by Straight-Bat for the Saker Blog

For quite some time, I have been alarmed with the general lack of understanding on modern India among the readers and activists (Indians and foreigners alike). As soon as “India” word appears on the paper or computer screen, a section of the readers start imagining the philosophical and religious connotation of the word, they try to realise how great saints spent whole life to get insights of ‘life’, ‘death’, and ‘moksha’! Another section of the readers on hearing the word “India” get an adrenaline rush through their body, their mind gets full of apathy bordering on hatred about ‘uneducated’ people who would continue to get screwed by their master perpetually. A third kind of readers feel India is a land of religious fascists, so no point in thinking about it.

The truth is, like any other civilization, the Indian subcontinent also has both glorious and sordid past. As a truth-seeker in political-social-economic domain, my concern is with the present state of affairs in India. However, in order to understand the present society, one must look back into the recent past – this article takes the interested readers and activists into a journey through the significant historical facts, politics, society and economy from around 1720 CE till March’2020.

A word of caution – readers who wish to read about how present ruling party mixed up the question of governance and economy with Hindu religion/spiritualism to bring back ‘ancient glory’ OR readers who wish to broaden their understanding on how covid-19 wrecked Indian economy since last week of March 2020 till date, won’t find this piece of article at all useful.

 1.  Introduction

In the post-colonial modern era, the South Asian landmass consists of the following countries:

  • India claiming an area of 3287.26 thousand sq. km. with 1352.64 million population in 2016
  • Pakistan claiming an area of 881.91 thousand sq. km. with 212.23 million population in 2016
  • Nepal claiming an area of 147.18 thousand sq. km. with 28.09 million population in 2016
  • Bhutan covering an area of 38.39 thousand sq. km. with 0.75 million population in 2016
  • Bangladesh covering an area of 147.57 thousand sq. km. with 161.37 million population in 2016
  • Sri Lanka covering an area of 65.61 thousand sq. km. with 21.23 million population in 2016

[ Link: https://en.wikipedia.org/wiki/South_Asia ]

Each of the above 7 modern political entities possess quite a few characteristics that would enable them to qualify as a ‘nation-state’, while there exist a number of other peculiarities that would render such definition of ‘nation-state’ as pretentious. So, for our discussion in this write-up, I would like to identify any entity listed above as a ‘country’ – it is simple and expressive of the actual meaning. A ‘country’ has a geographical boundary, a population, and sovereignty of governance within the geographical boundary.

South Asian landmass, as a whole, has a very significant characteristic – ever since the Palaeolithic age dawned over this subcontinent, may be around 10,000 BCE, the only common thread that links geography of all regions and history of all eras of this landmass had been / has been – DIVERSITY. In this respect, South Asia is very similar to the European subcontinent – just like South Asia, with a wide variety of clan, tribe, language, religion, custom etc. Europe could / can never come near to a homogeneous society (other than genocide, which was once tried as a political project). Similarity doesn’t end there – in case of both South Asian and European subcontinents, formation of political entities had/has been a dynamic idea and reality! So many republics, principalities, protectorates, kingdoms and empires dotted the landscape for past 4000 years, that the most uncommon feature of political processes across the South Asian and European subcontinents had been / has been – CENTRALISATION.

Without getting into the details of past history or trying to cover the entire south Asian subcontinent, I’m restricting myself within the region of Indian subcontinent (presently India plus Pakistan plus Bangladesh) from Maratha domination around 1719 CE till liberation from British empire in 1947 CE, and partitioned India from 1947 to 2020 CE. Through a thorough but brief survey of the significant political and economic narratives of recent 300 years of history of the Indian subcontinent, I want to establish the following hypothesis:

a) English East India Company (EIC) created world’s first ‘corporate-state’ in Indian Subcontinent – that fete is being repeated now by Indian oligarchy

b) Behaviour of wealthy elites didn’t change over time – EIC’s primary objective of exploitation and extortion now taken up by Indian oligarchy

The journey will begin with review of Indian society as well as economy during Maratha domination and British era, then discuss the post-independence Social Democracy, and Neoliberal Oligarchy era. I will end with current semi-fascist corporatocracy, but won’t discuss future possibilities.

2.  Maratha-Dominated Indian Subcontinent

2.1  Expansion of Maratha Empire & Fall of Maratha Confederacy

Had Maratha power appreciated the diversity of India and tweaked their expansion policy to acknowledge the significance of alliance, as well as assigned importance to economic affairs as similar to military affairs, the Maratha empire would have seamlessly replaced Mughal empire as the central power based in Delhi – the British imperialist history of Indian subcontinent would be, in that case, aborted by 1790.

2.1.1 Starting from 1674, Maratha king Shivaji and his two sons built a kingdom in west region of India primarily on the basis of their expertise in guerrilla warfare against the Mughal empire. Shivaji’s grandson Shahuji, in 1713 CE appointed Balaji Vishwanath Bhat as Peshwa (the governing authority of Maratha kingdom). He marched to Delhi in 1719 CE and deposed the Mughal emperor. Thus the century of conflict started with sacking of Delhi, capital of Mughal empire by Maratha kingdom in 1719, thereafter Maratha kingdom grew into an empire, then transformed into a confederacy, and, with comprehensive defeat of Maratha Confederacy against the British East India Company in the Third Anglo-Maratha War in 1818 the Maratha power was defeated and century of conflict ended.

During this period, marauding Maratha cavalry became a nightmare in northern, eastern, and southern regions (which were part of Mughal empire until a decade back and subsequently the ex-Mughal governors became independent rulers). Maratha power would extract annual tax chauth (levied at the rate of one-fourth the annual revenues of the region) and sardeshmukhi (additional 10% levy on top of the chauth) from all such regions as extortion tax. In the trend-setting incidence, in 1719, the-then Mughal emperor granted Shahuji the chauth and sardeshmukhi rights over the six Deccan provinces in exchange for his maintaining a contingent of 15,000 troops for the purpose of Mughal emperor.

2.1.2 After death of Balaji Vishwanath, his son, Bajirao was appointed in 1720 CE as Peshwa by Shahuji. An able military leader, Bajirao soon transformed the Maratha kingdom into Maratha empire. By the time Bajirao died in 1740, Maratha empire became strong and Maratha army was unconquerable. The regions under the Maratha empire in 1740 were:

  • Western part of present India except Solapur, Nanderh, Kutch, Junagarh regions
  • entire Central region of present India
  • Northern part of present India – Malwa

The Persian emperor Nadir Shah invaded the crumbling Mughal empire from January to May 1739 and sacked the capital, Delhi after defeating Mughal emperor Muhammad Shah. The loot was so ‘fabulous’ that Nadir Shah didn’t collect tax in Persian empire for next three years following his return. From that event onwards, effectively Mughal empire became a dead corpse which would still be showcased in Delhi, until 1857 when British forces would bury it. Three political powers active in India who were seeking expansion of their existing domain, got alerted – Maratha empire, Nizam of Hyderabad (erstwhile Mughal governor), and British East India Company (that didn’t have any territory by in 1740 apart from trading outposts).

The Mughal empire still had jurisdiction over the following regions in 1740:

  • Northern part of present India except Ladakh, Kashmir, Uttar Pradesh, Rajasthan

The governors/kings of erstwhile Mughal empire became independent rulers:

  • Northern region of present India – Uttar Pradesh (Awadh, Rohilkhand), Rajasthan (Jaipur, Jodhpur)
  • Eastern region of present India – Bengal-Bihar (Nawab of Murshidabad)
  • Southern region of present India – Maharashtra (Nizam’s portion), Telengana-Andhra (Nizam’s portion), Karnataka (Mysore), Tamil Nadu (Nawab of Arcot)

2.1.3 After death of Bajirao, his son Balaji Bajirao was appointed in 1740 CE as Peshwa by Shahuji. He expanded the Maratha empire to greatest height, but during his reign, lack of diplomatic statesmanship and lack of appropriate military strategy caused irreparable damages to the empire. Shahuji died in 1749. By the time Balaji Bajirao died in 1761, the Maratha empire established direct rule and indirect control over:

  • Western region of present India except Kutch, Solapur, Nanderh regions
  • entire Central region of present India
  • Northern region of present India – Malwa, part of Rajputana-Haryana-Punjab
  • Eastern region of present India – Orissa
  • Southern region of present India – part of Tamil Nadu

In 1751–52, the Ahamdiya treaty was signed between the Maratha and Mughal powers. Through this treaty, Mughal rule was restricted only to Delhi (currently greater Delhi). In 1752 when Ahmad Shah Abdali annexed Lahore and Multan, the Mughal Emperor entered into an agreement with Holkar and Scindia for protection against external and internal enemies granting the Marathas chauth tax of Punjab, Sindh, and Ganga-Yamuna Doab plus subadari of Agra and Aimer.

Ahmed Shah Abdali plundered Delhi in 1756, and Maratha army raided Delhi after Afghan withdrawal, defeating the Afghan garrison in the Battle of Delhi. Maratha power conquered North-west India successfully wresting Lahore, Attock, and Peshawar. However, Ahmed Shah Abdali came back soon to reoccupy lost territories. Afghani emperor Ahmed Shah Abdali invaded north-west and north India 8 times. During 1760-61 invasion the Afghani army took on the Maratha army. Afghani army in alliance with the army of Awadh and Rohilkhand routed Maratha army (with contingents from Maratha chieftains like Holkar, Scindia, Bhonsale, Pawar, Gaikwad etc.) which didn’t feel requirement of any alliance. Marathas maintained poor relations with most of the Rajput and Jat kings. Due to the defeat of Maratha military in January 1761 in the Third Battle of Panipat, Maratha power lost the wherewithal to replace Mughals to rule majority of Indian subcontinent from Delhi.

2.1.4 After death of Balaji Bajirao, his son, Madhavrao became Peshwa in 1761 CE. Maratha empire regained some of the lost glory during this period. In order to effectively coordinate the large empire through the satraps, Peshwa Madhavrao allowed autonomy to the most prominent of the satraps, and the Maratha empire became Maratha confederacy. However, after death of Peshwa Madhavrao I in 1772 CE, following chieftains became de facto rulers in far-flung regions of the empire:

  • Peshwa of Pune
  • Holkar of Indore
  • Scindia of Gwalior (Chambal region) and Ujjain (Malwa Region)
  • Bhonsale of Nagpur
  • Gaekwad of Baroda
  • Pawar of Dewas and Dhar

Even in the original Maratha kingdom of Shivaji many jamindars were given semi-autonomous charges of small districts like Aundh, Bhor, Phaltan, Miraj, Sangli etc.

