Grigori G. Kotovsky

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Certain Trends in India's Socioeconomic and Socio-Political DevelopmentAuthor(s): Grigori G. KotovskySource: Asian Survey, Vol. 24, No. 11, A Soviet Symposium on Pacific-Asian Issues (Nov.,1984), pp. 1131-1142Published by: University of California PressStable URL: http://www.jstor.org/stable/2644147 .Accessed: 26/03/2011 03:40

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CERTAINTRENDS IN INDIA'SSOCIOECONOMICANDSOCIO-POLITICAL EVELOPMENT___________ Grigori G. Kotovsky

In the system of international relations, the roleplayed by the South Asian region has increased in recent decades. Thisincrease is associated with the geopolitical conditions of the IndianOcean, the sharp increase in the level of military activity in the region,the emergence of conflicts in Southwest Asia, and the increased partici-pation in world politics of the South Asian countries that have become,following their liberation, active subjects in the processes of worldhistory. That description particularly applies to India, which is rapidlybecoming a great Asian power. In that sense an analysis of the basictrends in its domestic development is particularly important in order toidentify prospects for the dynamics of international relations at regionaland higher levels.

The assumption of political power in India by the local affluent groupsin 1947 created conditions conducive to a more rapid-in comparison tothe previous century-development of capitalism and its penetrationinto all sectors of Indian society. For more than a third of a century, Indiaexperienced a restructuring of its colonial-cum-feudal economic system.This restructuring proceeded along the following main lines:1. Industrialization, characterized by more rapid growth rates intechnology-intensive basic industries.2. Precapitalist types of ownership in agriculture were replaced by acapitalist sector. According to my estimate, by the mid-1970s semifeudaltenancy covered at most 5-7% of the entire occupied land. At the sametime, capitalist farms and entrepreneur-type economics of a transitionalto capitalist type produced more than 50% of the entire gross agricul-tural production (in terms of value).

Grigori G. Kotovsky is Professor and Head of the Department ofIndian and South Asian Studies, Institute of Oriental Studies, Moscow.' 1984 by The Regents of the University of California

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1132 ASIAN SURVEY VOL. XXIV, NO. 11, NOVEMBER 19843. Restrictions on the role of usurious capital were evident. By the late1970s the traditional forms of credit and marketing had used themselvesup as factors ensuring the full production cycle of small industrial enter-prises and large agricultural farms. At the same time, usurers and tradi-tional merchants continued to dominate the bulk of the "unorganized"sector, which still depended on preindustrial production forces.4. Policies encouraging national business and the gradual elimination offoreign capital from key positions were effective.As a result of customs protectionism, full or partial nationalization ofseveral enterprises, elimination of the system of managing agencies, andstate support of national private undertakings, the foreign monopolieswere demoted from the command and control positions in the country'seconomy that they had held at the end of the colonial period. Thisprocess forged ahead despite the growth in the absolute numbers offoreign private investments and despite the considerable growth incooperation between big foreign capital, including transnational corpo-rations, and the Indian corporate sector.The principal tool in the structural change of India's economy and inensuring economic growth and development was state capitalism. Animportant role was assigned to the public sector including undertakingsin the production process, and to large-scale regulation of the privatesector through an intricate economic and administrative mechanism.State capitalism determined the way in which certain kinds of planningwere done for developing and implementing the state economic policy.The public sector that was put together helped create and operate theindustrial and agricultural infrastructure including fuel and energyfacilities (public utilities), transportation and communications, majorirrigation systems, etc.; basic heavy and defense industries; and differentdepartments and agencies in the field of production credit and com-merce, which for one thing stimulated private and largely (small) busi-ness in certain economic domains, and for another, helped in pursuing aparticularsocial welfare policy designed to ensure minimal employmentand consumption among the poor. Economically, the need for a publicsector arose out of the failure of the private sector, represented in thelate 1940s and early 1950s predominantly by major national and foreigncapital, to rapidly restructure the colonial-cum-feudal economic system.In order to do that, it became necessary to curb somewhat the freemarket and free enterprise systems. That was the driving force of stateregulation of the national economy, supported as it was by the publicsector.State economic regulation made it possible to assign priority to small


