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Certain Trends in India's Socioeconomic and Socio-Political Development Author(s): Grigori G. Kotovsky Source: Asian Survey, Vol.

24, No. 11, A Soviet Symposium on Pacific-Asian Issues (Nov., 1984), pp. 1131-1142 Published by: University of California Press Stable URL: http://www.jstor.org/stable/2644147 . Accessed: 26/03/2011 03:40
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Grigori G. Kotovsky

In the system of international relations, the role played by the South Asian region has increased in recent decades. This increase is associated with the geopolitical conditions of the Indian Ocean, the sharp increase in the level of military activity in the region, the emergence of conflicts in Southwest Asia, and the increased participation in world politics of the South Asian countries that have become, following their liberation, active subjects in the processes of world history. That description particularly applies to India, which is rapidly becoming a great Asian power. In that sense an analysis of the basic trends in its domestic development is particularly important in order to identify prospects for the dynamics of international relations at regional and higher levels. The assumption of political power in India by the local affluent groups in 1947 created conditions conducive to a more rapid-in comparison to the previous century-development of capitalism and its penetration into all sectors of Indian society. For more than a third of a century, India experienced a restructuring of its colonial-cum-feudal economic system. This restructuring proceeded along the following main lines: 1. Industrialization, characterized by more rapid growth rates in technology-intensive basic industries. 2. Precapitalist types of ownership in agriculture were replaced by a capitalist sector. According to my estimate, by the mid-1970s semifeudal tenancy covered at most 5-7% of the entire occupied land. At the same time, capitalist farms and entrepreneur-type economics of a transitional to capitalist type produced more than 50% of the entire gross agricultural production (in terms of value).
Grigori G. Kotovsky is Professor and Head of the Department of Indian and South Asian Studies, Institute of Oriental Studies, Moscow. ' 1984 by The Regents of the University of California





3. Restrictions on the role of usurious capital were evident. By the late 1970s the traditional forms of credit and marketing had used themselves up as factors ensuring the full production cycle of small industrial enterprises and large agricultural farms. At the same time, usurers and traditional merchants continued to dominate the bulk of the "unorganized" sector, which still depended on preindustrial production forces. 4. Policies encouraging national business and the gradual elimination of foreign capital from key positions were effective. As a result of customs protectionism, full or partial nationalization of several enterprises, elimination of the system of managing agencies, and state support of national private undertakings, the foreign monopolies were demoted from the command and control positions in the country's economy that they had held at the end of the colonial period. This process forged ahead despite the growth in the absolute numbers of foreign private investments and despite the considerable growth in cooperation between big foreign capital, including transnational corporations, and the Indian corporate sector. The principal tool in the structural change of India's economy and in ensuring economic growth and development was state capitalism. An important role was assigned to the public sector including undertakings in the production process, and to large-scale regulation of the private sector through an intricate economic and administrative mechanism. State capitalism determined the way in which certain kinds of planning were done for developing and implementing the state economic policy. The public sector that was put together helped create and operate the industrial and agricultural infrastructure including fuel and energy facilities (public utilities), transportation and communications, major irrigation systems, etc.; basic heavy and defense industries; and different departments and agencies in the field of production credit and commerce, which for one thing stimulated private and largely (small) business in certain economic domains, and for another, helped in pursuing a particular social welfare policy designed to ensure minimal employment and consumption among the poor. Economically, the need for a public sector arose out of the failure of the private sector, represented in the late 1940s and early 1950s predominantly by major national and foreign capital, to rapidly restructure the colonial-cum-feudal economic system. In order to do that, it became necessary to curb somewhat the free market and free enterprise systems. That was the driving force of state regulation of the national economy, supported as it was by the public sector. State economic regulation made it possible to assign priority to small