There were two undercurrents simultaneously getting played out in Maratha confederacy:

  • Struggle for prominence and revenue collection among the Maratha chieftains
  • Struggle for capturing power within Peshwa family

There were two outstanding military leader-cum-statesman during the confederacy period:

  • Mahadji Scindhia controlled entire central and north India regions crushing all opposition from principalities and protectorate kingdoms of Jats, Rohilla Afghans, and Rajputs to Maratha rule between 1761 and 1793 CE – the period was termed as ‘Maratha Resurrection’. However, it remained one of the unresolved mystery of Indian history, why, even at the zenith of his power, Mahadji Scindia didn’t attempt to put a Maratha leader as the ‘emperor’ in Delhi.
  • Yashwantrao Holkar during the period 1799 through 1811 CE rebelled against the policies of the-then Peshwa Bajirao II and fought against the rising British power teeth and nail. He tried to unite all Maratha chieftains as well as other significant kingdoms of the-then Indian sub-continent communicating to them “First Country, and then Religion. We will have to rise above caste, religion, and our states in the interest of our country. You too must wage a war against the British, like me.” With most other dominions, principalities and kingdoms ruled by Indians signing treaties with the British, Yashwantrao Holkar had to also sign peace treaty in 1805 CE. His plan for final assault on British-held Indian territories didn’t materialise because of untimely death in 1811 CE.

2.1.5 Apart from seizing territory to expand the Maratha empire/confederacy, Peshwa also created a network of tributary/protectorate states all of which were part of Mughal empire in not-so-distant past. Maratha power imposed annual tax/protection money from these erstwhile provinces of Mughal power, while those erstwhile Mughal provinces/tributaries balked at paying extortions at any opportunity:

  • Nawab of Bengal (Bengal and Bihar; Orissa ceded to Marathas)
  • Nizam of Hyderabad (part of Maharashtra, part of Karnataka, Telengana, part of Andhra)
  • King of Mysore (part of Karnataka, part of Tamil Nadu)
  • Rajput kings of Rajputana (Rajasthan)

2.1.6 British East India Company played the role of ‘king-maker’ when it changed the Nawab (ruler) of Bengal-Bihar by winning the Battle of Plassey in 1757. However the significance of next British win in Battle of Buxar fought in October 1764 between British East India Company and combination of Nawab of Bengal-Bihar, Nawab of Awadh, and Mughal (Delhi) emperor was immeasurable – British East India Company became the de facto ruler of the largest revenue earning province of Mughal empire – Bengal-Bihar. By 1770 British company brought the following regions under direct ‘rule’:

  • Western region of present India – Mumbai (Bombay trading outpost)
  • Eastern region of present India – Kolkata (Calcutta trading outpost), Bengal, Bihar
  • Southern region of present India – Chennai (Madras trading outpost), coastal Andhra (Northern Sircars)

The most ferocious period of the 100-year conflict took place between 1766 through 1818 when eight significant wars were fought among British East India Company, Mysore, and Maratha (Hyderabad Nizam most of the time supported English EIC):

  • First Anglo–Mysore War (1766–69)
  • First Anglo-Maratha War (1777–83)
  • Second Anglo-Mysore War (1780–84)
  • Maratha-Mysore War (1785–87)
  • Third Anglo-Mysore War (1789–92)
  • Fourth Anglo-Mysore War (1798–99)
  • Second Anglo-Maratha War (1803–05)
  • Third Anglo-Maratha War (1817–18)

Third Anglo-Maratha War resulted in the British control of most of the Indian subcontinent either directly or through dependency/protectorate treaty. Through meticulous planning, cunning diplomacy, and psychological manipulation of the Indian states, the British power defeated/subdued all of them, and spread their empire across Indian subcontinent.

2.2  Administration & Revenue system of Maratha Power

The Maratha king (Chhatrapati) had an enlightened Council of Eight ministry through which the Maratha empire was administered: Prime Minister (Pantpradhan / Peshwa), Finance Minister (Amatya / Mazumdar), Secretary (Pant Sachiv), Interior Minister (Mantri), Chief of Military (Senapati), Foreign Minister (Sumant), Chief Justice (Nyayadhyaksh), and Highest Priest (Panditrao). After 1761 during the confederacy times, the administration of became quite complex with central Peshwa following the old ‘council of eight’ concept while the autonomous chieftains introduced some new processes. Maratha empire-turned-confederacy was avowedly military-state. The chauth collected across Indian subcontinent was primarily distributed for military purpose – two-thirds remained with Maratha chieftains for maintaining their military troops, 25% went to the King (Chhatrapati), 6% went to the office of pant sachiv for managing the royal secretariat.

Maratha empire was administratively divided into two regions: directly ruled by the king (regulation areas) and ruled by the semi-autonomous/autonomous chiefs (non-regulation areas). Land revenue from regulation areas were based on assessment, accounting and other factors, but revenue from non-regulation areas were not based on any realistic assessment. More vociferous chieftains would resist demand of king’s tribute and pay less compared to more docile chiefs. The assessment-based revenue was almost fixed during the 18th century, with minimum change in valuation.

The regulation areas had ‘vatandar’ system wherein land rights (including right to sale) would be vested in a brotherhood of patrilineal relatives. Vatandar units of about 20 to 200 villages was under a Zamindar termed as Deshmukh. Vatandars were co-sharers of the produce of ‘land’ as well as ‘revenue exempt land’. There were two types of tenants: resident cultivators with hereditary rights of occupancy, and temporary cultivators.

During late 1750s and 1760s, Peshwa completed the ‘tankha settlement’ considering old and new arable land, quality of land, and thorough measurement (king’s share became one-sixth of the produce). 1790s onwards when the Peshwa needed more revenue to pay for mobilisation of armies and obligations to the British, revenue collection target was raised.

The administrative systems in the semi-autonomous statelets called ‘saranjam states’ (Holkar, Scindia, Bhonsle, Pawar, Gaikwad etc.) were similar in principle, but each of the statelet would run its administration in its own way. Both – land revenue collection system within territory as well as extortion tax from neighbouring statelets, were managed by a well-structured bureaucracy (more often than not, these appointments were done within extended family).

2.3 Economy & Commerce

Summarising the economy in Indian subcontinent during Mughal era (assuming 1526 CE to 1739 CE), The Cambridge Economic History of Indian mentioned “Centralized administration, a uniform revenue policy, a network of inland trade fostered by Mughal peace and active encouragement to an expanding overseas commerce created conditions in which economic stimuli travelled fast enough from one part of the empire to another.” A few propositions stated above wouldn’t fit while describing the Maratha empire-cum-confederacy era between 1719 CE and 1818 CE, two factors especially stood out – firstly, ‘centralised administration’ was replaced by decentralised statecraft within Maratha confederacy and few other powerful statelets, secondly, ‘peace’ was elusive during this tumultuous period. Trading and crafts manufacturing activities in large urban cities like Delhi, Agra, Surat, Lahore, Dhaka etc. took a hit during the period of 1710s through 1720s. During this period, for common people (small landholders, agricultural labourers, craftsmen, soldiers), daily life became more stressful.

2.3.1 An estimate by Angus Maddison (Table B-18 in The World Economy, Paris: OECD, 2001) shows that, in early modern era the GDP of Indian subcontinent as a share of world GDP was highest during Mughal era and lowest during British Raj:

1600 CE 1700 CE 1870 CE
GDP (million 1990 int. $) % of World GDP GDP (million 1990 int. $) % of World GDP GDP (million 1990 int. $) % of World GDP
Britain 6,007 01.80 10,709 02.88 100,179 09.10
Western Europe 65,955 20.02 83,395 22.46 370,223 33.61
China 96,000 29.14 82,800 22.30 189,740 17.23
India 74,250 22.54 90,750 24.44 134,882 12.25
World 329,417 371,369 1101,369

A safe conclusion from the above estimate can be made that, even if the internal disturbances during Maratha domination were detrimental to the economic growth, the drastic reduction in Indian subcontinent’s share of world GDP in 19th century had minimum linkage with 18th century Maratha era.

2.3.2 While discussing the economy of 18th century Indian subcontinent, it must be mentioned that there is an uncanny similarity with imperial China of that period – close to 80% of total population were rural peasants. While Mughal power was deriving their land revenue primarily from north, east and south regions (as well as tax revenue from trade in west, east, and south regions), Maratha power grew out of west and central India where agrarian settlement reached limits of its development. That resulted in persistent pressure of the Maratha power into stimulation of higher productivity in more fertile areas (under their direct rule) like Doab region in north, and Tanjore region in south.

The Maratha rulers adopted revenue collection based on concessional assessment (istava) and extended facility of loans. Another significant policy was encouraging/rewarding the citizens to build and repair agricultural facilities like dam. Fukuzawa has noted that state promotion of agriculture and revenue management system by the Maratha rulers made considerable impact to medium and large plot-holders (18 acres to 108 acres of land)

He further noted that, over the years 1790 to 1803 the small plot-holders completely disappeared while the large land holders increased in number. The economic condition of vast section of rural peasantry and rural labours worsened considerably due to increased population and increased taxation, apart from prices of food grains.

During the power transfer process from Mughal to Maratha era, the families of privileged and powerful aristocracy (state ministers, deshmukhs, military officers, financiers and traders) who combined multiple functions simultaneously, became controller of rural resources and source of income through hereditary offices, tax collection, tax-exempted land etc. More often than not, these families were from non-cultivating background.

2.3.3 Medium and small sized mints were a feature of market towns. Copper and cowries were imported in large volume to meet the demand of highly ‘monetized’ local markets. People in western region of India were paid daily and monthly wages for handicraft production, agricultural labour, and other services. Records dated 18th century pertaining to monetary and contractual dealings, loans in cash and kind, etc. were found.

Apart from cultivation of staple food, cash crops and manufacturing were part of the economy in western, eastern, and southern regions. The crafts manufacturing in the northern region were negatively impacted due to the continuous warfare in Maratha era. Credit institutions operating in town and countryside were not only a vibrant part of economy, but it also played a not-so-impressive role of creating an indebted nobility class.

2.3.4 Development of market forces had impacted the subsistence character of Indian agriculture. Even though the peasantry met family requirements of food out of his own produce, very poor peasants would depend on moneylenders for seed and food-grains during non-cropping period. By mid-18th century non-food grain production (mulberry, poppy, indigo, sugarcane, tobacco, maize, and mango) increased substantially. However, the rural areas could never become source of ‘demand / consumption of goods’ due to poor purchasing power, and remained only ‘producers’ in spite of housing vast population.

In a somewhat similar trend as that of China, the rural peasants were also involved in manufacturing (like spinning of coarse cloth) for their own consumption as well as partly for disposal in the market. For production of agriculture-based products like raw silk, indigo, sugar, oil, and salt peasants were responsible. This type of rural manufacturing co-existed with urban artisan industries (which was independent from rural influences) that catered to a growing export market.