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GRIGORI G. KOTOVSKY 1133businesses or to public sector enterprises through restrictions and thecontainment of big and monopoly capital in some economic areas; tolevel out inter- and intra-industrial disproportions arising at differentstages of economic growth and development; to assign priorities, as far aspossible, in investment policies of private capital;and to practice protec-tionism vis-a-vis private business in stimulating their cooperation withforeign capital. As a result, the private capitalistuklad' began to functionto a major degree within the framework of a system that also includedthe state capitalist socioeconomic structure. A diversified industrial com-plex and a fivefold increase in industrial output had, by the late 1970s,launched India into the orbit of the world's ten largest industrial produc-ers. Having left behind its status as an agrariannation, India had becomean agro-industrialized country.This created conditions for considerable growth in India's scientificand technological capability, which produced spectacular results in nu-clear research, rocket engineering, and space research. A good start wasprovided for such science-intensive fields as nuclear power engineering,electronics, and air and space technology.The widening gap between the major industries forging ahead andagriculture lagging behind precipitated the steps taken in the second halfof the 1960s to intensify agricultural production. The so-called greenrevolution, which predominantly embraces the irrigated lands in North-western India, envisaged large-scale use of high-yield varieties of cer-tain crops such as wheat and rice. The program was implemented withconsiderable financialand institutional assistance from the state and usedsophisticated agrotechnological techniques. The past two decades havewitnessed an initial process of reequipment in Indian land tilling, aprocess that so far covers most economically viable farms and only someareas. The intensive and extensive processes in agriculture have almostdoubled India's agricultural output, with the result that the country ispractically self-sufficient in food grains (given the present low level ofper-capita consumption) and has created sizable buffer stocks throughdomestic production. The stabilization of the food situation, which wascritical in the mid-1960s, is one of India's most important achievements.By the mid- and late 1970s, the restructuring of the nonagriculturalsector of the economy had to all intents andpurposes been completed. Inagriculture, enclaves of agrarian capitalism had been created that havebecome basicallyself-reliant. It is important that in the 20 years between1960-61 and 1980-81, the share of capital investments used for the

1. Uk/ad is a system of production in which economic units have the same pattern ofownership-i.e., state, private, communal, or some other type of ownership.


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1134 ASIAN SURVEY, VOL. XXIV, NO. 11, NOVEMBER 1984import of machinery and equipment was reduced from 37% to 16%, andfor the import of general purpose grain from 8% to 1.4%. It can be safelystated that by now India has achieved a level of economic self-reliancethat one usually terms economic independence.Despite the positive changes in social production, India's economicand social development is plagued by deep-rooted contradictions anddifficulties determined by certain structural distinctions in the country'ssystem of production relations. These distinctions can basically beclassified into four major groups according to four major attributes:1. A particular type of co-occurrence of several economic systems, inwhich social and economic structures (uklads) coexist and interact. In acontemporary industrialized nation, these structures represent succes-sive forms in the development of the capitalist mode of production,ranging from the manufacturing stage all the way to the present statemonopoly capital.2. A vast relative sustained overpopulation, which as a result ofeconomic and demographic factors continues to increase. The over-population, which has existed since colonial times, builds up mainly inthe petty commodity and lower capitalist structures (uklads).3. The combination of the capitalist accumulation process (in itspresent-day forms) with the process of primary accumulation of capitalinherited from the colonial period, protracted over time and exaggeratedin terms of its place in social production.4. The decisive role of the state in economic development (in the formsof state regulation and the public sector functioning not only as a"locomotive" for the private capital business initiatives, but also as a mostimportant "booster" for the integration of historically asynchronouseconomic structures (uklads)by means of commodity, capital, and labormarkets.

This distinction, which permeates the socioeconomic structure ofcontemporary India, is most succinctly expressed in the dual nature ofthe country's economy. Although a considerable proportion of the GNPis generated by modern industries and transport as well as by theentrepreneur-type agricultural farms using hired labor and industrialforms of permanent capital (agricultural machinery, fertilizers, pes-ticides, seeds, etc.), the bulk of the population (at least 70%) is involvedin the type of production that is based totally or predominantly onmanual labor. These forms of production represent the forces of prein-dustrial production. This "traditional"sector is basically represented bythe petty commodity economic structure (including the various eco-


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GRIGORI G. KOTOVSKY 1135nomic forms transitional from the natural-patriarchaland semifeudaleconomic structures) and by the different forms of capitalism of themanufacturing type. The type of production forces in the "traditionalsector" explains the sustained high level of in-kind relations in the oper-ation of the constituent economic units.