businesses or to public sector enterprises through restrictions and the containment of big and monopoly capital in some economic areas; to level out inter- and intra-industrial disproportions arising at different stages of economic growth and development; to assign priorities, as far as possible, in investment policies of private capital; and to practice protectionism vis-a-vis private business in stimulating their cooperation with foreign capital. As a result, the private capitalist uklad' began to function to a major degree within the framework of a system that also included the state capitalist socioeconomic structure. A diversified industrial complex and a fivefold increase in industrial output had, by the late 1970s, launched India into the orbit of the world's ten largest industrial producers. Having left behind its status as an agrariannation, India had become an agro-industrialized country. This created conditions for considerable growth in India's scientific and technological capability, which produced spectacular results in nuclear research, rocket engineering, and space research. A good start was provided for such science-intensive fields as nuclear power engineering, electronics, and air and space technology. The widening gap between the major industries forging ahead and agriculture lagging behind precipitated the steps taken in the second half of the 1960s to intensify agricultural production. The so-called green revolution, which predominantly embraces the irrigated lands in Northwestern India, envisaged large-scale use of high-yield varieties of certain crops such as wheat and rice. The program was implemented with considerable financial and institutional assistance from the state and used sophisticated agrotechnological techniques. The past two decades have witnessed an initial process of reequipment in Indian land tilling, a process that so far covers most economically viable farms and only some areas. The intensive and extensive processes in agriculture have almost doubled India's agricultural output, with the result that the country is practically self-sufficient in food grains (given the present low level of per-capita consumption) and has created sizable buffer stocks through domestic production. The stabilization of the food situation, which was critical in the mid-1960s, is one of India's most important achievements. By the mid- and late 1970s, the restructuring of the nonagricultural sector of the economy had to all intents and purposes been completed. In agriculture, enclaves of agrarian capitalism had been created that have become basically self-reliant. It is important that in the 20 years between 1960-61 and 1980-81, the share of capital investments used for the
1. Uk/ad is a system of production in which economic units have the same pattern of ownership-i.e., state, private, communal, or some other type of ownership.



import of machinery and equipment was reduced from 37% to 16%, and for the import of general purpose grain from 8% to 1.4%. It can be safely stated that by now India has achieved a level of economic self-reliance that one usually terms economic independence. Despite the positive changes in social production, India's economic and social development is plagued by deep-rooted contradictions and difficulties determined by certain structural distinctions in the country's system of production relations. These distinctions can basically be classified into four major groups according to four major attributes: 1. A particular type of co-occurrence of several economic systems, in which social and economic structures (uklads) coexist and interact. In a contemporary industrialized nation, these structures represent successive forms in the development of the capitalist mode of production, ranging from the manufacturing stage all the way to the present state monopoly capital. 2. A vast relative sustained overpopulation, which as a result of economic and demographic factors continues to increase. The overpopulation, which has existed since colonial times, builds up mainly in the petty commodity and lower capitalist structures (uklads). 3. The combination of the capitalist accumulation process (in its present-day forms) with the process of primary accumulation of capital inherited from the colonial period, protracted over time and exaggerated in terms of its place in social production. 4. The decisive role of the state in economic development (in the forms of state regulation and the public sector functioning not only as a "locomotive" for the private capital business initiatives, but also as a most important "booster" for the integration of historically asynchronous economic structures (uklads) by means of commodity, capital, and labor markets. This distinction, which permeates the socioeconomic structure of contemporary India, is most succinctly expressed in the dual nature of the country's economy. Although a considerable proportion of the GNP is generated by modern industries and transport as well as by the entrepreneur-type agricultural farms using hired labor and industrial forms of permanent capital (agricultural machinery, fertilizers, pesticides, seeds, etc.), the bulk of the population (at least 70%) is involved in the type of production that is based totally or predominantly on manual labor. These forms of production represent the forces of preindustrial production. This "traditional"sector is basically represented by the petty commodity economic structure (including the various eco-



nomic forms transitional from the natural-patriarchaland semifeudal economic structures) and by the different forms of capitalism of the manufacturing type. The type of production forces in the "traditional sector" explains the sustained high level of in-kind relations in the operation of the constituent economic units. The dualism of India's economy is manifested among other things by the following situation. Given the fairly high absolute GNP (13th to 15th largest in the world in the early 1980s), India is near the bottom of the list in terms of per capita GNP. In the "traditionalsector," labor productivity and the consumption level are extremely low: according to official statistics 48% of the country's population was below what is known as the poverty line. In other words, they did not have the minimum for sustenance. The great majority (83%) of this group inhabits rural areas and primarily includes the families of tiny and marginal landholders, and the owners and tenants of pauperized and semiproletarian economies as well as the families of landless agricultural laborers. These two groups account for about 54% of all rural households. The uninterrupted replenishment of the "poverty reservoir" in the traditional sector and particularlyin its agriculturalsegments has become India's most important and most acute socioeconomic problem at the current stage of development. The solution to that problem is complicated and multidemensional. First, the use of the "redundant"population as a work force in modern industrial production is restricted both by the overall rate of industrial growth (4-4.5% in the 1970s) and by the emphasis in industrial development upon capital-intensive types of production. In their own turn these two factors are to a considerable degree determined by the restrictions of the "organized sector's" domestic market, catering, in the final analysis, to the top 30-40% of the population, and by the type and volume of foreign economic relations with the world's capitalist market, which in recent years has been rather depressed. Under these conditions the percentage of the work force engaged in agriculture in 1981 was only a little lower than in 1951: 66.7% and 68.33%,respectively. Second, further structural reforms in agriculture that are imperative for any improvement in the material status of rural working people came up against insurmountable socio-political obstacles. The program to impose ceilings on private land ownership was in fact not implemented. Up until now, only about 5% of the land owned by larger landlords (owners of 8 hectares or more) has been alienated. The virtual failure of agrarian reform can be attributed to the tooth-and-nail resistance on the part of the land-owning village elite and the elite-manipulated lower echelons of the administration and the bourgeois politicians who control the indi-