At the village level, there were marketing complex (mandi), which were permanent wholesale markets attracting traders and commodity sellers from both neighbouring and distant locations. Part of the produces would distributed across the country as well as pushed into overseas commerce. Surat, Masulipatam and Hugli were famous centres of export, and Agra and Burhanpur were significant inland commercial centre. By 1770’s English EIC almost monopolised the overseas trade through privileges from which the native Indians were excluded.

2.3.5 The arrogance of provincial rulers and the avarice of government officials during late Mughals (as against the philosophy of ‘good governance’ espoused by the early Mughal emperors) had curbed the enterprising spirit and prevented the accumulation of capital over generations. That type of administrative shortcomings were in place even during the Maratha domination in the subcontinent which deterred many traders and financiers who commanded immense resources (even if they had considerable influence with the political authorities). In fact, during 1750’s and 1760’s few prominent the-then Bengal traders-financiers conspired with English EIC officials against the Bengal Nawab (erstwhile Mughal provincial governor) to bring English EIC as the ruler of Bengal-Bihar-Orissa by enticing the commanders of Bengal Nawab’s Army. These Indian traders-financiers expected EIC would provide good governance and extend special privilege to them for business – it was a short-lived affair that permanently changed the history.

2.4 Significant observations on Maratha-dominated Subcontinent:

2.4.1 Between 1757 and 1819 the English EIC established control of most of the Indian subcontinent. Due to factors like (a) disunity, distrust, and rivalry among the Maratha chieftains, (b) short-sighted “hindutwa” policy of Maratha Peshwa who didn’t want to ally with Mysore Sultan because of few cases of forced religious conversion programmes in south India carried out by the Sultan, and (c) consistently pro-British stand of Hyderabad ruler Nizam and other small kingdoms, seven most prominent statelets of the-then Indian subcontinent (four Maratha statelets- Maratha Peshwa, Gwalior Scindhia, Nagpur Bhosle, Indore Holkar, Mysore kingdom, Hyderabad Nizam, and Sikh kingdom) never joined forces to fight the British forces. History showed that, had any four of them formed a united front and fought the English EIC forces, British forces would got vanquished. On the contrary, Maratha Peshwa, Gwalior Scindhia, Hyderabad Nizam, and Sikh king allied with English EIC at different point of time for their fight against other Indian statelets!

2.4.2 Compared to the early modern Europe and China, early modern Indian subcontinent had been a laggard in application of science and technology in to agriculture and crafts manufacturing. Apart from spinning, canon, and ship, labour-saving techniques in different sectors of economy remained elusive. However, with arrival of French and British companies, the subcontinent started absorbing new techniques and technologies like raw-silk reeling, indigo and saltpetre manufacturing, cloth printing etc. An intriguing observation by Indian scholars including M K Gandhi was that, specialisation and division of labour based on caste and clan got developed in Indian subcontinent since ancient era which kept the economy of villages self-reliant and all households had near-guaranteed employment that at least ensured subsistence. This old heartless and inefficient but effective system didn’t bring any impetus for major technological changes and labour-saving. The English EIC brought technological and management changes that started to break down the entire rural economy and urban crafts manufacturing as early as 1770s.

2.4.3 During the 15th century late medieval era, southern region, western region, Deccan region, and Rajasthan region witnessed emergence of powerful families (mostly upper caste Hindu Brahman-Kshatriya-Vaishya) who, across generations, accumulated various rights, offices, and capital (land, labour, money) and contributed to state building under different kings/emperors (both Hindu and Muslim). During the same time, northern region, north-western region, and eastern region witnessed emergence of powerful Turkish-Iranian Muslim families who similarly accumulated various offices and capital under mainly Afghan and Mughal Muslim sultans/ emperors. This aristocratic wealthy ‘class’ had been involved in state administration (including land survey, revenue accounting, and record keeping) in dual role – as land-owner and as administrator. They were also main driver for commercial ventures (export and shipping) and banking matters. Maratha domination up to 1818, didn’t change the existing structure, but reinforced it with induction of hundreds of aristocrat families based in west India most of whom were upper caste Hindu.

3.  British Rule in Indian Subcontinent

3.1  Road to Corporate-State Passed Through Bengal

English East India Company (EIC) was established in London in 1600 December through a royal charter from English monarch Elizabeth I for monopoly trading with Asia. Initially, EIC formulated separate joint stocks for each voyage, whereby investors would decide to allocate capital on the basis of individual voyage. The EIC became a permanent joint stock corporation in 1657 CE. A new company was awarded the monopoly of Asia trade, but with the old company decided to merge with the new one in 1709 CE – after that EIC became a pillar of public finance through its loan extended to the British exchequer. EIC became a colossus for Britain accounting for between 13 and 15 per cent of all Britain’s imports between 1699 and 1774. EIC trading outposts in Indian subcontinent were established in Masulipatnam, Surat, Madras, Bombay, and Calcutta by 1710 CE. In 1717 CE the company received privileges (firman) for duty-free trading rights in Mughal empire.

3.1.1 Since beginning of 18th century English EIC had a strong base in Calcutta. Due to proximity to good raw materials, and highly sophisticated division of labour, Bengal offered the world ‘an unbeatable combination of high quality and low prices’ and ‘immense diversity, with over 150 different names for the textiles … covering muslins, calicoes and silk, along with mixed cotton and silk goods’. Bengal’s share of total EIC imports (into Europe) climbed to 66% by 1738–40 from just 12% in 1668–70. Few prominent Bengal-based traders-financiers like Jagat Seth, Amir Chand, and Nabakrishna Deb came close to EIC officials owing to business relationship. These Indian merchants-bankers teamed up with the commanders of Bengal Nawab’s Army and conspired with Robert Clive and few other English EIC officials against the Bengal Nawab to remove him and place the-then Army Chief Mir Jafar as Nawab. The ulterior motive was to remove the anti-British Nawab and make way for the English EIC, which in the long run, would ensure special privilege awarded to those Indian merchants for business and trading.

Coup at Plassey in 1757 was followed by looting of the-then Bengal’s treasury at Murshidabad by English EIC – according to heresay the EIC shifted the treasury’s gold, silver, and jewels to their base at Calcutta by a fleet of over 100 boats. If the reality was even a small fraction, the Battle of Plassey not only paved the way for creation of British Empire in India, but it also resulted in a windfall one-time revenue equivalent to hundreds of millions of pound in those days – apparently, most of it was personally distributed among Robert Clive, few senior EIC officials, and few Bengal conspirator financer-merchants. After winning Battle of Buxar in 1764, English EIC got the Mughal emperor’s authorisation as “diwan” of government tax collection in Bengal province (the-then Bengal-Bihar-Orissa) August 1765 onwards. Robert Clive calculated that, from this acquisition there would be a profit to EIC to the tune of Rs12 million or £1.65 million. In 21st century terms, this amounted to an annual surplus of over £150 million, with a profit margin of 49%. It was a phenomenal ‘acquisition’ that propelled the shareholders and company executives on a completely new path to prosperity English EIC’s share price went for a boom when the news reached London’s financial markets in April 1766. In reality EIC would collect total over £10 million during the next 4 – 5 years, generating a surplus of £4 million, much less than initially expected – however that was still far lucrative ‘business’ at a time when the company’s total exports from Asia before the diwani amounted to around £1 million each year. The company directors instructed its officials in Bengal to split the surplus from tax collection between purchase of Bengal textiles, sending the remainder to Canton to buy tea, for shipment back to Europe and North America.

3.1.2 In January 1769, EIC bought British Parliament’s support for the acquisition of Bengal (presidency) with a commitment of annual payment to Parliament of an amount £400,000. In exchange, the Parliament would not attempt to interfere much in the English EIC’s business or other activities. World’s first corporate-state was born. The company used its dominance to monopolise the internal and foreign trade of Bengal-Bihar-Orissa in the decade that followed – very soon, they pushed out the Indian and other European merchants in the process. The EIC officials were extracting ever greater sums from the Bengal populace to maximise revenue for:

  • More and more dividend for British shareholders
  • Extra pay-out to British Parliament
  • Rampant corruption by EIC Officials who sought to line their pockets, make a fortune, take retirement

EIC officials forced the cloth manufacturers to work for them at an under price, at the same time those officials prohibited all Indian or European merchants from dealing with weavers – according to William Bolts, “the methods of oppressing the poor weavers were … fines, imprisonments, floggings, forcing bonds on them”. Consequently, widespread poverty and indebtedness followed. But profit margins for EIC’s cloth import into Europe from Bengal (and India) touched new high as the cloth cost was pushed down through oppression.

The greed, corruption, negligence, and apathy of EIC officials in the agriculture and textile sectors and lack of monsoon rains resulted in massive Bengal famine of 1770, during which millions of impoverished people in Bengal died from hunger, and disease. It was followed by floods. As Horace Walpole said at the time, “we have murdered, deposed, plundered, usurped – nay, what think you of the famine in Bengal, in which three millions perished, being caused by a monopoly of provisions by servants of the East Indies (EIC – author)”.

Between 1757 and 1780 goods worth estimated £38 million were transferred back to Britain by EIC on an unrequited basis – in 21st century terms, this amounted to over £3.5 billion. Apart from that, during the same period remittances to Britain by company executives averaged £0.5 million every year. Noted Indian scholar R C Dutt wrote, “A change came over India under the rule of the East India Company, who considered India as a vast estate or plantation, the profits of which were to be withdrawn from India and deposited in Europe”.

3.1.3 Due to humongous corruption and inefficiency, EIC faced significant financial strain in the early 1770s – in 1772 the company had to request British Parliament for a bailout of an £1 million to avoid bankruptcy. Parliament’s bailout came along with regulatory actions:

  • As per Regulating Act of 1773 during the premiership of Lord North, even though the ultimate sovereignty over the Indian subcontinent stayed with the British Crown, EIC would act as a sovereign power on behalf of the British Crown. It could do this while concurrently being subject to oversight and regulation by the British government and parliament., Warren Hastings was appointed as the first Governor-General of Bengal Presidency to govern the British dominion in India (supervising both Madras Presidency and Bombay Presidency)
  • The India Act of 1784, or Pitt Act, attempted to redress the shortcomings of the 1773 Act. A dual administration was created whereby the EIC would be controlled jointly by the company shareholders and the British Parliament. Board of Control was created to oversee the company affairs which rendered the Board of Directors (Proprietors) less influential. The India Act of 1784 signified the legal transformation of EIC and asserted Parliamentary oversight over EIC

These regulating measures limited EIC’s autonomy (and operational areas were restrained). Also, extending Parliament’s control over appointment of Governor-General (of EIC) business considerations such as profit and dividend could become secondary while state administration could appear as primary objective. These acts by British Parliament, thus legalised the transformation of the EIC from a corporation into a corporate-state. Establishment of similar corporate-state by Dutch East Indies Company in Java (in Indonesia) followed close on the heels of EIC’s ‘achievement’ in Bengal.