The dualism of India's economy is manifested among other things bythe following situation. Given the fairlyhigh absolute GNP (13th to 15thlargest in the world in the early 1980s), India is near the bottom of thelist in terms of per capita GNP. In the "traditionalsector," labor produc-tivity and the consumption level are extremely low: according to officialstatistics 48% of the country's population was below what is known asthe poverty line. In other words, they did not have the minimum forsustenance. The great majority (83%) of this group inhabits rural areasand primarilyincludes the families of tiny and marginallandholders, andthe owners and tenants of pauperized and semiproletarian economies aswell as the families of landless agriculturallaborers. These two groupsaccount for about 54% of all rural households.The uninterrupted replenishment of the "poverty reservoir" in thetraditional sector and particularlyin its agriculturalsegments has becomeIndia's most important and most acute socioeconomic problem at thecurrent stage of development. The solution to that problem is compli-cated and multidemensional.First, the use of the "redundant"population as a work force in modernindustrial production is restricted both by the overall rate of industrialgrowth (4-4.5% in the 1970s) and by the emphasis in industrial de-velopment upon capital-intensive types of production. In their own turnthese two factors are to a considerable degree determined by the restric-tions of the "organized sector's" domestic market, catering, in the finalanalysis, to the top 30-40% of the population, and by the type andvolume of foreign economic relations with the world's capitalist market,which in recent years has been rather depressed. Under these conditionsthe percentage of the work force engaged in agriculturein 1981 was onlya little lower than in 1951: 66.7% and 68.33%,respectively.

Second, further structural reforms in agriculture that are imperativefor any improvement in the material statusof ruralworking people cameup against insurmountable socio-political obstacles. The program to im-pose ceilings on private land ownership was in fact not implemented. Upuntil now, only about 5% of the land owned by larger landlords (ownersof 8 hectares or more) has been alienated. The virtual failure of agrarianreform can be attributed to the tooth-and-nail resistance on the part ofthe land-owning village elite and the elite-manipulated lower echelons ofthe administration and the bourgeois politicians who control the indi-


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1136 ASIAN SURVEY VOL. XXIV, NO. 11, NOVEMBER 1984vidual state administrations. The state legislation regulating landlord-tenant relations, the enforcement of minimum wages for agriculturallaborers, etc., also suffered defeat. And purely economic factors play acertain role. The competition among barely landed and landless peasantsfor each land plot to be leased out forces them to accept the rack-rentingconditions of lease. The available work force, far in excess of demand inthe agricultural labor market, also forces agricultural workers into ac-cepting wage levels that barely keep them alive. The unsatisfactoryemployment situation to a large extent explains the failure of the 1975program to liberate from indebtedness the bonded laborers, who, ac-cording to various estimates, numbered up to four million.

Similar difficulties arise when attempts are made to eliminate theexploitation of small agricultural producers by usurers, traders, andspeculators. By the early 1970s, most of the "nonorganized" credit inrural areas was no longer controlled by professional moneylenders(sahukars). Instead, control was assumed by the land-owning villagenobility ("agriculturistmoneylenders"). The market relations of medium-sized and small holdings, just as before, are mediated predominantlyby traditional merchant capital, personified in the castes of professionaltraders and moneylenders and intimately related to the urban bour-geoisie, as well as by the rural elite decisively penetrating this aspect ofcommerce.Third, the alleviation of the gigantic colonial overpopulation problemin rural areas is hampered by the ongoing demographic growth notindexed to employment opportunities. The population growth rate in-creased from 1.35% in 1941-51 to 2.05% per year in 1971-81. India'spopulation in absolute figures increased from 361 million in 1951 to 685million in 1981. Even according to optimistic predictions by Indian de-mographers, the country's population will be stabilized only by the mid-dle of the next century at 1.2 billion, nearly twice the present population.The poorest people crowded out of agricultural production replenishwhat is known as bustis (shantytowns) surrounding practically all of thecountry's major industrial centers. The growing migration into the citiesaggravates not only underemployment but also full unemployment. Be-tween 1970 and 1982, the number of officially registered unemployedincreased from 5.1 to 18 million people, and their percentage of theoverall number of persons employed by the organized sector grewfrom 29% to 79%. Incidentally, the ranks of the unemployed include notonly factory workers but also intellectuals and office personnel: thenumber of unemployed university graduates is now almost half a millionpeople. The growing unemployment rate for city dwellers depresses not


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GRIGORI G. KOTOVSKY 1137only the wage situation, but also other terms of employment for indus-trial workers and office personnel.

