The role of caste in economic transformation

Context: Caste, a structural factor that impedes economic transformation in India.

• Caste through its rigid social control and networks facilitates economic mobility for some and erects barriers for others by mounting disadvantages on them.
• Caste shapes the ownership pattern of land and capital and simultaneously regulates access to political, social, and economic capital too.

Ways it impedes

There are three ways in which caste impedes the economic transformation in India:

• ownership and land inequality related to productivity failure within the farm sector;
• elite bias in higher education and historical neglect of mass education, and
• caste-based entry barriers and exclusive networks in the modern sector.
• The divergent outcomes in structural transformation between countries in the global South, particularly India, China and South East Asia, is due to these three factors.
• All the nations which succeeded in achieving inclusive growth in the Global South had land reforms combined with human capital, invested in infrastructure by promoting capitalism from below and began industrialisation in the rural sector.
• India lost on all three counts.

Land ownership, productivity

• India has one of the highest land inequalities in the world today.
• Unequal distribution of land was perpetuated by British colonial intervention that legalised a traditional disparity.
• Some castes were assigned land ownership at the expense of others by the British for its administrative practices.
• The British inscribed caste in land governance categories and procedures that still underpin post-colonial land ownership pattern in India
• The prescribed categories and practices have entrenched caste inequality in land ownership.
• Even the subsequent land reform that took place after India’s independence largely excluded Dalits and lower castes.
• It emboldened and empowered mainly intermediate castes at the expense of others in rural India.
• Further green revolution tightened landlords social control over others in rural India.
• Land still defines social status and pride in many parts of rural India.

Modern day real estate

• Real estate and construction still works as a source of inheritance, family lineage and speculative capital
• Those castes that had a stake in agriculture did not benefit from the economic reforms (1991) for two reasons — historical neglect of education and the entry barriers erected by the upper castes in modern sectors.

Neglect of education

• If strong growth in productivity within the farm sector is crucial for sustained economic growth, an educated workforce is equally necessary to move to the modern sectors.
• India failed on both accounts.
• The Indian education system has been suffering from an elite bias since colonial times.
• It primarily focussed on higher education for the elites neglecting basic education of mass
• Inequality in access to education got translated into inequality in other economic domains including wage differentials in India.
• In contrast, Chinese and other East Asian countries invested in basic education and gradually shifted towards higher education.
• Their success in manufacturing is a direct outcome of the investment in human capital.
• As South East Asia and China captured low-end manufacturing jobs, India largely concentrated in high-end technology jobs.

Barrier to entrepreneurship

• India did not witness such capitalism from below except in a few cases.
• Caste shaped policy outcomes, including India’s highly unequal land reform and lack of public provision of education and health, which in turn erected barriers to economic diversification.
• Castes that were already in control of trading and industrial spaces resisted the entry of others.
• Social inequalities have mounted barriers for economic transition

For caste is not a residual variable, but is an active agent which stifles economic transformation.

Source: The Hindu