vidual state administrations. The state legislation regulating landlordtenant relations, the enforcement of minimum wages for agricultural laborers, etc., also suffered defeat. And purely economic factors play a certain role. The competition among barely landed and landless peasants for each land plot to be leased out forces them to accept the rack-renting conditions of lease. The available work force, far in excess of demand in the agricultural labor market, also forces agricultural workers into accepting wage levels that barely keep them alive. The unsatisfactory employment situation to a large extent explains the failure of the 1975 program to liberate from indebtedness the bonded laborers, who, according to various estimates, numbered up to four million. Similar difficulties arise when attempts are made to eliminate the exploitation of small agricultural producers by usurers, traders, and speculators. By the early 1970s, most of the "nonorganized" credit in rural areas was no longer controlled by professional moneylenders (sahukars). Instead, control was assumed by the land-owning village nobility ("agriculturistmoneylenders"). The market relations of mediumsized and small holdings, just as before, are mediated predominantly by traditional merchant capital, personified in the castes of professional traders and moneylenders and intimately related to the urban bourgeoisie, as well as by the rural elite decisively penetrating this aspect of commerce. Third, the alleviation of the gigantic colonial overpopulation problem in rural areas is hampered by the ongoing demographic growth not indexed to employment opportunities. The population growth rate increased from 1.35% in 1941-51 to 2.05% per year in 1971-81. India's population in absolute figures increased from 361 million in 1951 to 685 million in 1981. Even according to optimistic predictions by Indian demographers, the country's population will be stabilized only by the middle of the next century at 1.2 billion, nearly twice the present population. The poorest people crowded out of agricultural production replenish what is known as bustis (shantytowns) surrounding practically all of the country's major industrial centers. The growing migration into the cities aggravates not only underemployment but also full unemployment. Between 1970 and 1982, the number of officially registered unemployed increased from 5.1 to 18 million people, and their percentage of the overall number of persons employed by the organized sector grew from 29% to 79%. Incidentally, the ranks of the unemployed include not only factory workers but also intellectuals and office personnel: the number of unemployed university graduates is now almost half a million people. The growing unemployment rate for city dwellers depresses not



only the wage situation, but also other terms of employment for industrial workers and office personnel. Therefore, the demographic and economic situation has turned out to be one of the most important factors hampering continued economic growth and development. In formal terms the situation is well described by the insignificant per capita growth of production. On the one hand, the annual rate of economic growth has been 6.3% since Independence as against 0.65% for the last 30 years of colonial rule. The overall GNP has increased by a factor of 3.1, which helped reverse the trend toward decreased per capita national income, a trend typical of that particular stage of the colonial period in India's history. On the other hand, since Independence per capita national income has grown (from a rock-bottom level in the 1940s) by a factor of only 1.5. Per capita consumption among the low income groups, which account for 50-60% of the entire population, has practically stagnated. This situation has produced at least two important results. First, since the late 1960s and mid-1970s, with the virtual completion of the first major step in independent India's economic development-the restructuring of the colonial-cum-feudal economic system-the insufficient elbowroom for the domestic market has begun to increasingly hold back continued industrial development. The production capacities have been underutilized, the financial indicators characterizing the performance of industrial companies have deteriorated, and the growth rate of industrial production has slowed. In this context, foreign markets were of particular concern. The years of independence have witnessed a change in the structure of India's foreign trade. Its exports have come to include a larger share of industrial goods (chemicals and machinery increased from 2.2% to 15%), while the percentage of raw materials and traditional light industry exports decreased from 80% to 46%. However, in a deteriorating world trade situation, India's foreign economic expansion was only a limited success. The country's objective need to break through to the world market predetermined many of the important aspects of its foreign policy, particularly its active participation in the campaign for a new international economic order and for a serious North-South dialogue. India's quest for foreign markets other than those of western countries invariably spurs on the country's political and economic activity in the Third World and in the countries of the Socialist system. And India's demographic problem had a direct impact on the course of industrialization and an indirect impact on the dynamics of its foreign economic and political stance. Second, this factor also manifested itself in the widening gap between the haves and have-nots, the unprecedented polarization of wealth and




