Known as Dalit icon and maker of constitution, Ambedkar’s views on economy, development haven’t yet been properly evaluated

Prof Sukhdeo Thorat
Prof Sukhdeo Thorat

Dr BR Ambedkar is known in better known for his role as independent India’s first law minister, as principal architect of the Constitution of India, on one hand, and a powerful campaigner against untouchability, social discrimination, and the Indian caste system, on the other. Few know, however, that he combined in him the quality of jurist, politician, philosopher, anthropologist, historian and economist. In a recent article, well-known scholar Prof Sukdhdeo Thorat, former chairman of the Universities’ Grants Commission (UGC), has suggested that Ambedkar’s views on subjects other than Dalits and the constitution were equally powerful, qualifying him for a a much bigger historical role than contemporary national leaders. The need to highlight Ambedkar’s views is important because, lately, there has been an effort to provide Sardar Patel a much bigger role than any other national leader by building world’s tallest statue, 182 metres high, in the memory of the Sardar. Excerpts from Prof Thorat’s article:      

Ambedkar’s views on economic development

Economic writings of Dr Ambedkar cover a wide range of interrelated issues. These include his perspective on economic development and planning, working of the capitalist system, alternative economic framework, and the economics of the Hindu social order. Academic writings and the participation of Ambedkar in the decision-making process directly or indirectly influenced the national policy and planning in several economic spheres before Independence and after.

Ambedkar’s views on the economic development go back to the year 1918, when he participated in an academic debate on the problem of small holdings in India and its remedies. Although his paper, “Small Holdings in India and Their Remedies” (published in the Journal of the Indian Economic Society, Vol I, 1918) focused on the problem of small holdings, in its formulation and implied solution it contained a theoretical framework for economic development. Beginning with a discussion of the problem arising out of the smallness of land holdings, he went on to analyze the backwardness of the agricultural sector as a whole and ended with the proposed solution of capital investment in agriculture and industrialization for the overall development of the economy.

Carefully working out the theoretical logistics of the proposed strategy, Ambedkar’s analysis covered the issue of how to enlarge small and scattered land holding. The underlying assumption was that fragmented holdings were too small to be economically efficient. For him, consolidation of holdings was a practical programme while their enlargement was a theoretical one, demanding discussion of economic principles which could be said to govern the size of the farm. He argued that the evil of small land holdings in India was not fundamental but derived from the parent evil of maladjustment in her social economy.

Maladjustment resulted mainly due to disproportionate use of inputs. While capital was scarce in relation to land, and land (agricultural) was scarce in relation to rural population, the stock of labour force was disproportionately high. The availability of land and capital in relation to each other being limited, this posed major constraints on the optimum use of resource inputs. Ambedkar provided extensive evidence for the decline of average size of land holdings and the deficient use of capital goods and implements in agriculture.

Ambedkar asked: Why was capital investment in the form of agricultural implements so low? He stated that capital arises from saving and saving is possible where there is surplus. India’s agriculture, the mainstay of her population, gave them no such surplus. Because of the pressure of population on land, output per worker was low. An excess agricultural population in relation to agricultural land in actual cultivation meant that a large part of the agricultural population was superfluous and idle.

The economic consequence of the idle labour was twofold. First, given the lack of alternative job opportunities, the enormous population pressure led to subdivision of land into small and marginal holdings. Secondly, since idle labour continued to depend on agriculture, it reduced the income per worker to barely subsistence level, and thus it left no scope for saving and capital investment in agriculture. Ambedkar observed: “Idle labour and idle capital differ in one very important respect; capital exists, but labour lives. That is to say, capital when idle does not earn but does not also consume much to keep itself. But idle labour, earning or not, consumes in order to live.”

Productivity of agriculture could be increased, according to Ambedkar, by simultaneously expanding capital and capital goods, and reducing labour in agriculture to increase land and labour productivity. If the stock of capital goods alone was increased, without reducing surplus labour, the problem of small and scattered land holdings would not be solved. In fact, it would be aggravated as long as the stock of idle labour continued to increase. This would further subdivide the holdings, and reduce labour productivity.