Many historians, economists, businessmen consider East India Company as a transition from medieval forms of business entity like the guild and the regulated company, and the modern joint-stock company. However, they forget that, apart from carrying out trading business, EIC also maintained a standing army, vast territory, bureaucracy, a system of taxation, a judiciary with legal code; EIC combined the rights of private persons (like entering into contract, to sue, be sued) along with features of public sovereignty (like prerogative to wage war, sign treaty, govern over people, print/coin money). Niels Steensgaard pertinently pointed out, “The (early modern chartered – author) companies were created in a unique encounter between political power and market oriented entrepreneurship; they were the result of dynamic improvisations and experiments”. Considering Lenin’s view on imperialism as the highest stage of capitalism, it was no wonder that arrival of EIC as world’s first corporate-state on the world-stage was the final outcome of mercantile capitalist policy and monopolism promoted by the colonialist state of Britain.

3.1.4 The reforms of the 1770s, and 1780s had penetrated the Company’s autonomy as a business. ‘Industrial Revolution’ started impacting the industrial landscape of Britain – in 1781, mass production of British ‘muslins’ and ‘calicoes’ commenced. By 1793, a Lancashire mill operator had become about 400 times more productive than the average Indian weaver. Mill-made cottons took increasing slices of the EIC’s market share of textiles in both Britain and its key re-export markets in Africa, and America. 1790 onwards, EIC explored alternate business by promoting exports of raw materials (from Indian subcontinent) on a larger scale including sugar, silk, saltpetre, indigo.

Due to sustained campaign by merchants and bankers in Britain, in 1813 EIC lost monopoly of trade with India. Its commercial monopoly was removed for all except the China trade that was extended for another 20 years. 20% increase in import duties on Indian goods was added in 1813 to ensure that competition from Indian subcontinent couldn’t challenge the British mill owners. As a result, after 1813 textile imports from Bengal presidency and Indian subcontinent fell by three-quarters while exports to India of British textile rose more than fifty-fold. British textiles soon inundated the Indian markets – value of the textile imports grew from £5.2 million 1850 to £18.4 million in 1896. In 1818, EIC’s cloth ‘factory’ at Dhaka (now capital of Bangladesh) was wound up – by 1840, population of Dhaka had fallen from 150,000 to just 20,000. Not only the British rulers refused to give any tariff protection to Indian textile sector (until 1920) preferring imports from Britain, but in a ‘grisly repeat of earlier cruelties, when machine-made yarns were first introduced into Dhaka in 1821, the ‘thumb and index finger of some of the renowned artisans began to be chopped off in order to disable them from twisting finer yarns’. The main aim of the British rulers was to transform Indian subcontinent into a consumer of British goods. Textile, metal, and glass industrial sectors in Indian subcontinent lost their traditional position as employer. In the beginning of 19th century, unable to compete with the British industry-made products, the Indian craft goods lost both their domestic as well as foreign market.

3.1.5 In the 19th century, the most lucrative trading for EIC was opium, which could generate up to 2000% profit from each chest of 63 kg opium sourced from Bengal presidency and Malwa region, and transported to Chinese empire through Canton port. As the textile export (mainly from Bengal) to Europe went down, opium export to China went up steadily – 2000 chests in 1800 CE, 12000 chests in 1824, 40000 chests in 1839, and 58000 chests in 1859 CE. Sticking to the original objective of ‘making profit’, EIC officials had no qualms about the ‘drug smuggling’ business. Tea, hides and skins, oil cake (used as animal feed and fertilizer) etc. became export goods 1860 onwards.

3.1.6 By 1832 CE, within Britain there were hue and cry from two sections of elite society:

(a) Merchants and businessmen wanted the trading charter from EIC to be completely revoked

(b) Few politicians, economists and social activists wanted to close down EIC for its blatant mismanagement of internal affairs in Indian subcontinent.

In 1833 CE, British Parliament put an end to EIC’s trading operations in India; EIC however, remained as territorial administrator in India; land revenue, opium, and textile imports into subcontinent became most important sources of revenue. The Governor-General of Bengal presidency was redesignated as the Governor-General of India.

3.2  Setting Up of ‘British India’ Empire by English EIC

Apart from the conflicts the English EIC had with the different political entities of Indian subcontinent, they also fought 3 wars with French East India Company primarily in Carnatic region (the coastal Tamil Nadu and coastal Andhra) which was itself a dependency of Hyderabad Nizam – popularly known as ‘Carnatic War’. Between 1746 (initiation of the First Carnatic War) and 1818 (conclusion of the Third Anglo-Maratha War) English EIC spread their empire across Indian subcontinent.

3.2.1 First Carnatic War (1746–1748), Second Carnatic War (1749–1754), Third Carnatic War (1756–1763) were essentially a series of diplomatic and military struggle between the French EIC and the English EIC for dominance among the European trading companies within Indian subcontinent. The French company was defeated and was confined primarily to Pondicherry, and the British Company eventually established British empire in India generally called as ‘British Raj’. Even before English EIC bagged their first imperial dominion in 1765 as Bengal-Bihar-Orissa, they had 5 trading outposts across India and in order to fight with the French EIC for supremacy in Indian subcontinent they maintained a standing army of 18,200 spread over Calcutta, Madras, Bombay trading outposts. Between 1763 and 1805, EIC’s army had grown almost nine-fold from 18,000 to 154,500, far beyond what was required for self-defence – the continuous build-up of military strength fuelled a powerful dynamic in favour of further aggression. By 1857, EIC commanded an army of 350,538 out of which only 39,500 troops were British. It was briefly described in Section 2 how English EIC colluded, collaborated and controlled most powerful statelets of the-then Indian subcontinent (Maratha Peshwa and warlords, Mysore Sultan, Hyderabad Nizam, Carnatic Nawab, Awadh Nawab, Sikh emperor).

3.2.2 Richard Wellesley’s tenure as governor-general was the most important in EIC’s history of territorial expansion. He expanded beyond Bengal presidency subjugating Mysore, Marathas, Hyderabad, and Awadh. He was a shrewd practitioner of ‘Subsidiary Alliance System’ – it was an alliance system which left the Indian ‘princely state’ a measure of internal autonomy in matters relating to administration, taxation and finance, but were obliged to maintain minimum defence and no foreign affairs. A resident appointed by EIC coordinated affairs between the Indian statelet and EIC. Through such protectorate alliance, more than 550 statelets (about 200 statelets had sizeable land area and population while more than 200 statelets were as small as couple of villages with an area of less than 10 sq. mile) were absorbed in British empire by mid-19th century. In 1947 when British rule in Indian subcontinent ended, princely states covered about 40% of the area of pre-independence Indian subcontinent and constituted about one-fourth of its population.

Five most significant princely states with an individual British resident/envoy permanently stationed, were:

  • Mysore state (29,326 sq. mile)
  • Nizam’s Hyderabad state (82,698 sq. mile)
  • Dogra’s Jammu & Kashmir state (84,516 sq. mile)
  • Gaikwad’s Baroda state (8,164 sq. mile)
  • Scindhia’s Gwalior state (26,367 sq. mile)

Almost all of the remaining princely states – large and small – were incorporated within special entities called ‘agency’ where British political agents/officers coordinated the affairs of those states:

  • Baluchistan Agency (significant states – Makran 21,000 sq. mile)
  • Northwest Frontier States Agency (significant states – Swat 3,190 sq. mile)
  • Punjab States Agency (significant states – Bahawalpur 17,726 sq. mile, Mandi 1,140 sq. mile)
  • Rajputana Agency (significant states – Bharatpur 1,978 sq. mile, Bikaner 23,317 sq. mile, Jaipur 15,579 sq. mile, Marwar/Jodhpur 35,016 sq. mile, Mewar/Udaipur 12,694 sq. mile)
  • Central India Agency (significant states – Bhopal 6,902 sq. mile, Indore 9,518 sq. mile, Rewa 13,000 sq. mile, Dhar 1,784 sq. mile, Panna 2,596 sq. mile)
  • Western India States Agency (significant states – Bhavnagar 2,961 sq. mile, Junagadh 3,284 sq. mile, Kutch 8,250 sq. mile)
  • Deccan States Agency (significant states – Kolhapur 3,217 sq. mile)
  • Madras States Agency (significant states – Travancore 7,625 sq. mile, Cochin 1,480 sq. mile)
  • Eastern States Agency (significant states – Keonjhar 3,096 sq. mile, Kalahandi 3,700 sq. mile, Bastar 13,062 sq. mile, Surguja 6,090  sq. mile, Tripura 4,116  sq. mile)

Three princely states however remained out of such ‘agency’ but were British protectorate:

  • Kalat (73,278 sq. mile in Baluchistan region)
  • Manipur (8,456 sq. mile in Bengal-Assam region)
  • Sikkim (2,818 sq. mile in Bengal-Assam region)

The territorial expansion of English EIC from 1757 to 1857 happened through outright annexation in:

a) Calcutta – 24 Parganas – Bengal (part of present east India & Bangladesh) – Bihar – Orissa combined as Bengal Presidency;

b) Madras – Carnatic region (coastal Andhra & coastal Tamil Nadu) – rest of Andhra – Tanjore region – Mysore regions (part of Karnatake & part of Tamil Nadu) combined as Madras Presidency;

c) Bombay – Surat – Maratha Gaikwad territory (part of Gujarat) – Maratha Peshwa territory (part of Maharashtra and part of Karnataka) – Thar region – Sindh region (present Pakistan) combined as Bombay Presidency;

d) Benaras – Awadh territory (east and central Uttar Pradesh) – Maratha Scindia territory (west Uttar Pradesh) – Dehradun region – Jhansi territory combined as United Provinces (North-Western Provinces plus Awadh);

e) Maratha Bhonsle territory (Madhya Pradesh and part of Maharashtra) – Sambalpur region combined as Central Provinces ;

f) Assam – Kachhar region (part of present India) – Sylhet region (present Bangladesh) – Hills of Khasi-Jaintya-Naga combined as Assam province

g) Delhi – Sikh territory (Punjab in present India and Pakistan, Peshawar region in present Pakistan) – Kangra region – Shimla region combined as Punjab province

Supportive Map

3.2.3 In 1829 the British ruled territories were reorganised through establishing districts which were small enough to be controlled by an administrative Head (acting as revenue collector, police officer, and judge). The high-ranking civil service officers were mostly British until the 1920s when Indian Civil Service examinations began to be simultaneously held in UK and Indian subcontinent. Apart from district/provincial administration, education, healthcare, public works, postal, and railway services employed a large number of British citizens.

