Recasting India

by Hindol Sengupta

  Ambedkar argued that the section in the constitution on the directive principles of state policy already included what he thought were relevant guidelines about economic policy in Part IV and Article 31, namely,

  The State shall, in particular, direct its policy towards securing-

  (i) that the citizens, men and women equally, have the right to an adequate means of livelihood;

  (ii) that the ownership and control of the material resources of the community are so distributed as best to subserve the common good;

  (iii) that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment;

  (iv) that there is equal pay for equal work for both men and women.2

  These Ambedkar thought were enough—there was no need to bring in state ownership of capital, resources and industry, which would curb private enterprise. Unlike many of his cabinet colleagues who were uninterested in economic theory, Ambedkar wrote some of the most definitive works on economics in India. This is a man who fervently spoke for industrialization and mechanization, and his ideals of socialism have more to do with justice than with restricting the role of individual enterprise. His economic writings are replete with ideas that are being absorbed and applied skillfully today by entrepreneurs like Saroj.

  Ambedkar’s three seminal works are The Problem of the Rupee: Its Origins and Solutions (1923), Administration and Finance of the East India Company (1915) and The Evolution of Provincial Finance in British India: A Study in the Provincial Decentralisation of Imperial Finance (1925).

  Consider these two sections from The Problem of the Rupee:

  Money is not only necessary to facilitate trade by obviating the difficulties of barter, but is also necessary to sustain production by permitting specialization. For, who would care to specialize if he could not trade his products for those of others which he wanted? Trade is the handmaid of production, and where the former cannot flourish the latter must languish. It is therefore evident that if a trading society is not to be out of gear and is not to forego the measureless advantages of its automatic adjustments in the great give-and-take of specialized industry, it must provide itself with a sound system of money.

  Also,

  Trade is an important apparatus in a society, based on private property and pursuit of individual gain; without it, it would be difficult for its members to distribute the specialized products of their labour. Surely a lottery or an administrative device would be incompatible with its nature. Indeed, if it is to preserve its character, the only mode for the necessary distribution of the products of separate industry is that of private trading. But a trading society is unavoidably a pecuniary society, a society which of necessity carries on its transactions in terms of money. In fact, the distribution is not primarily an exchange of products against products, but products against money. In such a society, money therefore necessarily becomes the pivot on which everything revolves. With money as the focusing-point of all human efforts, interests, desires, and ambitions, a trading society is bound to function in a regime of price, where successes and failures are results of nice calculations of price-outlay as against price-product.3

  The economist in Ambedkar protested against the core ideas of the kind of state-driven socialism with which Jawaharlal Nehru would later be identified—a centralized, center-driven approach. Ambedkar wrote,

  By centralisation all progress tends to be retarded, all initiative liable to be checked and the sense of responsibility of local authorities greatly impaired. Besides, centralisation involves and must involve a serious sacrifice of elasticity, for it is naturally disagreeable to a central department to have to deal with half a dozen different ways of managing the same branch of administration, and which therefore aims at reducing all types to one. Further centralisation conflicts with what may be regarded as a cardinal principle of good government, namely, that when administrative business reached an authority fully competent to deal with it, that authority should deal with it finally. Even when there is a higher authority equally competent, to pass the business on to it would at best help to transfer power to the hands of the tower ranks of the official hierarchy, by causing congestion of business in the Central Department … centralisation, unless greatly circumscribed, must lead to inefficiency. This was sure to occur even in homogeneous states, and above all in a country like India where there are to be found more diversities of race, language, religion, customs and economic conditions than in the whole continent of Europe. In such circumstances there must come a point at which the higher authority must be less competent than the tower, because it cannot by any possibility possess the requisite knowledge of all local conditions. It was therefore obvious that a central government for the whole of India could not be said to possess knowledge and experience of all various conditions prevailing in the different Provinces under it. It, therefore, necessarily became an authority less competent to deal with matters of provincial administration than the provincial governments, the members of which could not be said to be markedly inferior, and must generally be equal in ability to those of the central government, while necessarily superior as a body in point of knowledge.4

  This is a critical point of departure from the overwhelming theme of Dalit empowerment in India, which has predominantly been driven by the central government and central laws. Yet in truth, political emancipation in the community has come from decentralization and devolution of power—whether through the rise of the Dravidian lower-caste parties in Tamil Nadu in the south or the rise of the Bahujan Samaj Party and other lower-caste political groupings in the northern heartland.

  In a sense, the rise of Dalit entrepreneurship mirrors in the world of economics and commerce what has already happened in politics. Several Dalit entrepreneurs told me that the creation of the DICCI (Dalit Indian Chamber of Commerce and Industry) was an effort to push back against caste prejudice in the top tier of Indian business, which used to be dominated by upper-caste Gujarati Jains, Punjabis and Marwaris. DICCI now has 1,000 entrepreneur members—400 of these are in the western state of Maharashtra. It started with only 100 entrepreneurs in 2005. India’s biggest industry lobbying group, CII (Confederation of Indian Industry), has announced that it will work with DICCI to propel the increased sourcing of goods and services from scheduled caste and scheduled tribe (SC and ST) entrepreneurs by 10 to 20 percent but, as Chandra Bhan Prasad, scholar and writer on Dalit issues, clarifies, only on merit.