Ambedkar therefore argued for a strategy of transferring labour from agriculture to other sectors of the economy. He advocated that “the siphoning off of surplus labour in non-agricultural channels of production will at one stroke lessen the pressure and destroy the premium that at present weighs heavily on the land in India. Besides, this labour when productively employed in agriculture and industrial sector will cease to live by predation and will not only earn its keep but will give surplus; and more surplus is more capital.”

 Ambedkar’s role as planner

The entry of Ambedkar in the Central Cabinet as member in-charge of the labour (and also irrigation and power) portfolio in 1942 coincided with the formulation and implementation of the post-war plan for reconstruction and economic development of India. In fact, it will not be out of place to say that this particular plan marks the beginning of economic planning by the Central Government with an all-India perspective. Its importance also lies in the fact that the policy measures and action plan conceived and implemented during 1942-46 not only had an impact on the type of economic regime that India adopted on gaining independence, but many of these plans continued and became a permanent feature of our planned economic development after Independence.

Ambedkar, being a member of the Central Cabinet, was also a member of the Reconstruction Committee of the Council. In addition, he was the President of Policy Committee which was set up to formulate policy and plans for improvement in the condition of labour, and the development of irrigation and electric power. He contributed immensely to the formulation of the objectives and strategy of the plan, in general, and the formulation of policy for labour, irrigation and electric power developments, in particular. We see a distinct impact of Ambedkar’s economic thinking on the post-war plan of economic development for India.

Speaking on the nature of the post-war economic plan, Ambedkar argued, “The problem of reconstruction in India must include consideration of all questions with which other countries engaged in war are concerned. At the same time, we must not forget that the problem of reconstruction in (European) countries is a problem of rehabilitation of industry, which had been in existence. The problem of reconstruction in India, as I see it, is a problem mainly of the industrialization of India as distinguished from the rehabilitation of industry.” As it turned out, the reconstruction plan for India did cover measures both for rehabilitation and economic development.

Ambedkar significantly influenced the decision concerning the strategy of post-war economic plan as well. His views on economic development were reflected in his plan strategy. He emphasized the need for industrialization for overall economic development as well as for development of the agricultural sector. Poverty in India, in his view, was mainly because India was solely dependent upon agriculture; agriculture had failed to produce sufficient food to feed the people because of the maladjustment of the social economy of the country.

Writing about the situation during the 1943, he observed that India was caught between two sides of a pincer, the one side of which was progressive increase of population on land and the other was progressive increase in deterioration of the soil. The result was that at the end of a decade we were left with a negative balance between population and production and a constant squeezing of standard of living. At every decade the negative balance between population and production was increasing in alarming degree, leaving India with the inheritance of poverty, more poverty and chronic poverty.

This process, he said, “could be stopped when agriculture was made profitable. Nothing could open possibilities of making agriculture profitable except a serious drive in favour of industrialization. For it is industrialization alone which could draw away excess population, which was exerting such enormous pressure on land, into gainful employment other than agriculture.” He did not rule out the possibility of direct capital investment in agricultural sector for balanced development of the economy.

The strategy of economic development enunciated in his paper of 1918 (“Small Holdings in India and Their Remedies”) was restated 20 five years later, in 1943-44, some elements of which were eventually incorporated in the objective of the reconstruction plan. This became obvious from the following statement of objectives in the Plan Paper:

“The ultimate object of all planning must be to raise the people as a whole and to ensure employment of all. To that end, the purchasing power of the people must be increased by improvement in the efficiency and consequently the productivity of labour, on the one hand, and simultaneous development and a reorganization of agriculture, industries and services, on the other”.

And further: “Agriculture is and will remain India’s primary, industry but the present imbalance in economy has to be rectified by intensive development of the country’s industries so that both agriculture and industry may develop side by side. That will enable the pressure of population on the land to be relieved and will also provide the means required for the provision of better amenities for the people in the form of education, sanitation, public health housing etc.”

Development of infrastructure such as electric power, irrigation, roads, communication and transport services were treated as prerequisites for industrial development and therefore received top priority in the plan strategy. It was believed that development of infrastructure would bring a relatively higher annual rate of growth in industrial output and employment than the rural labour force and help to absorb the surplus labour from agriculture.