3.2.4 Indian social reformers and modernisers like Ram Mohan Roy and Ishwar Chandra Vidyasagar were leading social movements for modernisation of social life in Bengal presidency and Indian subcontinent. They instigated the EIC officials to initiate some far-reaching programmes to introduce modern education system which emphasized English language compared to vernacular languages and European justice system that blended customary Indian law (on the basis of religious community) with European concepts. But these changes didn’t bring major transformation in village society which was based on caste and religious identity, the position of downtrodden and untouchables, neither agricultural system changed.

The British officials demonstrated much less religious or cultural fanaticism in introducing Christianity and European culture into Indian subcontinent compared to what Spanish and Portuguese colonialists did in South America. Macaulay devised the education policy and its objective as: “It is impossible for us, with our limited means to attempt to educate the body of the people. We must at present do our best to form a class who may be interpreters between us and the millions whom we govern; a class of persons, Indian in blood and colour, but English in taste, in opinions, in morals, and in intellect. To that class we may leave it to refine the vernacular dialects of the country, to enrich those dialects with terms of science borrowed from the Western nomenclature, and to render them by degrees fit vehicles for conveying knowledge to the great mass of the population” Thus, the ‘westernisation’ introduced by EIC in Indian subcontinent primarily served their main purposes of

a) creating a class of local professionals who would assist EIC in managing their business (administration of the vast empire itself was part of the business operation) for commercial profit and wealth accumulation in lieu of fat salary that placed them in a separate class

b) switching the loyalty of existing aristocracy (landlords-bankers-merchants-logistics owners etc.) from Mughal governors and Maratha warlords to British Crown by offering them a slice of land revenue as well as business opportunity

A new category of elites were formed who would embrace Western life-style and English medium education. The lifestyle and habits of EIC officials were copied by the new local professional elites (doctors, lawyers, business managers, higher education teachers, and businessmen). This new group of professionals, however, would still bear their caste identity sneakily – most of the new elites would come from Hindu upper castes: Brahman-Vaishya-Kshatriya.

3.2.5 In 1837 postal services was established in the British territory in Indian subcontinent. Network of post offices were established in the principal towns across the provinces. District collectors (of land-tax) coordinated the district post offices. By February 1855 telegraph lines (for paid messages) joined main cities of British India territory – Calcutta, Agra, Bombay, Peshawar, Madras – extending over 3,050 miles and touching 41offices. By 1857, the telegraph network expanded to 4,555 miles of lines and 62 offices.

Contracts were awarded in 1849 to three joint-stock companies to construct a 120-mile railway in Bengal presidency, a 30-mile railway in Bombay presidency, and 39 mile railway in Madras presidency. In 1854, the-then Governor-General Lord Dalhousie prepared a plan to construct a network of railway lines connecting significant regions of India. ‘By the turn of the 20th century, India (Indian subcontinent – author) would have over 28,000 miles of railways connecting most interior regions to the ports of Karachi, Bombay, Madras, Calcutta, Chittagong, and Rangoon, and together they would constitute the fourth-largest railway network in the world.’ (Quoted from Wikipedia).

Such infrastructure programme opened avenue for British bankers and investors to invest surplus money in the construction of railways (with a guaranteed minimum profit of 5% by the government). Railways made trading in commodities much easier by providing faster and safer mode of goods transport between ports and internal markets, and also capital inputs like rail-lines, engines, coaches, wagons etc. would create demand for rolling stock industry. Thus it benefited the British businessmen and capitalists tremendously.

Rural infrastructure was not a priority for British rulers – out of about 565,000 villages less than 10,000 were electrified. While network of railways and highways connected the big and medium sized urban centres, most of the villages remained completely isolated.

3.2.6 In 1857, a partially organised rebellion broke out against the British rule, significant participants of which were native soldiers of EIC Army posted in Bengal Presidency and United Provinces, and the common people in United Provinces and Central Provinces. Third most important participants were few of the erstwhile princely states of northern and central regions like Awadh and Jhansi, that were annexed by EIC (ostensibly because rulers had left no heirs for the throne). Not only most of the princely states under ‘Subsidiary Alliance System’ remained in favour of EIC during the battles, but bulk of the native soldiers of EIC Army posted in Bombay Presidency, Madras Presidency, Punjab province also remained aloof from the rebellion. The overwhelming superiority of military machinery-logistics-communication, loyal native troops, and coordinated military strategy of EIC Army against the spontaneous and localised Indian rebellion proved decisive for defeat of the first nationalist struggle by Indians.

3.2.7 In 1858, British Parliament replaced EIC with direct British rule in India. The British crown forged an alliance with the remaining native princes and stopped taking over new territory. As described in previous section 3.1, the corporate state of EIC became a principle pillar of the British economy. From the beginning of 19th century, EIC became a resource base for Britain providing troops and supplies to the state. Also, EIC acted as the agent of British empire throughout west, south and east Asia.

The Company’s demise in 1874 ended the era of the chartered corporation. EIC already played its role as the leading torch-bearer of British colonialism-capitalism-imperialism.

3.3  Agriculture and Land Revenue in British Era

3.3.1 There were three systems of revenue collection in the Indian subcontinent that was directly under EIC rule:

a) In place of complex systems of Mughal (and Maratha) era ownership with intersecting rights and responsibilities of peasant, zamindar/taluqdar/jagirdar, and officials, the Governor-General Cornwallis introduced the English model of land-lordship termed as ‘Permanent Settlement’ in Bengal presidency in March 1793 that targeted fixed revenue £3 million (at 1789 prices) in perpetuity. The new zamindars (often upper caste Hindu employees of EIC, many of whom didn’t have rural background) were given exclusive rights over their lands – ’20 million small landholders were dispossessed of their rights, and handed over, bound hand and foot to the tender mercies of a set of exacting rack-renters’. Forced labour of the peasants by the zamindars became widespread to meet the Company revenue demands. The zamindars were often unable to meet the increased demands that EIC had placed on them – within 3 decades, almost one-third of Bengal-Bihar-Orissa was put up for sale in search of ‘new’ zamindar.

b) Thomas Munro, who was appointed Governor of Madras presidency in May 1820 introduced ‘Ryotwari Settlement’, which was extended to the Bombay presidency also. Political economist John Stuart Mill who was working for EIC in 1857 wrote in a report, “Under the Ryotwari System every registered holder of land is recognised as its proprietor, and pays direct to Government. He is at liberty to sublet his property, or to transfer it by gift, sale, or mortgage. He cannot be ejected by Government so long as he pays the fixed assessment, and has the option annually of increasing or diminishing his holding, or of entirely abandoning it. In unfavourable seasons remissions of assessment are granted for entire or partial loss of produce. The assessment is fixed in money, and does not vary from year to year“. The levy was not based on actual revenues from the produce of the land, but instead on estimate of the production potential of the soil. Traditionally dominant castes mostly acquired land titles, while lower-caste cultivators became their tenants.

c) The ‘Mahalwari Settlement’ system was introduced by Holt Mackenzie and Robert Martins Bird in the states of Punjab, United Provinces, Central Provinces in 1822, and modified in 1833. The settlement was directly made with the village/estate/Mahal by the instruction of the settlement officers (patwari/qanungo), who would fix the annual rent after consulting the ‘lambardar’ (the chief or head of the household or family, usually the eldest male) and the rent payment would be shared by the cultivating peasants. Here, the settlements had neither been with hereditary ‘revenue farmer’ like the zamindars in Bengal presidency nor with the plot-owners like humble cultivators in Madras presidency.

In all areas other than the Bengal Presidency, land settlement work involved a continually repetitive process of surveying and measuring plots, assessing their quality, and recording landed rights, and constituted a large proportion of the work of Indian Civil Service officers working for the government. According to a survey initiated by British government in 1927-28, the distribution of land revenue settlement method was:

  • Rayatwari settlement system – 51%
  • Mahalwari settlement system – 30%
  • Permanent settlement (zamindari) system – 19%

None of the settlement system ever achieved targeted revenue. Often there were several layers of tenancy between the actual cultivator and the ‘land-lord’. The tenant cultivators as well small plot-owners were grinded into distress and poverty by extremely corrupt local and EIC officials as well as excessive state demands. The landless agricultural labourers grew in size to about 15% of rural population at the end of 18th century. British control of India started with a famine in Bengal in 1770 and ended in a famine in 1943 again in Bengal. Working in the midst of the 1877 famine, Cornelius Walford estimated that in the previous 120 years of British rule there had been 34 famines in Indian subcontinent – there could be no better yardstick to measure the adversity brought by the British rule.

After British Crown took over the administration from EIC in 1858, land tax burden was reduced progressively. By the end of the colonial period, in Indian subcontinent the land tax was only 1 per cent of national income – however, most of the benefits of the lower tax burden were appropriated by the landlords and .

3.3.2 Because of the emergence of ‘clear titles’ for cultivation lands, it was now possible to mortgage land. As moneylenders’ importance grew with time, a considerable amount of land changed hands through foreclosures. While the Economists point out that, moneylenders helped to root out imprudent and inefficient landowners, it was equally true that, almost nothing was done by the colonial government to promote agricultural technology, like use of fertilizers. The government however made some arrangements for irrigation.

Increase in population was not matched by increase in cultivated area. United Province was one of the examples. By 1880 the cultivated area of the United Province was calculated at 34 million acres (including double-cropping in about 2.5 million acres). By 1947 with the land carrying a population of 63 million instead of 45 million, the cultivated area had increased only to under 37 million acres (of which over 9 million acres were double-cropped). Scarcity of food almost became a ‘normal’ in British India.

3.4 Industry, Commerce & Economy in British Era

3.4.1 Edmund Burke coined phrase ‘the great drain of India’ which he calculated in 1783 as annual £1.2 million between 1757 and 1780. In India, the drain depressed consumption and savings, while ‘enabling Britain to live beyond its means, to consume, trade and invest at a greater rate than its own internal economy would allow’.

During the rule of EIC, official transfers of funds to Britain rose gradually until they reached about £3.5 million in 1856. During the period of direct British rule after 1858, official transfers were called the ‘Home Charges’ – by the 1930s home charges were in the range of £40 to £50 million each year.

There were substantial private remittances by British officials working in Indian subcontinent – during inter-war period these amounted to about £10 million each year. Apart from those, there were dividend and interest remittances by shipping and banking companies, traders and other investors – most of these commercial transactions were resultant of privileged position of British business in Indian subcontinent.

British India contributed over one million troops for WW I cost of which were financed from Indian budget.