poverty, which had to create a situation of mounting social tensions. One of the fundamental ways to solve this set of problems would be to restructure a multitude of subsistence economies and have them generate surplus product. This can be accomplished through alleviating the problem of rural overpopulation by boosting the rate of industrial development. This latter step in its turn would unquestionably result in a reorientation of the organized sector, which would begin to gravitate toward broader cross sections of the people as against the current orientation, which is almost exclusively toward the affluent few. At the same time, the present demographic situation calls for a vigorous demographic policy ("family planning") designed to drastically reduce the rate of population growth. It has been universally recognized that this policy depends for its success on rapid improvements in the cultural and educational standards of the people. In the final analysis, it is a matter of higher living standards supported by changes in economic development. It has been pointed out that these changes must ensue from major structural reforms. It will be noted further that India's need for "economic democracy" is made imperative by the extreme urgency of its economic and demographic problems, as well as by the general regularities in the development of world history. Since the current political system makes that almost impossible, an alternative could well involve a major program designed to solve, although only partially, the unemployment problem and to increase the consumption level for the poorest. This policy is being implemented along the following principal lines: 1. To put into effect different large-scale programs in order to create jobs, particularly in rural areas ("food for work"), etc. 2. To mount special purpose programs extending assistance to small and marginal farms (low interest credits, agrotechnological assistance, etc.). 3. To curb the various precapitalist forms of economic and social exploitation and discrimination, eliminating bonded labor, passing legislation banning caste discrimination, etc. The same program includes steps to give landless agricultural laborers plots for homesteads. 4. To distribute necessities of life (particularly food) at fixed prices among the poor through a network of government-controlled "fairprice" retail shops. 5. To set aside for the lowest social groups (the untouchables, the scheduled tribes) quotas in legislative and executive governmental agencies and educational institutions and to extend to them assistance in social matters including their day-to-day living.



The tangible results of this social policy, which has been pursued for several decades now, have proved few and far between. This situation is attributable to a number of causes: 1. The scarcity of finances available from the state for social programs. 2. The persistence of causes of particular socioeconomic phenomena, for example, debt bondage. 3. The socio-political controversy over some of the programs and the vicious resistance to these programs by influential elements in the affluent classes, legislators, and the administrative mechanism. And yet, the political impact of the social programs is considerable. In combination with populist slogans (the 20-point program, etc.), they serve as an important tool in the hands of the ruling classes to maintain social stability and to ensure support for the ruling party by the electorate. These factors will pressure the government into channeling an inrcreasing proportion of state resources toward these unproductive or almost unproductive objectives. In recent years the policy of social subsidies has assumed a wider scope as a result of the ongoing aggravation of the already-grave economic and demographic situation, as well as of the increasing role of the government's social policy, a kind of pressure valve to "let off" the social tensions. The increase in the absolute numbers of people living below the poverty line, the unbridled unemployment, the widening gap between the haves and have-nots, etc., on top of the lingering remnants of prebourgeois social oppression (caste oppression, etc.), tend to increase social tensions. This can be seen not only in the growing number of class and social conflicts registered by the official statistics, but also in the sporadic explosions of massive violence and vandalism, the operation of terrorist groups, and the growing crime rate. At the same time, the intensity and type of India's class struggle generated by the contradictions of capitalist development do not measure up to the overall level of social tension. This is associated with the following factors: 1. Despite the absolute domination of the socioeconomic structure by economies representing the makings of a capitalist system, these economic units are predominantly either of a petty commodity type or of a petty capitalist type, with some intermediate forms in between. In these economic units, class relations are frequently obscured by the paternalist patriarchal relations between the employers and the hired hands. 2. The classes of bourgeois society are still emerging and are generally