In a policy committee on public works and electric power, Amebedkar emphasized that the country needed “cheap and abundant electricity”; without it, no efforts for industrialization could succeed. The development of electric power (and road, transport and communication) was crucial for industrial and agricultural development. Improvement in irrigation facilities was expected to raise agricultural productivity.

 Planning for the poor and the downtrodden

Ambedkar was aware about the limitations of the capitalistic form of economic system under parliamentary democracy in ensuring economic security to the masses. He, therefore, argued for an important place to the “labour” and the “depressed classes” in the planned economic development of the country. He was particularly concerned that planned economic development should not only develop programmes but translate them in terms which the common man could understand, namely, peace, housing, clothing, education, good health and, above all, the right to work with dignity. The state could not be content with securing merely fair conditions of work for labour but fair conditions of life. A great responsibility lay on the state to provide the poor with facilities for the growth of individuals according to their needs. To do that, the government could not be a government of ‘laissez faire’: It would have to be government essentially based on a system of control.

Influenced by Ambedkar’s thinking on the problems of labour, the issue of labour was accorded an important place in the objective of the post-war plan of economic development, which, it was declared, would “raise the standard of living of the people as a whole and ensure employment for all.” To that end the purchasing power of the people was to be raised by improvement in the efficiency and consequently the productivity of the labour on the one hand and simultaneous development and reorganization of agriculture and industries and services on the other.

Labour was to be made more productive (in order to raise productivity in agriculture and industry) through several measures, which include various amenities, free or subsidized services such as education up to the age of 14, medical relief, water supply, and other public utility services including electric power. This would improve the health and efficiency of labour. Other measures in this direction would be attempts to secure a fair wage deal for labour, maternity and sickness benefit, holidays, etc. Many of these schemes for labour were undertaken by the Labour Department under Ambedkar’s advice.

In Ambedkar’s view, the schedule castes (SCs) and depressed classes needed to be treated as a separate entity for the purpose of planning, and this provision was incorporated in the Plan objective. A plan document stated that “one of the objectives of the government would be to take steps to ameliorate the condition of the SCs and backward classes. Care must be taken to see that social amenities such as education, public health, water supply, housing, which are meant to be provided under the plan, work especially for the benefit of such classes, and that labour is offset by special concessions in the shape of educational facilities, grant, scholarships, hostels, improved water supply and similar measures.

It would be the special responsibility of the government to see that early measures are taken to remove the handicap of these classes and help them to raise their level to that of their more fortunate fellow citizens. The provision of full employment as well as various measures of social security contemplated under the section of labour would also automatically benefit the backward and the depressed classes.” The Central Government’s irrigation and electric power policy during 1942-44 reflected this view of Ambedkar about the poor and their place in planned economic development of the water resources of the country. He urged the policy makers to incorporate measures in the irrigation development policy to benefit the poor and oppressed selection of society.

Ambedkar was in favour of improvement in production efficiency. He wanted public sector enterprises to earn reasonable profit. And, like Jawaharlal Nehru, he did not favour the public sector to be merely a growth-maximiser of national income. He did talk about letting the national income grow large enough before adequate standard of living could be provided for all. At the same time, he was very much concerned about the distribution of national income to the common man.

In 1943, he emphasized, “We must be prepared for the revaluation of the value. It will not be enough to make industrial development of India as a goal. We shall have to agree that any such industrial development shall be maintained at a socially desirable level. It will not be enough to bend our energies for the production of more wealth in India. We shall have to agree not merely to recognize the basic right of all Indians to share in that wealth as a means for a decent and dignified existence, but devise ways and means to ensue him against insecurity.”

This view was emphasized in the formulation of irrigation and hydro-electric policy for India. In October 1943, in his presidential address to the Policy Committee on electric power, Ambedkar pointed out the significance and the ultimate objective behind the need for electrical development in India, and said: “I will request you to ask yourself a question. Why do we want cheap and abundant electricity in India? The answer is that without cheap and abundant electricity no effect for the industrialization of India can succeed. Ask another question. Why is industrialization necessary? And you will have the full significance made clear to you at once, for the answer to the question is: We want industrialization of India as the surest means to rescue the people from the eternal cycle of poverty in which they are caught. Industrialization of India must, therefore, be grappled with immediately.”

