect of their concerns, primarily caused by acute under-development of these regions.

The north-easterners still express similar reservations, except that their intensity over time seems to have grown. Assamese or their other several northeastern counterparts are clearly jealous of the fact that the IT revolution is restricted to the already privileged cities, states or people in the country. There is complete lawlessness in the northeast, despite huge military deployment. The influx of illegal economic migrants from neighbouring Bangladesh has made matters worse for local residents.

Then there is this galloping growth of Nexalite movement in many states like West Bengal, Andhra Pradesh and parts of several other states. While the disaffected communities of the northeast are often face to face with the security forces, the Nexalites cover a much wider domain. They choose their targets from within the society whom they consider to be exploitative, and then go for the kill. The writ of the central and state governments in both cases is quite limited. Under the grab of Nexalite movement, which has Marxist undertones, many criminals get away with their crimes. The notorious dacoit Veerappan may have been killed, the modern day criminals in India have taken the shelter of the violent, anarchist Nexalite ideology.

Democracy’s Contribution

In a country of over 1 billion people residing in 35 different provinces, speaking 18 different national languages or some 600 dialects of these languages, belonging to as diverse religious faiths as Hinduism and Islam, social conflict or tension should be rather unavoidable. However, given India’s democratic evolution post-Partition, the country has shown a remarkable potential to muddle through formidable challenges to national integration.

It survived much of the first fifty years of independence by keeping itself insular from global economy, by following a socialist model that helped laid an indigenous industrial base. In the last 15 years of capitalist growth, it is this industrial base that has started to expand in all directions.

Besides industrialization, the Indian leadership has given special attention to the expansion of quality education. Whether in medicine, law or software engineering, the Indian elite educational institutions—such as the multi-branched Indian Institute of Technology—are no less competitive than the best of US or British universities offering higher learning in relevant subjects.

Demographically speaking, India has the highest percentage of population, almost two-thirds according to some estimates, aged between adulthood and the middle age. This is, and will be, potentially the most productive section of the population. Currently, out of over 1 billion people, more than 200 million constitute the middle class, which is around one-fifth of the population. It is this middle class that has to expand if India’s ruling elites have to take pride in their country’s rise to global prowess in the rest of the 21st century. If India’s economy continues to grow 8 to 9 per cent a year, the way it has been in recent years, some 100 million more Indians will join this class.

Unlike China, where Capitalist economic growth contradicts with the country’s totalitarian political system, India’s two main assets—namely, democracy and secularism—will assure that India’s economic rise remains smooth. In India’s case, what we really have to understand is that, unlike China, it has a gigantic knowledge-based intellectual capital, which is what will take India forward in an equally gigantic fashion in the coming years.

At least the people of urban India, from poor to rich, privileged or un-privileged, speak English, which is the working national language. An increasing number of them have an unparalleled mastery in the software business, which is the hallmark of the world of globalization. China, on the other hand, is the world’s leading country in mass manufacturing at cheaper rates. It does not have the sort of high-tech, modernistic intellect that India has.

It is also in the interests of those who are currently behind the wheels of Indian capitalist drive that the country’s middle class expands. For, unlike other countries, India has a huge domestic consumer market. 300 million middle class people by 2010, when India is schedule to organize the Commonwealth Games, means hugely expanded productivity and consumerism. Thus, even if Indian industrialists do not export their value added products abroad, they can be marketed at home.

Unlike the strife-torn states like Pakistan, the Indians are relatively at peace with themselves. Various socio-cultural fissures are there, but they do not lead to the sort of consistent militancy and consequent political instability, which should discourage foreign direct investment or additional outsourcing opportunities.

Back to Basics

The points raised above do have their own respective significance, but let me come back to the basic issue of social consequences of India’s ongoing capitalist growth mentioned at the start. There is, indeed, some truth in the arguments of the proponents of free trade or free market system. Be it India or any other country that experimented with socialism in past, the road to capitalism at the initial stage has to be difficult. The current social disparity caused by India’s one and a half decade long experience with free market system is natural.