The comparison of real GDP per capita of Britain and Indian subcontinent would be an eye-opener. While GDP per capita of Britain was a direct beneficiary of the imperial colonies and industrial revolution, Indians languished. As per the Maddison Project Database, version 2018, (by Bolt, Jutta, Robert Inklaar, Herman de Jong and Jan Luiten van Zanden), the estimated GDP figures are:

Year Real GDP per capita (in 2011 US $
Britain Indian subcontinent
1700 1591 1200
1741 1712 —
1781 2046 —
1821 2182 968
1861 3314 925
1901 5572 1152
1941 10116 1532

3.4.2 Mughal empire (and Maratha domination) not only had a larger industrial output than any other country which became a European colony, but Indian subcontinent was also an industrial exporter in pre-colonial times. The early modern industrial landscape of Indian subcontinent was completely destroyed in course of British rule.

Noted Historian R.C. Dutt argued, “East India Company and the British Parliament, following the selfish commercial policy of a hundred years ago, discouraged Indian manufacturers in the early years of British rule in order to encourage the rising manufactures of England. Their fixed policy, pursued during the last decades of the eighteenth century and the first decades of the nineteenth, was to make India subservient to the industries of Great Britain, and to make the Indian people grow raw produce only, in order to supply material for the looms and manufactories of Great Britain.”

The main powerhouse of Indian industry was textile. During the period 1896-1913, massive import of cheap textile goods supplied about 60% of cloth consumption in Indian subcontinent, and the proportion was still higher during most of the 19th century. While British goods imported into Indian subcontinent as duty free, excise duty on Indian manufactured products prevented them gaining a market share in Britain. Thus textile sector was pushed to death.

The crafts manufacturing sector had another story to tell. Since the British rule dawned over the subcontinent, consumption of British and European luxury goods became a symbol of social status for the native aristocracy and newly created professionals. Angus Maddison wrote about the demise of crafts industry, “about three-quarters of the domestic demand for luxury handicrafts was destroyed. This was a shattering blow to manufacturers of fine muslins, jewellery, luxury clothing and footwear, decorative swords and weapons.”

3.4.3 Reindustrialisation started with installation of first textile mills in Bombay were in 1851 by Indian capitalists (preceding Japan by 20 years and China by 40 years). In 1896 Indian mills supplied 8% of domestic cloth consumption which gradually increased to 76% in 1945.

First jute mill was built in 1854 in the vicinity of Calcutta by Europeans. Between 1879 and 1913 jute spindles multiplied tenfold. Faster expansion of jute industry was possible because most of jute products was for export. In 1911 first Indian steel mill was built in the-then Bihar (succeeding Japan by 13 years and China by 15 years). Coal mining started in Bengal, output of which reached 15.7 million tons by 1914.

Around 1945-46, large-scale manufacturing industry in Indian subcontinent employed less than 3 million people as compared with 12 million in small-scale industry and handicrafts, while total labour force was around 160 million. British policy permitted the emergence of a small but wealthy class of Indian entrepreneurs based in Calcutta, Bombay and Ahmedabad. At independence, exports were less than 5% of national income, probably worst among all Asian countries.

3.4.4 After EIC’s trade monopoly privileges were withdrawn in 1833, the former British employees of EIC set up ‘managing agencies’ to operate most of the industrial enterprises and international trade in Indian subcontinent. Those agencies were closely linked with British and European finance and shipping lines. The agencies got commissions from the enterprise-owners/investors based on sales and/or profits.

3.5 Demography & Occupation in British Era

In 1881, British government conducted first synchronous decennial census. Due to ongoing WW II accuracy of the 1941 census is debated. The 1931 census is considered last accurate British-administered census in Indian subcontinent (including Burma/Myanmar but excluding Portuguese Goa and French Pondicherry).

3.5.1 The population as per 1931 census reached 352,837,778 from 253,896,330 according to census in 1881. The total literate population of Indian subcontinent in 1931 was 28,131,315 (i.e. 8%) – with 12% literacy, the figure improved a bit by 1947. The urban population in 1931 was around 38,985,427 i.e. 11%.

Number of working people (including working dependent) in Indian subcontinent as per 1931 census was 153,916,050 (male 105,086,333 and female 48,829,717) – that signify less than 44% of total population was employed. While most of the males aged under 10 and over 60 form the bulk of non-working dependants, most of the males belonging to the age group 20 – 60 were working people. As per 1931 census, out of every 10,000 persons of Indian subcontinent (including Myanmar but excluding Portuguese Goa and French Pondicherry):

  • Non-working dependants – 5609
  • Working people (including working dependent) – 4391…. Out of which, significant occupations:
    • Cultivation of general crops – 2766
    • Cultivation of special crops – 47
    • Stock-raising – 100
    • Fishing & Hunting – 24
    • Exploitation of minerals – 10
    • Textile Industry – 117
    • Industries of dress and ‘the toilet’ (toiletries?) – 96
    • Food Industries – 42
    • All other Industries (including construction) – 183
    • Transport – 67
    • Trade in foodstuff materials – 110
    • All other Trades – 116
    • Military force & Police – 24
    • Public Administration – 28
    • Professions & Liberal Arts – 66
    • Domestic service – 311
    • Insufficiently described occupation
    • (Services in unorganised sectors) – 222
    • Unproductive (like jail inmate, beggar etc.) – 46

Hence, 64% of working people were engaged in cultivation, and 12% of working people were engaged in unorganised sectors like domestic services and service to miscellaneous establishments. The 1931 census laid bare the reality of relationship among agriculture-industry-occupation in British India better than any scholarly article and book – Indian subcontinent and Burma in the early 20th century were backward pre-modern economies.

A break-up of ‘Cultivation of general crops’ occupation is a pointer on how the agriculture sector accommodated employment among such huge work force in rural Indian subcontinent:

  • Non-cultivating proprietors taking rent – 3.36%
  • Cultivating owners – 27.85%
  • Tenant cultivators – 35.24%
  • Agricultural (landless) labourers – 32.46%
  • Cultivators of jhum, and shifting areas – 0.85%

The big landlords/zamindars were largely parasitic and would spend their time and money for extravaganza. The smaller landowner’s ambition was to stop working and enhance social status based on return from agricultural labourers toil. At the bottom of social structure in villages, condition of tenant cultivators and landless labourers (mostly lower caste Hindu, except in Bengal where majority were Muslim and Punjab-Sind where majority were Muslim and Sikh) remained wretched. Extreme level of poverty was quite common for those tenant cultivators and agricultural labours i.e. about 68% of all families who were involved in cultivation.

In urban areas, occupation in industry, transport, trade, public administration etc., though limited, helped creating new westernized ‘middle class’ Indians (educated in western education institutions). Here also, the upper caste Hindus seized the opportunity though the Parsis and Sikhs also did well.

3.5.2 The census since 1881 opened another Pandora’s Box. The fault lines between aristocratic upper caste wealthy Hindu families and aristocratic Turkic-Afghani wealthy Muslim families (which existed since 1192 CE when Turkic-Afghani rulers established empire in north-west, north, and east regions of Indian subcontinent by defeating local Hindu rulers of dozens of kingdoms) developed into deep chasm. For large section of aristocratic Hindu elites, their ancestral land was steadily being ‘usurped’ by Muslim foreigners, which was ‘substantiated’ by census data:

  • In 1931, Hindu population was 239,195,000 (proportion of population in 1931 became 68.24% from 74.32% in 1881)
  • In 1931, Muslim population was 77,678,000 (proportion of population in 1931 became 22.16% from 19.74% in 1881)

The reality was/is that, the majority of Muslims in Indian subcontinent were not foreigners, they were/are local converts (with much higher birth rate in the community).

3.6  Political Movement for Independence from British Rule

Three acts passed by British Parliament paved way for Indian natives to take part in the process of governance at province and central level: Indian Councils Act 1909 (known as Morley-Minto Reforms), Government of India Act 1919 (called as Montagu-Chelmsford Reforms), and Government of India Act 1935.

The last one authorised establishment of the ‘Federal Legislature’ at the centre and the ‘Provincial Legislature’ at the provinces. Legislative assemblies in all provinces of British India had seat distribution based on religion-race-caste-occupation of the electorate – a voter could cast a vote only for candidates in his/her own category.

Central parliament combining British India and princely states was blocked by the rulers of the princely states

3.6.1 Starting from 1870s, political movements started taking shape in Indian subcontinent. Contrary to popular belief of M K Gandhi and his team vs. British rule that was promoted by Anglo historians as well as a large section of Indian historians, there were wide range of socio-political movements based on different beliefs and ideologies. Significant ones were:

Indian National Congress – moderate (wing) members were primarily the founders of founder of the party that believed in gradual reformation of British rule in Indian subcontinent without pushing for political independence; most of the leaders were from upper caste Hindu and some members from Muslim and Parsi communities, with background of western education and professionals by occupation; they were non-communal in outlook and believed in European style of secular society

  • Indian National Congress – ultra-nationalist (wing) members were relatively younger generation leaders who believed in continuous agitation for self-rule replacing British rule in Indian subcontinent; most of the leaders were from upper caste Hindu, with background of western education and professionals by occupation; they believed Hindu society should be the future in Indian subcontinent
  • Indian National Congress – democratic unionist (wing) members finally wrested control of the party under leadership of M K Gandhi who believed in opportunity-based mass movements for self-rule replacing British rule in Indian subcontinent; most of the leaders were from upper caste Hindu, and some members from Muslim community, with western education and by occupation professionals, businessmen and landlords; mostly they believed each community in subcontinent should be free to live in their own way within European model of governance; a small but vocal group led by Jawaharlal Nehru and Subhas Chandra Bose was influenced by Socialist thoughts
  • All India Muslim League – unionist (wing) members were relatively conservative elites who believed in collaboration with British rule in Indian subcontinent; they believed Muslim society should coexist along with Hindu society in future subcontinent with Muslim-dominated provinces separated from Hindu-dominated ones
  • All India Muslim League – separatist (wing) members were mostly from aristocratic society and were more vocal about the necessity of separate country for Muslim and Hindu population as they believed Muslim religion is a way of life completely incompatible with Hindu way of life and society; they believed in collaboration with British rule in Indian subcontinent
  • Hindu Mahasabha members were almost Hindu version of Muslim League – separatist (wing) who wished either separate country for Hindu and Muslim population due to completely different philosophy of life and society, or single country with Hindu majority in governance and no special treatment like ‘community-wise reservation’ for Muslims; they also believed in collaboration with British rule in Indian subcontinent
  • Communist Party of India members were mostly from upper caste Hindu, and some members from Muslim community, with background of western education; they believed each community in Indian subcontinent should be free to live in their own way within a communist society in Indian subcontinent; Communists’ emphasis on economic status that completely ignored or bypassed the religious perspective and caste system, made limited appeal in Indian subcontinent
  • Armed revolution was another type of movement to which educated middle class youths were drawn into; primarily a phenomenon in Bengal presidency, Punjab province, and Bombay presidency the revolutionaries depended on terrorist attacks on British officials; couple of large-scale uprising across Indian subcontinent was thwarted by British government
  • Backward caste movement was primarily led by Dr. B R Ambedkar to emphasize social equality of the lower caste Hindu population; they became ally of Indian National Congress – democratic unionist after agreement on reservation for depressed/backward castes in legislature assembly (proposed under Government of India Act 1935); primarily it was restricted in Bombay presidency, Central province, and Madras presidency among the educated lower caste Hindu

3.6.2 The largest among the political streams, Indian National Congress (INC) was not organized as a Hindu party, but due to the large difference in level of western education between Muslims and Hindus, elite Hindus made up the majority of the INC leadership since its inception. INC demands for competitive examinations for entry in the civil service and academic institution riled the Muslim elites/leaders, as they felt that would favour the Hindus since Muslims were lagging behind in western education. Also, Hindu leaders of the INC would not give sincere assurance to Muslim leaders about community-wise representation in future governance system. In the absence of mutual trust between educated elites of two communities, elite Muslim leaders from United Province and Bengal floated All India Muslim League (AIML) to represent interests of the Muslim community.