A similar emphasis was to be accorded in planning to the development of irrigation. In his presidential address to the Conference on Multipurpose Development of Damodar Valley, Ambedkar stressed that “the Centre expects the Provinces to bear in mind the absolute necessity of ensuring that the benefits of the project get ultimately right down to the grassroots i.e., everyone living in the valley and some of those in the vicinity, all have their share in the prosperity which the project should bring.”

In fact, Ambedkar laid down the foundation of Irrigation, Water and Power policy at the Centre during 1942-1946. These efforts by Ambedkar and Labour department resulted into

the emergence of a definite all-India policy with regard to the development of “water and electric power resources” of the country; the creation of an administrative apparatus and technical bodies at the centre to assist the states in the development of irrigation and electric power resources, such as the present-day Central Water Commission and Central electricity Authority; and

initiation of some important present-day river valley projects, such as the Damodar river Valley project, Hirakud project and others development of electric power policy for the first time.

The key elements of the new water policy and planning constitute: (a) adoption of a multipurpose approach for water resources development on the basis of river valley basin (b) introduction of the concept of river valley authority; and (c) creation of technical expert bodies at the Centre to promote development of water and power resources.

On each of these, Ambedkar had views of his own. In the period 1943-46, when the new policy was evolved, he actively participated in all discussions and expressed his views through presidential addresses and lectures. Between November 15, 1943 and  November 8, 1945 he addressed five conferences, of which two were on the Damodar Valley Project, both held at Calcutta (January 3 and August 23, 1945), one on the Mahanadi Valley Project (Cuttack, November 8, 1945) and two on electric power (Delhi, November 15, 1943 and February 15, 1945).

 Conservation of water resources

In a conference on the development of Orissa rivers, Ambedkar expressed his views about conservation and use of water resources. He referred to the recommendations made by the various committees, starting with the first committee in 1872 to the Orissa Flood Advisory Committee of 1945. Criticizing the remedies suggested by these committees, he observed: “With all respect to the members of these committees, I am sorry to say that they did not bring the right approach to bear on the problem. They were influenced by the idea that water in excessive quantity was an evil, that when water comes in excessive quantity, what needs to be done is to let it run into the sea in an orderly flow. Both these views… are now regarded as grave misconceptions, as positively dangerous from the point of view of the good of the people.”

“Man suffers more from lack of water than from excess of it”, Ambedkar said. “Not only was nature niggardly in the amount of water it gives, it was also erratic in its distribution, altering between drought and storm. But this could not alter the act that water was wealth. Water being the wealth of the people and its distribution being uncertain, the correct approach was not to complain against nature but to conserve water.”

Ambedkar observed that “if conservation of water was mandatory from the point of view of public good, then obviously the plan of embankments was a wrong plan. It was a means which does not subserve the end, namely, conservation of water, and must, therefore, be abandoned.” The appropriate method, according to him, was to follow the approach adopted by some developed countries, that is, “to dam rivers at various point to conserve water permanently in reservoirs” and put it to multipurpose use. Such reservoirs, beside irrigation, could be used for generating electric power and navigation. He particularly emphasized the use of rivers for navigational purpose. In the conference on Orissa Rivers (November 8, 1945), he observed:

“Navigation in India has had a checkered history. During the rule of the East Indian Company, provision for internal navigation occupied a very prominent part in the public works budget of the Company’s government. Many of the navigation canals we have in India today … are remnants of that policy. Railways came later, and for a time policy was to have both railway and canals navigation. By 1875, there arose a great controversy in which the issue was railway versus canals. The battle for canals was fought bravely by the late Sir Arthur Cotton… Unfortunately supporters of railways won.”

In the first Conference on Damodar Valley Project (Calcutta, 3 January 1944), Ambedkar asserted: “The Damodar project must be multipurpose project… It would not only deal with the problem caused the floods, it should also provide for irrigation, electricity and navigation… There has not been enough realization that our policy for water resource development must multi-purpose policy so as to include all possible uses of water.”

