Excerpts from the research paper “Wealth Inequality, Class and Caste in India, 1961-2012”, by Nitin Kumar Bharti, World Inequality Lab, Paris School of Economics:
India is a very peculiar country with a complex and regressive caste system. Unfortunately past unequal distribution of wealth along caste lines has never been corrected. A simple depiction is the land distribution in India. Land forms a major part of wealth in India (Rural India- 65% and Urban India 45%). In the past land distribution was entirely based on caste where the upper-castes of society possessed almost all of the land and lower castes predominantly formed the working class. Colonial period concretized the possessions of land by distributing land titles and land ownership.
Indeed, post independence India adopted land reforms aiming for the distribution of land ownership to the real farmers who were mainly from the lower castes. However, even going by the reports of the government this measure has met with partial success and the distribution did not go well beyond certain ranks of the castes.
Early adoption of an egalitarian meritocratic system was accompanied by a support system in the form of positive armation (reservation/quotas) for the lower castes. The data shows that the situation of every caste has improved over time, but there is no convergence between upper and lower castes. The rate of growth of forward/upper castes in terms of acquiring wealth or consumption is higher than the lower castes.
The urbanisation level in India has grown from a level of 10.8% in 1901 to 31.2% in 2011. It is still a rural dominated country and the urbanization level is much lower than what is experienced in developed countries. France US, UK all have urbanization level as high as 80%. The urbanization level is very low even compared to developing nations likeChina (55%) South Africa (65%), Russia (74%). It is even lower than the urbanisation level in partitioned countriesPakistan (38%), Bangladesh (34.3%). India still is a country of villages where more than 65% of the population resides.
Caste system is not only a Hindu religion phenomena anymore though it indeed has its beginning in Hinduism/Brahmanism way of living. It has now entered into all the religions in India, in one or other form. It is believed that Buddhism and Jainism, the two ancient religions of India were born in around 5th century B.C against the backdrop of high levels of social inequality that generated from discriminatory norms of Brahmanism of that time. With time these religions themselves acquired the prejudiced traits of Brahmanism. The decline of Buddhism in its own birthplace is often associated to this reason.
Caste system has broad acceptance in the society. It is not a menace in the opinions of majority of the population. It acts as an identity and beyond that it provides some of the benefits which the welfare state provides. For all the practical purposes, there is very less competition inside this system to outrank others, because caste is determined by birth. The top-most rank is reserved forever for the perceived creators of the system – Brahmans.
Caste system provides a form of social status to every caste. Indeed, as with any form of status, it comes at some cost. Some castes derive higher status tag at the expense to lower status tag to others. However, it is more generous in the sense that the higher status has been distributed to fairly large proportion of population. 5% Brahmins and around 5-7% Rajputs (from Kshatriya of varna), Bania ( 2%) are considered higher castes. It could be surmised that the most important and unique factor which provides sturdiness to the caste system is the fact that it assigns relative position to every caste in the society.
Even though Rajputs come second in hierarchy, they are on top of 90% of the population. Similarly Banias derives utility by being higher in status to 88% of the population. And this way the caste system has created a situation where all the castes (except the ones at bottom) derive some kind of superior social status compared to other castes.
As per Census data the proportion of SC in population has increased from 14.67% in 1961 to 16.6% in 2011. During the same time period the proportion of ST has increased from 6.23% to 8.6%. OBCs formed 38%, 30%, 20%,13.6% in Hindu, Muslims, Christians and Sikhs respectively which increased to 43%,43%,25%,21% in 2009 in the same order. The increase in OBC population is in all religion which is chiefly is due to reclassification of more castes into OBC.
Average annual income of an household in India is Rs.113,222 (Rs 9, 435 per month). The annual income of ST and SC group stands at 0.7 times and 0.8 times lower than the all-India average income. OBC and Muslims both have around 0.9 times household income of the overall average income. Forward castes (FC), have average household income at 1.4 times the all-India income (with a slight difference between Brahmin and Non-Brahmin).
Categorizing the population in 5 brackets from Poorest to Richest, 50% of the Brahmin, 31% of Rajputs, 44% of Bania and 57% of Kayasth fall in richest category. For other caste groups only 5% ST, 10% SC,16% OBC,17% Muslims fall in richest category.
Within ST, Christians have 1.6 times income and assets than all-India average and their educational level is better than many other groups. Muslim STs’ economic parameters are closer to all-India average but education wise they are behind. Hindus and Other/No religion STs which forms 78% and 12% of all STs are the worst performing groups.