Therefore, the demographic and economic situation has turned out tobe one of the most important factors hampering continued economicgrowth and development. In formal terms the situation is well describedby the insignificant per capita growth of production.

On the one hand, the annual rate of economic growth has been 6.3%since Independence as against 0.65% for the last 30 years of colonialrule. The overall GNP has increased by a factor of 3.1, which helpedreverse the trend toward decreased per capita national income, a trendtypical of that particular stage of the colonial period in India's history.

On the other hand, since Independence per capita national income hasgrown (from a rock-bottom level in the 1940s) by a factor of only 1.5.Per capitaconsumption among the low income groups, which account for50-60% of the entire population, has practically stagnated.This situation has produced at least two important results. First, sincethe late 1960s and mid-1970s, with the virtual completion of the firstmajor step in independent India's economic development-the restruc-turing of the colonial-cum-feudal economic system-the insufficientelbowroom for the domestic market has begun to increasingly hold backcontinued industrial development. The production capacities have beenunderutilized, the financial indicators characterizing the performance ofindustrialcompanies have deteriorated, and the growth rate of industrialproduction has slowed. In this context, foreign markets were of particu-lar concern. The years of independence have witnessed a change in thestructure of India's foreign trade. Its exports have come to include alarger share of industrialgoods (chemicals and machinery increased from2.2% to 15%), while the percentage of rawmaterialsand traditionallightindustry exports decreased from 80% to 46%. However, in a de-teriorating world trade situation, India's foreign economic expansion wasonly a limited success. The country's objective need to break through tothe world market predetermined many of the important aspects of itsforeign policy, particularly its active participation in the campaign for anew international economic order and for a serious North-Southdialogue. India's quest for foreign markets other than those of west-ern countries invariably spurs on the country's political and economicactivity in the Third World and in the countries of the Socialist system.And India's demographic problem had a direct impact on the course ofindustrialization and an indirect impact on the dynamics of its foreigneconomic and political stance.

Second, this factor also manifested itself in the widening gap betweenthe haves and have-nots, the unprecedented polarization of wealth and


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1138 ASIAN SURVEY VOL. XXIV, NO. 11, NOVEMBER 1984poverty, which had to create a situation of mounting social tensions. Oneof the fundamental ways to solve this set of problems would be torestructure a multitude of subsistence economies and have them gener-ate surplus product. This can be accomplished through alleviating theproblem of rural overpopulation by boosting the rate of industrial de-velopment. This latter step in its turn would unquestionably result in areorientation of the organized sector, which would begin to gravitatetoward broader cross sections of the people as against the current orien-tation, which is almost exclusively toward the affluent few.At the same time, the present demographic situation calls for a vigor-ous demographic policy ("family planning") designed to drastically re-duce the rate of population growth. It has been universally recognizedthat this policy depends for its success on rapid improvements in theculturaland educational standardsof the people. In the finalanalysis, it isa matter of higher living standards supported by changes in economicdevelopment.It has been pointed out that these changes must ensue from majorstructural reforms. It will be noted further that India's need for"economic democracy" is made imperative by the extreme urgency of itseconomic and demographic problems, as well as by the general reg-ularities in the development of world history. Since the current politicalsystem makes that almost impossible, an alternative could well involve amajor program designed to solve, although only partially, the un-employment problem and to increase the consumption level for thepoorest. This policy is being implemented along the following principallines:1. To put into effect different large-scale programs in order to createjobs, particularlyin rural areas ("food for work"), etc.2. To mount special purpose programsextending assistance to small andmarginal farms (low interest credits, agrotechnological assistance, etc.).3. To curb the various precapitalist forms of economic and socialexploitation and discrimination, eliminating bonded labor, passing legis-lation banning caste discrimination, etc. The same program includessteps to give landless agricultural laborers plots for homesteads.4. To distribute necessities of life (particularly food) at fixed pricesamong the poor through a network of government-controlled "fairprice"retail shops.5. To set aside for the lowest social groups (the untouchables, thescheduled tribes) quotas in legislative and executive governmental agen-cies and educational institutions and to extend to them assistance insocial matters including their day-to-day living.