Ambedkar stressed the multipurpose use of water more emphatically in the case of the Mahanadi river: “Orissa must…adopt the method which the USA adopted in dealing with the problem of its rivers…that method was to dam rivers at various points to conserve water permanently in reservoirs. Such a storage scheme as applied to the river Orissa will have the special feature, namely, that it will not only give irrigation and electricity, but also provide a long line of internal navigation…”

The systematic steps towards the introduction of the concept of River Valley Authority for projects on inter-state rivers and creation of two technical experts bodies at the Centre, namely the Central Waterways, Irrigation and Navigation Commission and the Central Technical Power Board were attempts to provide technical advice for the multipurpose development of water resources on regional basis. He made this clear in the first Calcutta Conference (3 January 1944):

“As a preliminary steps for securing the best use of water resources of the country the Government of India have created as central organization, called the Central Technical Power Board, and are contemplating to created another to be called the Central Waterways, Irrigation and Navigation Commission. The objects which have led to setting up of these two organizations are to advise the Provinces on how their water resources can be best utilized and how a project can be made to serve purpose other than irrigation.”

Ambedkar expounded the nature of the new water policy in the First Calcutta Conference. He said: “It is not far from true to say that so far there has been an absence of positive all-India policy for development of water resources. There has not been enough realization that our policy for waterways must be multipurpose policy so as to include the provision for irrigation, electrification and navigation. Government of India is very much alive to disadvantage arising from the present state of affairs and wishes to take steps to evolve a policy which will utilize the water resources to the purpose which they are made to serve in other countries.”

 Contribution to labour policy

Ambedkar adopted a three-fold approach in the formulation of labour policy:

  • Providing safeguard and social security measures to workers.
  • Giving equal opportunity to workers and employers to participate in formulating labour policy and strengthening the labour movement by introducing compulsory recognition of trade unions in order to enable labour to play an effective role in the economy of the country.
  • And establishing machinery for enforcing labour laws and settling disputes.

In order to achieve this, the appropriate machinery was evolved.  These include:

  • Setting up of the Indian Labour Conference and Standing Labour Committee;
  • Enactment of labour laws;
  • Establishment of the Chief Labour Commissioner’s organization;
  • Appointment of the Labour Investigative Committee;
  • Machinery for fixing minimum wages;
  • Standing orders in industrial employments; and
  • Recognition of trade unions.

These efforts on the part of Ambedkar for protection and promotion of the interest of labour and working class as a member of the Viceroy’s Council made significant impact on the labour movements and industrial relations of India. The Indian Labour Conferences he convened gave an opportunity to labour to work shoulder to shoulder with the employer for formulating labour policies for economic development in the post-independence era. The Minimum Wage Act, 1948, the Industrial (Standing Orders) and social security measures adopted by him provided framework for improvement in their working conditions. The creation of the Chief Labour Commissioner’s organization facilitated the implementation of labour laws. It also served as forum for workers and employers to come together and settle their disputes without resorting to strikes and lockouts. The recognition of trade union provided an instrument to fight for their rights.

 Other issues

Ambedkar’s contributions dealt with the issue of reorganization of states, which posed considerably difficulty to the Constituent Assembly, in “Thoughts on Linguistic States”.  His views were new and differed from those of the State Reorganization Commission. According to him, “The one state, one language theory may be put up by any of the two ways: (1) one state, one language or (2) one language, many states.” While in principle he agreed that language should form the base for the creation of states, since a linguistic province produces what democracy needs, namely social homogeneity, and makes democracy work better than it would in a mixed province, he favoured the second option of people speaking one language organized into many states, his preference being for small states.

Ambedkar laid down five principles for the formation of the individual states: (a) efficient administration, (b) needs of the different area, (c) sentiments of different areas, (d) proportion between the majority and minority, and (e) the size of the state. Based on these, he proposed a revised schemes of the States. This scheme, in fact, became the basis for the formation of new states after 1956.

Regarding religious minorities, an issue which was uppermost in the minds of many at that time, Ambedkar expressed his views in a book, “Thoughts on Pakistan”, which was  provocative but helpful analysis of the basis of nationalism. It helped government to develop an understanding on the question of partition.

Ambedkar worked for the equal right for Hindu women as law minister. He introduced the Hindu code bill which provided equal rights to women in property, education and other spheres. This effort of Ambedkar ultimately led to adoption of the bill, although in installments and a gradual manner.


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