3.6.3 The political atmosphere between 1935 and 1947 was a triumph of personalities and their political ambitions over ideology – it was the most tragic period in the history of Indian subcontinent. Mohammad Ali Jinnah, one of the most secular AIML politician who always sought communal harmony, became ardent supporter of two-nation theory (separate independent countries for Muslim and Hindu communities) because partition would guarantee fulfilment of his political ambitions. Jawaharlal Nehru, a socialist and an impeccable believer in Hindu-Muslim unity, became supporter of partition because that would create the opportunity for him to preside over the Hindu part without political competition from Jinnah. Subhas Chandra Bose, a socialist who first initiated deliberations on Indian economy considering Soviet model of economic planning, with his ambition to preside over an undivided subcontinent, went out of India, and opened a battle front with the help from Japanese fascists in the north-east of Indian subcontinent to fight the British power during WW II.

While Nehru and Jinnah along with their close circle of elites and aristocrats of Hindu and Muslim communities lorded over the newly independent entities of India and Pakistan, the common people of the subcontinent bore the brunt of the unplanned and illogical partition happily assisted by the British power (who worked overtime to create a permanently feuding subcontinent). M K Gandhi failed to rise to the occasion and was relegated to the side-lines, he would be assassinated in India after independence by a terrorist who was a Hindutwa fundamentalist.

3.7  Significant observations on British Rule

3.7.1 Between 1755 and 1765, the giants of trade and finance of the-then Bengal conspired with the English EIC top officials to remove the-then ruler of Bengal-Bihar-Orissa (the region that earned maximum revenue in Mughal empire). It was modern world’s most spectacular corporate conspiracy. French historian Fernand Braudel concluded that the EIC’s rise to prominence only came about with the “help, collaboration, collusion, coexistence, symbiosis” of the local merchant elite.

Once the EIC corporate juggernaut was set rolling, it first crushed the Indian traders and financers to establish monopoly over export from and import into Indian subcontinent, then it transformed into corporate-state to plunder the subcontinent, finally it destroyed the local crafts and industry by duty-free imports into the subcontinent. The EIC’s demise in 1874 ended the era of the chartered corporation. The leviathan of mercantile capitalism was no longer suited to the new empire of colonies that Britain was establishing across the globe for sourcing of raw material and selling of finished goods produced in its factories as an outcome of industrial capitalism.

3.7.2 It won’t be truthful to put entire blame on the British rulers for the abysmal poverty of the common people. Two categories of elites were equally responsible for such poor state of affairs: (a) the rulers and bureaucrats of princely states ruling over 40% of subcontinent, who were, by and large oblivious to unemployment and poverty, (b) the local politicians and bureaucrats of British ruled 60% of subcontinent, who were more mindful to seek prestige and wealth than to influence the British decision-makers for benefit of common people.

Karl Marx summed up British rule as the tool of Britain’s elites-aristocrats-oligarchs, “the aristocracy wanted to conquer it, the moneyocracy to plunder it and the millocracy to undersell it”. Marx, however, didn’t notice that most of the elites and aristocrats of Indian subcontinent (Hindu-Muslim-Sikh-Jain alike) were complicit in the crime – only few patriotic aristocrats put up resistance to British rule.

3.7.3 The partition of Indian subcontinent was most irrational decision agreed by INC under pressure from AIML under continuous ‘guidance’ from British imperialists, fostering the following irregularities during the partition:

(a) AIML got 425 seats in the election to Provincial Legislative Assemblies in 1946 for which AIML chose its main election plank as separate country for Muslims; apart from the provinces in north-west and east regions which were to be affected by partition, AIML got substantial number of seats from other provinces: Madras presidency (29), Bombay presidency (30), United Province (54), Bihar (34), Central Province (13) – why neither British rulers nor INC-AIML parties arranged for mass migration of Muslim community to Pakistan as wished by those constituencies?

(b) For the princely states, there was no process of considering the choice of common people for inclusion in either of the newly independent political entities – the ruler of the princely state was authorised to sign documents of accession; Hyderabad Nizam ruling over 82,698 sq. mile land with majority of population as Hindu wanted to join Pakistan, but army of independent India forced him to join India, while Jammu & Kashmir king ruling over 84,516 sq. mile territory (though China never accepted boundary drawn by British officers) with predominantly Muslim population signed to join India, but militia of independent Pakistan occupied major portion of the princely state – why neither British rulers nor INC-AIML parties settled such well-known problem areas across the subcontinent and did an orderly transition?

4.  India From 1947 To 2014 – Socio-Political Landscape

Newly independent India faced enormous humanitarian crisis due to chaotic partition of the subcontinent that resulted in inter-religious violence as well as displacement of millions of people. Post-partitioned Indian part of the subcontinent witnessed two variants of political economy followed by the mainstream political parties – social democracy during the period August’1947 to May’1991, and neoliberal oligarchy from June’1991 onwards. A brief recapitulation of the social democratic era is noted below:

4.1  Politics during Social Democracy: 1947 to 1991

Immediately after the independence, between 1947 and 1949 India was bogged down with exchange of population with Pakistan on massive scale, integration of princely states, and war with Pakistan over Jammu & Kashmir. On 26 January 1950 India became a democratic republic with adoption of the Constitution of India (with strong provisions for Fundamental Rights of the citizens) which guaranteed a federal structure of governance in the country.

4.1.1 Most of the pundits on India miss the most important political reorganisation that happened in independent India since 1950. About 10 British era provinces and more than 500 princely statelets had been reorganised into Indian provinces (called as ‘state’) on the basis of language and cultural identity – the process continued till couple of years back resulting in 29 self-ruled states and 9 centre-ruled territories. By this process, the immense diversity of India has been acknowledged by the political leadership of the country.

Supportive Map :

https://en.wikipedia.org/wiki/Political_integration_of_India#/media/File:India_Administrative_Divisions_1951.svg

4.1.2 INC remained the most important mainstream party that professed socialism, but in reality the policies were that of a social democratic party. Soon after the independence, the existing support base in rural and urban areas expanded – however, party didn’t notice or simple didn’t care that, instead of more people from poor and backward families filling up the grass-root leadership, the wealthy and well-established families filled the leadership layers from grass-root up to province. Slowly but steadily INC became a training centre for grooming leaders – whenever any non-Marxist party would offer to disgruntled INC leaders a position in their political hierarchy that is more lucrative than existing position, the leaders from INC would join them. Hailing from mainly aristocrat/ elite families, they had no qualms for changing party as long as that improve their prestige and power.

Socialist Party and its offshoot, Praja Socialist Party were political outfits of non-Marxist socialist leaders of India who wanted to blend M K Gandhi’s thoughts and modern socialist thoughts on industrial civilization with Indian traditions. After two decades of existence the ideological influence waned at the central elections since the beginning of 1970s primarily because INC became rallying point for most of the socialist-minded workers (and a section of communists also). But various splinters groups of Socialist Party remained a force to reckon with in few of the Indian states particularly in state elections.

Communist Party of India was a well-known force in the-then Indian politics with its limited but committed mass base in rural areas and industrial belts – the turmoil in global communist movement resulting from the clash of CPSU and CPC took its toll in India (as it did in every country of Asia-Africa-South America continents). A splinter group of Indian communists came to power in couple of Indian states during this period – in fact the government formed by Communists in Kerala province was world’s first elected communist government.

Bharatiya Jan Sangh (latter became Bharatiya Janata Party) was established as rightist political wing of Hindu revivalist Rashtriya Swayamsevak Sangh (RSS). Hindu Mahasabha leaders became the backbone of Bharatiya Jan Sangh. The socio-cultural propaganda by RSS and Hindu Mahasabha has been to relentlessly spread the message of perceived ‘superiority’ of Hindutwa (similar to any right conservative outfit) through its dozens of social wings. The essence of the campaign not only by RSS during its existence for about 100 years, but also by its progenies like Bharatiya Janata Party (BJP), the political wing, Bharatiya Mazdoor Sangh (BMS), the trade union wing, Akhil Bharatiya Vidyarthi Parishad (ABVP), the student wing, can be summed up as below:

  • Aryan Hindu community has been living in Indian subcontinent perpetually since dawn of humanity,
  • Veda scriptures directly originated from Almighty God,
  • Veda is the storage of all significant knowledge in and about the universe,
  • Sanskrit has been the script of Hindu community since dawn of civilization in Indian subcontinent,
  • Caste system with Brahmans as ‘prime mover’ is way for socio-economic progress of Hindu society
  • Indian subcontinent is de facto Indian nation which is the ‘ancient Hindu nation’.

Swatantra Party was established by the right ideologues of INC and few of the royal family members from erstwhile princely states, who were peeved with Nehru’s leftist ideals and promotion of public sector economy. After a decade or so the party’s influence declined dramatically.

Indian Union Muslim League was established by Muslim elites after partition of India. The party represents religious conservatism in Muslim society of India. However, as a matter of fact, Muslim community in different provinces generally voted en bloc in favour of either INC or some strong regional party.

Apart from above mentioned political parties at the national level, there were a dozen of regional political outfits (based on language and caste based politics) which were more or less social democrats in policies. A significant point that should be mentioned here pertains to the conduct of the political parties vis-à-vis their professed ideology – during this period, all significant leaders and their parties not only would chalk out their policies and programs in line with their avowed ideology, but they would also try to implement those programmes if voted to power. It would be another issue that most of the time, such implementations would go haywire.

4.1.3 INC ruled at the centre for most of this period with Jawaharlal Nehru as Prime Minister from August 1947 to May 1964, Indira Gandhi from January 1966 to March 1977 as well as from January 1980 to October 1984, and Rajiv Gandhi from October 1984 to December 1989. Apart from these 3 leaders, few other leaders associated with INC at different point of time came to power at centre for very short duration, mainly through coalition politics at centre.