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GRIGORI G. KOTOVSKY 1139The tangible results of this social policy, which has been pursued forseveral decades now, have proved few and far between. This situation isattributable to a number of causes:

1. The scarcity of finances available from the state for social programs.2. The persistence of causes of particular socioeconomic phenomena,for example, debt bondage.3. The socio-political controversy over some of the programs and thevicious resistance to these programs by influential elements in theaffluent classes, legislators, and the administrative mechanism.

And yet, the political impact of the social programs is considerable. Incombination with populist slogans (the 20-point program, etc.), theyserve as an important tool in the hands of the ruling classes to maintainsocial stability and to ensure support for the ruling party by the electo-rate.

These factors will pressure the government into channeling an inr-creasing proportion of state resources toward these unproductive oralmost unproductive objectives. In recent years the policy of socialsubsidies has assumed a wider scope as a result of the ongoing aggrava-tion of the already-grave economic and demographic situation, as well asof the increasing role of the government's social policy, a kind of pres-sure valve to "let off" the social tensions.

The increase in the absolute numbers of people living below thepoverty line, the unbridled unemployment, the widening gap betweenthe haves and have-nots, etc., on top of the lingering remnants ofprebourgeois social oppression (caste oppression, etc.), tend to increasesocial tensions. This can be seen not only in the growing number of classand social conflicts registered by the official statistics, but also in thesporadic explosions of massive violence and vandalism, the operation ofterrorist groups, and the growing crime rate.At the same time, the intensity and type of India's class strugglegenerated by the contradictions of capitalist development do not mea-sure up to the overall level of social tension. This is associated with thefollowing factors:1. Despite the absolute domination of the socioeconomic structure byeconomies representing the makings of a capitalist system, theseeconomic units are predominantly either of a petty commodity type or ofa petty capitalist type, with some intermediate forms in between. In theseeconomic units, class relations are frequently obscured by the pater-nalist patriarchal relations between the employers and the hired hands.2. The classes of bourgeois society are still emerging and are generally


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1140 ASIAN SURVEY, VOL. XXIV, NO. 1 1, NOVEMBER 1984represented by different intra-class transitory social groups. For thisreason class awareness particularly among the working people has not yettaken definite shape.3. The formation of class psychology is complicated and hampered bythe prebourgeois (traditional) social institutions, such as caste, religion,community, patronymy, etc. The impact of these institutions is amplifiedby the extremely low cultural standards and prevailing illiteracy.

The emergence of classes in a bourgeois society occurs in India todaywithin the framework of religious, caste, village community, occupa-tional, and professional ties and within the ramified ethnic structure thecountry inherited from the colonial and precolonial past. The process ofclass formation is at a stage where the overwhelming majority of ruraland urban proletarians and semiproletarians objectively included in theclass of hired hands, as a rule subjectively identify themselves only asbelonging to a particular caste, religious community, the traditionalsection of a rural community, or, in some situations, to an ethnic andregional group. The affluent classes-bourgeois and bourgeois urbanmiddle classes-have almost emerged as an integral political entity.However, some groups and strataof the exploiting classes in India haveremained "classes unto themselves" instead of becoming "classes forthemselves." That predominantly applies to rural bourgeoisie.Despite the development of capitalism, the social behavior of theworking people as well as of the majority of Indians is determined inmany ways by the impact of religion, caste, and more recently, ethno-national relations, on their consciousness. This situation is objectivelypromoted by the following factors. First, caste and religious affiliation iswidely used by bourgeois politicians as an important tool for winningelection votes, and this emphasizes the role of caste and religion inregulating the social behavior of the masses. Second, class stratificationinIndian society to a major degree and particularlyin ruralareas coincideswith caste stratification. The rural elite basically belong to the upperwarrior-cum-agriculturistcastes, while the landless laborers belong to thelowest caste of the untouchables (harijans).The class oppression of thislatter group is aggravated by caste oppression. In the cities, most of thebourgeois class belongs to the trader and usurer castes and to the reli-gious communities of Parsis and Catholic Christians, and the intellec-tuals belong to the highest Brahman castes, etc.Caste prejudice hampers the emergence of mass organizations in ruralareas that would be based on strictly class principles. Thus, most mem-bers of agricultural workers' unions belong to the harijan or otherlowest castes, while members of peasants' unions belong to the higher