Unsurprisingly, therefore, the Indian leadership is presently engaged in tackling the various challenges posed by capitalist transformation. Unlike Pakistan, where state as well as public focus is mostly on foreign policy issues or the so-called strategic dynamics of regional and global politics, the Indians, the rulers as well as the ruled, are mostly busy sorting out domestic issues. To put it differently, in south India, where I spent the last over two weeks, hardly anyone is bothered about happenings in India-Pakistan relations or across Pakistan’s western frontiers, or the so-called Indo-US nuclear deal. The giant India seems to be a world unto itself, with local issues pre-occupying public attention.

The foremost issue these days is that of reservations. Under the Indian Constitution, 22.5 per cent of seats in admission to educational institutions, and appointment and promotion in government jobs is reserved for the Scheduled Castes (SCs) and Scheduled Tribes (STs). The Human Resource Development Ministry recently proposed to raise reservation from 22.5 to 49.5 per cent in all central government-funded professional elite educational institutions. Out of this, 27 per cent additional reservation is meant for Other Backward Classes (OBCs), since they lag behind upper castes and other privileged classes both socially and economically.

India’s miraculous economic growth in the last 15 years has occurred primarily due to contributions of a new breed of professionals and entrepreneurs. However, most projections show an impending shortage of trained manpower in India owing to rapidly growing demand. If this welcome momentum were to be sustained, the raising of reservation quota to 49.5 per cent would become a serious hurdle. Capitalism-driven growth is based upon competitiveness of proficient and creative individuals. It is merit rather than considerations of social justice that matter most. Otherwise, the whole experiment with Capitalism starts to crumble at the budding stage.

Why Reservations?

However, insofar as the reservation issue is concerned, caste-patterning of educational inequality is a reality in India. According to India’s National Sample Survey Organisation, which recently surveyed the percentage of graduates in the population aged 20 years or above in different castes and communities in rural and urban India, only a little more than 1 per cent of STs and SCs, and Muslims are graduates in rural India, while the figure for Hindu upper castes is four to five times higher at over 5 per cent. The real inequalities are in urban India, where the SCs in particular, but also Muslims, OBCs, and STs are way behind the forward communities and castes with a quarter or more of their population being graduates.

Another way of looking at it is that STs, SCs, Muslims, and OBCs are always below the national average while the other communities and especially Hindu upper castes are well above this average in both rural and urban India. As for the share of different castes and communities in the national pool of graduates as compared to their share of the total population aged 20 years or more, with the exception of rural Hindu OBCs and urban STs, the same groups are severely under-represented while the Hindu upper castes, Other Religions (Jains, Parsis, Buddhists, etc.), and Christians are significantly over-represented among graduates. Thus the Hindu upper castes’ share of graduates is twice their share in the population aged 20 or above in rural India, and one-and-a-half times their share in the population aged 20 or above in urban India. Compare this, for example, to urban SCs and Muslims, whose share of graduates is only 30 per cent and 39 per cent respectively of their share in the 20 and above population.

Leaving aside the above-mentioned educational disparities highlighted in the said survey, the proponents of merit, who include competitive students of India’s elite educational institutions like medical colleges, are already out in the streets—fighting violently with the police. They contend that the principle of reservations should in the first place be done away with, since it contradicts with the principle of capitalism. They also argue that this whole issue of reservations is politically motivated, an opportunistic attempt on the part of the Congress Party to rally support of its coalition partners, especially parties like Smajwadi Party led by OBSc leadership.

They further contend that most OBSc are not financially capable to pay for education in elite professional institutions. Given that, the argument goes, additional reserved quota of admissions in such institutions will only benefit the already privileged upper echelons of the OBSc, such as Yadevs, and a mass of the backward classes will eventually remain outside the domain of economic progress as they have always been. Scores of medical students have been on hunger strike to protest the central government’s decision to implement the new reservation policy by June 2007.

However, as the pros and cons arguments go on in the media, with their violent ramifications also frequently visible on the street, the government at the Centre is trying to find a via media. That is what happens in a democracy. In retrospect, even if the state of formerly socialist India does not look good on the social front 11 years after the country decided to march on the capitalist path, its longer run future looks quite bright—provided its secular and democratic values continue to flourish, and the focus of the Indian state remains primarily on national developmental issues rather than any domineering quest for South Asia on its own or on some external power’s behalf.