  For so long, the economic debate among Dalits has been simply what the appropriate level of central government largesse is. Now this clutch of feisty entrepreneurs was reclaiming Ambedkar’s ideas and decentralizing the economic conversation.

  One essay of Ambedkar’s works that is rarely referred to fascinated me while I was writing this book. It is called India on the Eve of the Crown Government. Ambedkar begins by comparing the British Empire with the Roman Empire. The British, like the Romans, he says, based the ideology of their imperialism in the garb of the cultural betterment of those they conquer. He writes:

  They [the Romans] proclaimed that they were a people of superior race with a culture too high to be compared with any other, that they had a better system of administration, that they were versed in the arts of life. They also proclaimed that the rest were people of inferior race with a very low culture and were absolutely devoid of the arts of life, and that their administration was very despotic. As a logical consequence of this the Romans argued that it was their divine mission to civilise their low lying brethren, nay to conquer them and superimpose their culture in the name of humanity.5

  Ambedkar objected to the British description of India as run by “brigands and despots” before the arrival of English civilization and quoted Sir Thomas Munro, who told British historians, “When we compare other countries with England, we usually speak of England as she now is, we scarcely ever think of going back beyond the Reformation and we are apt to regard every foreign country as ignorant
and uncivilised, whose state of improvement does not in some degree approximate to our own, even though it should be higher than our own as at no distant period.”6 Ambedkar pointed out that the First Crusaders put 40,000 men, women and children to the sword during their conquest of Jerusalem. Who was the brigand then, Ambedkar asked, who the despot?

  He then went on to do what he did best—analyze the prosperity of India and the Indians before the coming of the British. He particularly picked on British criticism of India’s Muslim rulers:

  We have a consensus of opinion on both Hindu and Mohomedan [Muslim] as regards the prosperity of India when the Mohomedan conquest took place. The magnificence of Canouj and the wealth of the Temple of Somnath bear witness to it. It is a mistake to suppose that the Mussalman sovereigns of India were barbarous and despots. On the other hand a majority of them were men of extraordinary character. Mohommed of Guzni showed so much munificence to individuals of eminence that his capital exhibited a greater assemblage of literary genius than any other monarch in Asia has ever been able to produce. If rapacious in acquiring wealth, he was unrivalled in the judgement and grandeur with which he knew how to expend it.

  Of all his illustrious successors … Feroz Shah is very well known for his administration. His public works consisted of 50 dams across rivers to promote irrigation, 40 mosques and 30 colleges, 100 Caravan series, 30 reservoirs, 100 hospitals, 100 public baths, 150 bridges, besides many other edifices for pleasure and ornament; and, above all, the canal from the point in the Jumna where it leaves the mountains of Carnal to Hausi and Hissar, a work which has been partially restored by the British Government. The historian of this monarch expatiates on the happy state of the ryots under his Government, on the goodness of their houses and furniture and the general use of gold and silver ornaments amongst their women…. The general state of the country must have been flourishing, for Milo de Conti, an Italian traveller, who visited India about A.D. 1420, speaks highly of what he saw in Guzerat, and found the banks of the Ganges covered with towns amidst beautiful gardens and orchards. He passed four famous cities before he reached Maarazia, which he describes as a powerful city, filled with gold, silver, and precious stones. His accounts are corroborated by those of Barbora and Baitema, who travelled in the early part of the sixteenth century. The former in particular describes Cambay as a remarkably well-built city, situated in a beautiful country, filled with merchants of all nations, and with artisans and manufacturers like those of Flanders. Caesar Frederic gives a similar account of Guzerat, and Ibne-Batuta, who travelled during the anarchy and oppression of Mohammed Tagluk’s reign, in the middle of the fifteenth century, when insurrections were reigning in most parts of the country, enumerates many large and populous towns and cities, and gives a high impression of the state in which the country must have been before it fell into disorder. Baber (spelt nowadays as Babur), the founder of the Moghul dynasty in India found the country in a prosperous condition and was surprised at the immense population and the innumerable artisans everywhere. He was a benevolent ruler and public works marked his statesmanship. Sher Shah who temporarily wrested the throne from the Moghul was, excepting Akabar, the greatest of Mohomedan rulers and like Baber executed many public works.

  Akbar’s benevolent administration is too well known to need any mention.

  The rule of Shah Jehan who reigned not so much as a king over his subjects, but rather as a father over his family was marked by the greatest prosperity; his reign was the most tranquil.

  Speaking of the condition of the people in the dominions of the Marathas who were contemporaries of the later Moghuls a traveller says, “from Surat, I passed the ghats, and when I entered the country of the Maharattas, I thought myself in the midst of the simplicity and happiness of the golden age where nature was yet unchanged, and war and misery were unknown. The people were cheerful, vigorous, and in high health, and unbounded hospitality was a universal virtue; every door was open, and friends, neighbours and strangers, were alike welcome to whatever they found.”