represented by different intra-class transitory social groups. For this reason class awareness particularlyamong the working people has not yet taken definite shape. 3. The formation of class psychology is complicated and hampered by the prebourgeois (traditional) social institutions, such as caste, religion, community, patronymy, etc. The impact of these institutions is amplified by the extremely low cultural standards and prevailing illiteracy. The emergence of classes in a bourgeois society occurs in India today within the framework of religious, caste, village community, occupational, and professional ties and within the ramified ethnic structure the country inherited from the colonial and precolonial past. The process of class formation is at a stage where the overwhelming majority of rural and urban proletarians and semiproletarians objectively included in the class of hired hands, as a rule subjectively identify themselves only as belonging to a particular caste, religious community, the traditional section of a rural community, or, in some situations, to an ethnic and regional group. The affluent classes-bourgeois and bourgeois urban middle classes-have almost emerged as an integral political entity. However, some groups and strata of the exploiting classes in India have remained "classes unto themselves" instead of becoming "classes for themselves." That predominantly applies to rural bourgeoisie. Despite the development of capitalism, the social behavior of the working people as well as of the majority of Indians is determined in many ways by the impact of religion, caste, and more recently, ethnonational relations, on their consciousness. This situation is objectively promoted by the following factors. First, caste and religious affiliation is widely used by bourgeois politicians as an important tool for winning election votes, and this emphasizes the role of caste and religion in regulating the social behavior of the masses. Second, class stratification in Indian society to a major degree and particularly in rural areas coincides with caste stratification. The rural elite basically belong to the upper warrior-cum-agriculturistcastes, while the landless laborers belong to the lowest caste of the untouchables (harijans). The class oppression of this latter group is aggravated by caste oppression. In the cities, most of the bourgeois class belongs to the trader and usurer castes and to the religious communities of Parsis and Catholic Christians, and the intellectuals belong to the highest Brahman castes, etc. Caste prejudice hampers the emergence of mass organizations in rural areas that would be based on strictly class principles. Thus, most members of agricultural workers' unions belong to the harijan or other lowest castes, while members of peasants' unions belong to the higher



land-tilling castes. In recent years, despite the legislative ban on caste discrimination, there have been eruptions of violent killings of harijans by rich peasants and sometimes even by middle and poor peasants belonging to the rural elite castes. When the classes of bourgeois society that have basically emerged as economic entities still exist within the framework of a lingering traditional social structure, class conflicts often take the shape of caste, religious, ethnic, or other clashes. The gap between the rich and the poor and class contradictions underlie the country's entire political life. However, they frequently come to the surface mediated by "traditional"social conflicts. These social contradictions and conflicts can be classified into three basic types: 1. Conflicts expressing in effect socioeconomic and class contradictions, both bourgeois and prebourgeois. 2. Conflicts expressing traditional contradictions in the socio-cultural and ideological fields. 3. Conflicts expressing subjective. ambitions of professional politicians taking advantage of traditional caste, religious, and ethno-regional group relations in their quest for political clout and power. The caste, religious, and ethnic conflicts often combine elements of the above types of contradictions, a factor that complicates the overall political process. Religious communal and ethnic conflicts are also often associated with the demographic factor and the problem of employment in general-for example, competition for college enrollment openings not involving any political demands. In addition to the long-term socio-political factors listed above, India's political situation is affected by short-term socio-political factors taking the form of pressure groups that lobby political parties and organizations. These factors include social and political action by students and jobless university graduates, the army, and the police. In the context of the on-going vicious competition in the menial and intellectual labor markets, as well as in businesses, particularly small ones, the above distinctions of social organization in Indian society are widely used to their own advantage by reactionary communalist parties and organizations. The development of capitalism in the country spurred the growth of local businesses, which created a basis for an explosion of bourgeois nationalism. For instance, bourgeois nationalism brought to power in the South Indian state of Andhra Pradesh the regional Telugu Desam Party,



whose class orientation is virtually the same as that of the Indian National Congress that was defeated in that state. Capitalism as a socioeconomic system exists in India at a stage in its development that provides considerable room for a deep and wide expansion. This fundamental condition in combination with another factor-the current level of class formation in the country-is the reason that the cumulative effect of the above socioeconomic and sociopolitical factors has not resulted in a nationwide crisis of bourgeois power. At the same time, this condition had a decisive impact on the restructuring of the party and political structure that emerged in the early years of independence, a process that has become more intensive since the mid1960s. The sum total of these factors was conducive to political action that proceeded along the following lines: 1. Access to power on a state level by Communist-led left-oriented political coalitions. 2. Stratification of bourgeois and petty-bourgeois elements in politics. Among other things, this process had a direct impact on the situation in the communist movement and on the political changes in the states of West Bengal, Tripura, and Kerala, where control was assumed by left forces. 3. Accentuation in the political process of the particular interests of the rural bourgeoisie. 4. Crystallization of ethno-national and regional interests. 5. A certain polarization of the ideological orientation toward the modern and traditional values of bourgeois and petty-bourgeois political formations. The Indian bourgeoisie has succeeded so far, and will continue to succeed in the near future, in striking a political balance between the sum total of class and social contradictions in the name of continued development of the bourgeois parliamentarysystem. However, in the more distant future, major changes in political power may be precipitated by new social tensions and a more vigorous class struggle.