In the chapter “Democracy and Rising Inequalities in India”, by well-known political scientist Prof Zoya Hasan — published in the book “Promoting Democracy for a Better and Peaceful World: Regional, National and Local Perspectives” (2015)*, released by Observer Research Foundation and Global Policy — the author seeks answer to the question: How and why could dramatic inequalities persist in a democracy in which voters create pressure for improved outcomes? Excerpts:
The strength of India’s record of political democracy has not been matched with egalitarian economic development. India’s claim as the world’s largest democracy is flawed by failures to reduce mass deprivation and promoting human development. The economy has been on a high growth path leading to growth rates of eight or nine per cent for the economy as a whole in the last few years, making India the second fastest growing economy in the world. The quality of India’s growth, however, is flawed, given the persistence of so many indicators of backwardness in the national economy. It has been largely ‘jobless’; as a consequence, India risks becoming a twotier economy.
Economic growth has been biased towards services and unorganised industry, employment in manufacturing has not grown despite high economic growth, the vast majority of the people working in very vulnerable, fragile, and low-paying jobs. Even as many Indians have benefited from rapid economic growth, it has short-changed a significant bulk of the population. The main beneficiaries are the comparatively affluent in urban areas, while things have got worse for the majority of the rural population and a significant part of the urban population. Despite accelerated growth, poverty has gone down slowly. More than one-third of the population remains trapped in poverty. This reinforces the idea of an elite revolution benefiting the top 20 per cent of the population, to the virtual exclusion of the majority.
Even a cursory look at the human development indices will bring home the stark divide built into India’s political economy, clearly unable to address the educational and employment needs of the majority of the population in the rural sector. Comparable growth rates sustained over similar lengths of time have utterly transformed societies in the 20th century: South Korea, Taiwan, Singapore, and large parts of China, to mention the most prominent ones. They have gone from largely poor, illiterate, and agrarian societies to middle-class, literate, urbanised, and industrial societies with standards of living that is vastly superior to ours.
However, the development experience of these countries is distinct from India’s because they embraced democracy two decades after the start of their economic upturn. China and Singapore are yet to become liberal democracies. The problem is not just that the state has significantly underperformed when addressing mass deprivation but that social progress is not commensurate with growth when the surpluses available to tackle this problem has increased substantially. This is hardly surprising because in India there is considerable tolerance for inequalities. In reality, the elite and middle classes do not find inequalities disconcerting. This leads to the culture of avoidance and the political economy of normalising poverty and rationalising inequality.
The key lies in identifying the ruling structure and how the rulers manage the country’s many divisions. As before, the ruling elite is a ‘coalition of interests’. But the composition of the capitalist class has changed under the pro-business growth model. Instead of the earlier dominance of a few monopoly houses, there are many more entrants into the capitalist class. It is made up of large and medium businesses, the new entrepreneurs in real estate, finance, and information technology, the upper segment of the urban middle classes, the upper echelons among the bureaucracy, and large sections of the media. Corporate capital has gained a position of unparalleled significance within middle classes and urban society, displacing the legitimacy previously enjoyed by the developmental state. High GDP growth has seen an enormous concentration of wealth with the private corporate sector the chief beneficiary of the economic boom.
Profits of the corporate sector have grown at 25 per cent, which is among the highest in the world. The growing power of the business class is underpinned by a state-business alliance and integration with the global economy gaining momentum. A business driven development model is a recipe for exacerbating inequality; this pattern of economic growth is disequalising and results in concentration of wealth amid impoverishment and insecurities marked by acute discontent and the occasional violent clashes. The better off segments are not bothered by the huge social divides perhaps because the large size of the middle class acts a protective 20 shield leading to complacency on the part of its members. In fact, the new elites are impatient at being held back by the backwardness of India. It is quite dismissive of electoral politics, though it is this electoral democracy that legitimises its exercise of power.
The political class too is drawn from the affluent, educated, and socially powerful sections of society. Every succeeding Parliament contains increasing numbers from the upper echelons of society, with the current Lok Sabha and Rajya Sabha assuming the character of an exclusive club of millionaires and multimillionaires. Election itself has become highly expensive that no ordinary citizen can afford to fight an election on their own steam. As a result, the class composition of democratic institutions has become almost predetermined. This is evident from election expenditure and declaration of assets of MPs and candidates. According to one estimate, in the 2012 elections in Himachal Pradesh, the declared income of the 10 richest candidates is cumulatively over Rs. 394 crores; in the 2012 Gujarat election, the 20 richest candidates won the elections and the richest among them declared assets of Rs. 268 crores.
India has always been a deeply divided and unequal society. Despite growth acceleration and impressive economic growth, disparities remain widespread; indeed, there is evidence of widening inequalities along a variety of dimensions: city versus the countryside; across regions; and along class lines. Faster economic growth has been accompanied by huge inequalities and disparities. Inequalities are an outcome of India’s model of development in which growth was not based on industries, where ordinary people can get jobs.
The most striking problem with this model is that it has failed to create enough new jobs and this is one of the reasons why inequalities have increased. The highest growth sectors are construction, trade, advertising, telecoms, and road transport. In all these sectors, what counts is privileged access to natural resources and the national commons, most critically land, mining leases, property development rights, construction permits and spectrum allocation, which is at the core of the government’s discretionary powers. These disparities and inequalities have been intensified by large-scale corruption. The numbers of scams and scandals have been growing as hundreds of billions of rupees are extracted in a variety of ways.
New dimensions have been added to these divisions and these have contributed to greater inequality. Today’s divisions run along multiple fractures—class, caste, gender, urban/rural, advanced/backward regions, and religion. The last of these divisions is particularly important not the least because the religion axis of inequality has been overlooked despite evidence that large sections of the Muslim minority are among its poorest citizens excluded from the new economy. Some regions have seen impressive economic growth, but there are regions that have witnessed social polarisation due to lack of opportunities and economic and social development.
However, with the process of economic liberalisation, not only did inequality grow phenomenally, but even the egalitarian vision itself, was abandoned. With these changes, a significant change has taken place in thinking about development as faster economic growth and in the process and pattern of translation of development objectives through high growth. However, a major problem lies with the very nature of the growth process which does not provide an opportunity for a democratic and equitable alternative route to economic development.
It relies on generating growth through various incentives designed to encourage the expansion of private capital. These incentives—in the form of tax concessions, cheap loans, and access to underpriced land and other natural resources, and so on—lead to the concentration of wealth and income, and create the conditions for crony capitalism and corruption to flourish. This strategy militates against investing in social welfare and in a more broad-based and egalitarian economic expansion. The socio-political interests that allow the persistence of gross inequalities have ensured that public policy—which would deliver basic benefits to the entire population—was not made a priority. These policies in the Indian context would include the following: agrarian reform; food procurement; education; employment creation; changes in governance through decentralisation; and some devolution of resources. Indian governments in the recent past have not invested enough in agriculture, or in the poorest regions; these omissions have contributed to growing deprivation.
*Click HERE to download the full book