  With regard to the economic condition of the people in southern India which was under the rule of Tipoo, a historian says, “When a person, travelling through a strange country, finds it well cultivated, populous with industrious inhabitants, cities newly founded, commerce extending, towns increasing, and everything flourishing, so as to indicate happiness, he will naturally conclude it to be under a form of government congenial to the minds of the people. This is a picture of Tipoo’s country, and this is our conclusion respecting its government…. His government though strict and arbitrary, was the despotism of a strict and able sovereign, who nourishes, not oppresses, the subjects who are to be the means of his future aggrandisement, and his cruelties were, in general, inflicted on those who he considered as his enemies.

  Clive described Bengal as a country of inexhaustible riches. Macaulay said, “In spite of the Mussalman despot and of the Maratha freebooter, Bengal was known through the East as the Garden of Eden—as the rich kingdom. Its population multiplied exceedingly; distant provinces were nourished from the overflowing of its granaries: and the noble ladies of London and Paris were clothed in the delicate produce of its looms.”7

  But how did prosperous India become so poor? Ambedkar was clear about the answer. The British not only looted the enormous royal treasures of Indian kingdoms and principalities, but they also—even more dastardly in Ambedkar’s eyes—killed Indian industry, trade and business through destructive economic policies.

  The essay lists a range of such devastating shenanigans—from usurious duty structures to trade tariffs aimed at ruining Indian industry on everything from sugar to spice, cotton, coffee, gum and silk.

  “All these” British discriminatory tactics, wrote Ambedkar, “were a means to kill Indian industries.”

  He quoted the nineteenth-century German-American economist Georg Friedrich List, who said, “Had they sanctioned the free importation into England of Indian cotton and silk goods, the English cotton and silk manufacturers must, of necessity, soon come to a stand. India had not only the advantage of cheaper labour and raw material, but also the experience, the skill and the practice of centuries.”8 He also cited Horace Hayman Wilson, the then renowned Indologist, who complained,

  It is also a melancholy instance … of the wrong done to India by the country on which she has become dependent. It was stated in evidence (in 1813) that the cotton and silk goods of India up to the period could be sold for a profit in the British market at a price from 50 and 60 per cent lower than those fabricated in England. It consequently became necessary to protect the latter by duties of 70 and 80 per cent on their value, or by positive prohibition. Had this not been the case, had not such prohibitory duties and decrees existed, the mills of Paisley, and Manchester would have been stopped in their outset, and could scarcely have been again set in motion, even by the power of steam. They were created by the sacrifice of the Indian manufacture. Had India been independent, she would have retaliated, would have imposed prohibitive duties upon British goods, and would thus [have] preserved her own productive industry from annihilation. This act of self-defence was not permitted her. She was at the mercy of the stranger. British goods were forced upon her without paying duty, and the foreign manufacturer employed the arm of political injustice to keep down and ultimately strangle a competitor with whom he could not contend on equal terms.9

  “Thus,” said Ambedkar, “The prohibitory protectionist policy of England ruined the industries of the country whose wealth attracted these swarms of flies that drenched her to the last dregs.”10

  He concluded, “It is with industries ruined … over-taxed, with productivity too low to bear high taxes, with few avenues for display of native capacities, the people of India passed from the rule of the Company to the rule of the Crown.”11

  Yet, it is the native capacity today’s Dalit entrepreneurs believe they are reviving. Saroj told me, “I had always been told that one could only get something in life if there
was a quota [a reservation] for Dalits in that job or that education. That was my basic understanding—one needs quotas. All I wanted was a small, decently paying job—that would have made me happy. But I realized that Ambedkar wanted more for us.”

  And there is opportunity waiting to be tapped. Research done by the Harvard Business School shows that scheduled castes accounted for around 16.4 percent of the population (2001 census) but owned only 9.8 percent of all enterprises before 2005. The only nuance here is that while the numbers of enterprises may have grown, many of them are still one- or two-person projects. These are enterprises of desperation—due to the lack of job opportunities anywhere else—rather than entrepreneurship by choice.

  But then, in a way, Kalpana Saroj also began as an entrepreneur of desperation—she would have been happy with a job in nursing or the police. She says it is not a distinction she makes. “I learnt from Ambedkar that opportunities are blessings for Dalits—it does not matter how they have come.” It is a lesson that illuminates her life choices. By the time her first real estate project was completed and her sugar mill built, Saroj had received several death threats and had acquired her gun license. She says she was determined that if she was going to die, she would at least fire back.

  Then came her big breakthrough—in 2006, employees of the once grand but by then ruined company Kamani Tubes approached her to buy out the company. There were 170 cases against the nonferrous metal tubes and pipes maker and a debt of Rs 116 crores ($19 million). The Kamani family, whose name before independence was as big as the biggest business houses, like the Tatas and the Birlas, and whose founder once associated closely with Mahatma Gandhi, had given up control of the company to employees in 1997 after many years of labor trouble and family infighting.