Average per capita wealth (APCA) is increasing since 1961 and the increase is faster in recent years. In Rural areas, till 2002 there is only a modest increase from Rs.50.8k in 1961 to around Rs.180k in 2002. This figure jumped to Rs.390k in 2012 which is 117% growth in a decade or 7.5% annual growth rate from 2002-12. Similarly in Urban area, we see a steep increase after 2002. The APCA in Urban area has increased from 272k in 2002 to 904k in 2012, implying an increase of 232%, or 12.7% annual growth rate. The Urban-Rural gap in APCA is consistently increasing since 1981. The ratio of Urban APCA to Rural APCA has increased to 2.32 in 2012 from 1.25 in 1981.
SC suffers the worst in total wealth share as it owns only around 7-8% of total wealth which is almost 11 percentage points (pp) less than their population share. ST owns 5% 7% of total wealth which is around 1-2 pp less than their population share. OBC group owns 32% of total wealth in 2002 which increased only marginally in 2012 resulting in overall worsening of the gap relative to population share (-7.8% to -10.2%), due to considerable increase in their population share. On the other hand FC group share has shown an increase from 39% to 41% in their share in total wealth. Relative to their population share this group improved the gap from +14% to +18%.
The total land area with ST which was 3.6 pp more than their population share in 1991 increased to 10.81% in 2012 at all-India level. There is no surprise that ST own more land as majority of them still closely live with nature in forests with large land area. The big increase in 2012 survey is surprising. Forest Rights Act (2006) was implemented from December 2007, with the provision to grant legal recognition to the rights of traditional forest dwelling communities — almost all of whom will be ST. Land title rights was one of the rights. 1.1169 millions claim covering 3% of the forest area was recognized till 30th Apr 2011. OBC group has around 38% land area. SC is the worst in land area ownership. The total land value share is 2 pp less for ST and Muslim, 11 pp less for SC, 7.9 pp less for OBC however 14.7 pp more for FC. This suggests the poor land valuation of the land owned by ST and OBC. The poor land valuation could be due to poor land fertility in rural areas or less developed land area in urban areas.
Middle wealth population in Rural India used to own 45% total value of rural wealth in 1961 which has decreased to 39% in 2012. The wealth share almost equals the population share of the middle 40%. In Urban sector, Middle 40% share has declined to below 35% in 2012 from ⇠ 42% in 1981. We see a jump in 2002 in Middle wealth population which is in contrast to the decline of Top 10% share we saw above. At all-India level, the share of middle wealth population is now closer to urban sector level at ⇠ 35%. The share of bottom 50% in Rural India has decreased from 12.6% in 1961 to 10.5% in 2012 which implies a drop of 15.9%. Inequality in Urban regions is more extreme. In those regions the bottom 50% owns only 5.9% of total wealth. At all-India level the share of this section stands at 8%. The condition of half of the population of country is dismal in the share of total wealth.
The divide between FC and rest of the caste is more prominent in 2012 than before. Interestingly within ST the allocation of wealth to Top 1%, Top 5% and Top 10% population increased than that of in SC in 2012 which was opposite three decades earlier. Within Forward Caste, Top 1% within FC owned almost 13.6% of the total FC wealth in 2002 which increased to 29.4% in 2012. Top 5% owned 32% in 2002 which increased to 47.6% in 2012. And Top 10% now owns 60% of the total FC wealth. This is a drastic change in ten years is which needs more enquiry. The inequality within FC group is the highest.
Within ST, Top 1% owned 10.7% of total ST wealth in 1991, which increased to 15.1% in 2002 and further to above 19.5% in 2012. Top 5% share of total ST wealth increased from 27.7% in 1991 to 38.93% in 2012. Top 10% of share increased from 40.3% in 1991 to 51.4% in 2012. This caste group has seen a consistent rise in within caste inequality. Within SC, Top 1% owned 11.9% of total SS wealth in 1991, which decreased to 10.83% in 2002 and then increased to 14.4% in 2012. Top 5% share of total SC wealth increased from 30.3% in 1991 to 33.5% in 2012. Top 10% of SC share increased from 43.6% in 1991 to 46.7% in 2012. SC has the lowest level of within caste inequality in terms of top decile share. Within OBC, Top 10% share increased from 46.2% in 2002 to 52% in 2012.
Bottom 50% of the population has lost 2-4 pp within all the caste categories. The major decline of their share in FC followed by ST, OBC and SC and Muslims. Fig 9a shows that there is slight improvement of wealth share in Bottom 10% population within every caste. The gain is highest in Muslims (.14 pp) followed by OBC (.12 pp).
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