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GRIGORI G. KOTOVSKY 1141land-tilling castes. In recent years, despite the legislative ban on castediscrimination, there have been eruptions of violent killings of harijansby rich peasants and sometimes even by middle and poor peasantsbelonging to the rural elite castes.When the classes of bourgeois society that have basically emerged aseconomic entities still exist within the framework of a lingering tradi-tional social structure, class conflicts often take the shape of caste,religious, ethnic, or other clashes. The gap between the rich and the poorand class contradictions underlie the country's entire political life. How-ever, they frequently come to the surfacemediated by "traditional" ocialconflicts.

These social contradictions and conflicts can be classified into threebasic types:1. Conflicts expressing in effect socioeconomic and class contradictions,both bourgeois and prebourgeois.2. Conflicts expressing traditional contradictions in the socio-culturaland ideological fields.3. Conflicts expressing subjective. ambitions of professional politicianstaking advantageof traditionalcaste, religious, and ethno-regional grouprelations in their quest for political clout and power. The caste, religious,and ethnic conflicts often combine elements of the above types of con-tradictions, a factor that complicates the overall political process.

Religious communal and ethnic conflicts are also often associated withthe demographic factor and the problem of employment in general-forexample, competition for college enrollment openings not involving anypolitical demands.

In addition to the long-term socio-political factors listed above, India'spolitical situation is affected by short-term socio-political factors takingthe form of pressure groups that lobby political parties and organizations.These factors include social and political action by students and joblessuniversity graduates, the army, and the police.In the context of the on-going vicious competition in the menial andintellectual labor markets, as well as in businesses, particularly smallones, the above distinctions of social organization in Indian society arewidely used to their own advantage by reactionary communalist partiesand organizations.The development of capitalism in the country spurred the growth oflocal businesses, which created a basis for an explosion of bourgeoisnationalism. For instance, bourgeois nationalism brought to power in theSouth Indian state of Andhra Pradesh the regional Telugu Desam Party,


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1142 ASIAN SURVEY,VOL. XXIV, NO. 11, NOVEMBER 1984whose class orientation is virtually the same as that of the Indian NationalCongress that was defeated in that state.Capitalism as a socioeconomic system exists in India at a stage in itsdevelopment that provides considerable room for a deep and wideexpansion. This fundamental condition in combination with anotherfactor-the current level of class formation in the country-is the reasonthat the cumulative effect of the above socioeconomic and sociopoliticalfactors has not resulted in a nationwide crisis of bourgeois power. At thesame time, this condition had a decisive impact on the restructuring ofthe party and political structure that emerged in the early years ofindependence, a process that has become more intensive since the mid-1960s.The sum total of these factors was conducive to political action thatproceeded along the following lines:1. Access to power on a state level by Communist-led left-orientedpolitical coalitions.2. Stratification of bourgeois and petty-bourgeois elements in politics.Among other things, this process had a direct impact on the situation inthe communist movement and on the political changes in the states ofWest Bengal, Tripura, and Kerala, where control was assumed by leftforces.3. Accentuation in the political process of the particular interests ofthe rural bourgeoisie.4. Crystallization of ethno-national and regional interests.5. A certain polarization of the ideological orientation toward the mod-ern and traditional values of bourgeois and petty-bourgeois politicalformations.

The Indian bourgeoisie has succeeded so far, and will continue tosucceed in the near future, in striking a political balance between the sumtotal of class and social contradictions in the name of continued de-velopment of the bourgeois parliamentary system. However, in the moredistant future, major changes in political power may be precipitated bynew social tensions and a more vigorous class struggle.

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Grigori G. Kotovsky