In 1975, Indira Gandhi advised the President to declare a country-wide emergency that allowed the central government to assume sweeping powers and suspend civil liberties in states. Due to the unpopularity of emergency, Indira Gandhi lost 1977 general elections where ex-INC senior leaders played crucial role in creating Janata Party piecing together many opposition parties.

Two of the Prime Ministers were assassinated in this period – Indira Gandhi and Rajiv Gandhi. Though Indians hardly engage in conspiracy theories about these assassinations, a thorough analysis of cui bono might point out towards involvement of anti-Soviet Union world order and Deep State in removing both leaders, so that in absence of pro-Soviet leaders from Nehru-Gandhi family, India can be easily drawn into USA-oriented world order.

4.1.4 Nehru’s foreign policy was centred on Non-Aligned Movement (NAM) of which India was a co-founder. But, Nehru secretly worked with CIA for keeping religious disturbances alive in Tibet, and provided logistics and moral support to Dalai Lama who was resisting the attempt of government of China to establish the rule of law in Tibet province of China. Indira Gandhi continued the NAM policy of her father, but practically steered India towards USSR camp (during Bangladesh liberation war Soviet support was instrumental) in order to safeguard country’s interests in international arena, to deter USA Navy approaching India and Bangladesh coast.

India fought 2 wars with Pakistan over Jammu & Kashmir, and a third war with Pakistan to help East Pakistan (Bangladesh) get separated from West Pakistan. A brief border war with China was fought. Sikkim was annexed as a state within Indian republic. India deployed troops for peacekeeping operation in Sri Lanka’s ethnic conflict during Rajiv Gandhi’s leadership – next government withdrew the troops when they became entangled in fighting the Tamil rebels itself.

During Indira Gandhi’s tenure in 1975 Sikkim was integrated with India as a province. Sikkim used to be protectorate of India after 1947. Though there had been criticism internationally as ‘annexation’ by India, the anti-monarchy movement within Sikkim was a key factor behind the willingness of Sikkim’s politicians for getting integrated with India.

4.2  Politics during Neoliberal Oligarchy: 1991 to 2014

Even during the neoliberal era, there was/is still an important differentiation among mainstream non-Marxist parties which related to the party’s close identification with some communities demarcated on the basis of religion/ caste/language/region etc. (as against Marxist parties who try to identify with livelihood/income class) – it was/is also called ‘vote bank’ politics. While mainstream national party like INC profess secular policies, it had no qualms to promote medieval culture of divorce within Muslim communities (where husbands summarily divorce wife without alimony, particularly in low-income households) to keep their Muslim vote bank undisturbed. Overall, INC maintained lip service to the concepts of constitution of India (where 4 different ethno-genetic groups, 15+ major languages and close to 100 minor languages, 5 major religions have been cohabiting for millennium). On the other hand, mainstream national party like BJP professes extreme religious intolerance to polarise majority Hindu voters and create a vote bank. This party was proud to demolish a medieval historical mosque which would have been treated as a serious offence against archaeological heritage in any modern country! BJP’s parent RSS popularised their slogan of Hindu-Hindi-Hindustan which delegitimise equal treatment of other religions other than Hindutwa and other languages except Hindi.

4.2.1 Indian National Congress (INC), the most important mainstream party, transformed itself into a neoliberal democratic party after killing of Rajiv Gandhi. The entire party machinery and leadership positions were grabbed by the so-called ‘realist-cum-pragmatist’ camp through a ‘seize from within’ campaign by the elites-businessmen-landlords-technocrats. Narasimha Rao and Manmohan Singh led the transformation of INC into neoliberal fantasy-land after INC won elections at centre in 1991. The media and academia (which till 1991 used to paint a social democratic façade of INC) went full steam ahead to preach on benefits of the so-called LPG (liberalisation-privatisation-globalisation) regime introduced by Rao-Singh duo. I will come back to the so-called economic benefits in the next section, section 5. The semblance of social democratic ideology got eroded so much within a span of 23 years that, during the general election in 2014 INC couldn’t escape from being branded as party of ‘crony capitalists’.

The neoliberal oligarchy period has been the golden period for RSS and BJP-BMS-ABVP – RSS spread its wings unchallenged during this period. With INC openly promoting economy and governance away from the political philosophy of ‘welfare state’, a right conservative institution like BJP promoted by Hindu upper caste landlords and businessmen had no problem in catching wind in their sails. Standing on the ‘solid’ bedrock of Hindutwa socio-cultural propaganda by RSS across India, BJP planned a political movement based on Hindutwa and implemented the plan – (a) Babri Masjid (in UP province) demolition by RSS-BJP workers was carried out in December 1992, and (b) Godhra (in Gujarat province) train-burning (BJP alleged that Muslim community burnt the train, but officially reason couldn’t be ascertained) in February 2002. Both the ‘main incidents’ were followed by religious riots across India (during which most of the attacks were by Hindu fundamentalists). Such gruesome carnage took place when the neoliberal politicians from both INC and BJP were ruling at centre and/or state. BJP’s message for political manipulation was simple, which at one hand, created a sense of deep insecurity among common Hindu (majority) population, and at the other hand, the same population was offered relief from such ‘insecurity’ if they chose BJP.

Communist Party of India and its splinter groups squandered its limited mass base but wide appeal among the middle class sympathisers, due to both internal and external reasons – (a) dissolution of CPSU and Soviet Union, and adoption of capitalist market economy by CPC were portrayed in Indian media and academia as ‘proof of failure of communism’; Communist parties in India couldn’t effectively counter such nonsense, (b) dozens of splinter groups of Communist parties were mired in politicking which lacked consolidated plan and programme across the country, Communist parties in India couldn’t effectively unite and make a single plan of action during past six decades, (c) attitude of ‘intellectualism’ among the senior leadership simultaneously with ‘careerism’ of the junior apparatchiks deflected the Communists from their main strength – strength of Marxist humanitarianism. The different splinter groups of Indian communists have been drifting aimlessly (generally their aim has been to get voted into power in a province through election).

During this period, the regional parties regrouped with social democracy as their declared ideology – in fact, such parties filled in the vacuum created by withdrawal of INC from its old ideological base. There has been three kinds of such regional parties all of which revolve around cult of personality:

  • Backward caste and/or minority language based political parties in few provinces
  • Breakaway splinter groups of INC in few provinces, where province-level INC leaders were charismatic
  • Erstwhile junior leaders of now-defunct non-Marxist Socialist Party created new entity through mergers/demergers

4.2.2 INC ruled at the centre for most of this period with Narasimha Rao as Prime Minister from June 1991 to May 1996, Manmohan Singh from May 2004 to May 2014. BJP ruled for significant period with Atal Bihari Vajpayee as Prime Minister from March 1998 to May 2004. Apart from these 3 leaders, few other leaders associated with different regional parties came to power at centre for very short duration through coalition politics at centre.

During this period of neoliberal oligarchy, the national bourgeoisie allied with the comprador bourgeoisie and influenced political programmes and economic liberalisation carried out by both INC and BJP. Substantial amount of foreign investment had been registered during this period, and Indian industrialists-traders-bankers happily collaborated with MNCs and vied for such FDI. In fact, an in-depth survey shows that, economic policy-wise there was no distinction between INC and BJP – both work tirelessly so that the top 1% of Indian population can amass wealth and power, and the fruits of economic growth gets shared by the next 9% population (as managers and implementers of all policies). The deep divide between INC’s secular socio-cultural platform and BJP’s Hindutwa socio-cultural base vanished when it came to economic liberalisation and westernisation assisted by capital from Zionist-Capitalist global oligarchy. It was only the style of election campaign that still demarcated them. Thus it is no wonder that, during past 7 years when Narendra Modi became crowd-puller for BJP’s campaign, hundreds of seasoned politicians of INC across India joined BJP for contesting elections at province and at centre.

4.2.3 The objectives of foreign policy was/is a peaceful global and regional environment in which Indian economy can grow as well as food security, water security and energy security are maintained. Along with the changing landscape of economic policies, Indian foreign policy also went for a makeover.

4.2.3.1 Background of Jammu & Kashmir Problem – All along, the main focus of Indian foreign policy has been the northern province/state of Jammu & Kashmir (J&K) which was/is the intersection of border disputes with both Pakistan and China. Fact remains that, it was the imperialist British power which created border problems in 1947 through a messy partition. British lawyer Cyril Radcliffe demarcated the so-called border in 1947 between India and Pakistan from the provinces/regions that were directly administered by the-then British government. British government neither issued notification on integration of the individual 550+ princely states with India or Pakistan (except those regions that would basically create the entity of Pakistan) nor arranged uniform procedures for general people of the princely states to choose between India and Pakistan. Even though in 1947 Dogra king signed accession document on behalf of J&K princely state with India government, Pakistan and China didn’t accept the legality, hence J&K became a permanent source of conflict between India and Pakistan as well as India and China:

    • India government controls more than half of the erstwhile J&K Dogra kingdom – part of Kashmir region, entire Jammu region, larger part of Ladakh region. India demands that Pakistan and China cede their control from all regions that were part of erstwhile Dogra kingdom of J&K
    • Pakistan government controls part of Kashmir region, entire Gilgit region, entire Baltistan region. Pakistan ceded a small part of Baltistan to China in mid-1960s. Pakistan further demands entire Kashmir region from India
    • China controls entire Aksai Chin region. China further demands part of Ladakh region from India

It wouldn’t be out of context to mention that, on behalf of princely state J&K, British government maintained foreign relations with Tibet kingdom (a protectorate of China) and Chinese empire, between 1857 and 1947. During this period, British government proposed boundary line between princely state of J&K and Tibet twice, namely Ardagh–Johnson Line in 1860s and Macartney–MacDonald Line in 1899. Chinese government didn’t sent formal acceptance to British government in either of the cases, but 1912 onwards with removal of Qing dynasty, Chinese government always denied the boundary demarcation proposed by British government. Upon independence in 1947, Indian government fixed official boundary that resembled Ardagh–Johnson Line (hence included Aksai Chin region), which was denied by China earlier.

4.2.3.2 Background of Arunachal Pradesh Problem – Border dispute with China has a second dimension in India’s north-east province/state of Arunachal Pradesh (earlier called as North-East Frontier Agency). British administrator Henry McMahon proposed the McMahon Line as the demarcation line between Tibet kingdom and the-then north-east region of British India at the 1914 Simla Convention signed between British and Tibetan representatives. Chinese government didn’t accept the legal status of McMahon Line because Tibet was a tributary state of China while Arunachal Pradesh was southern territory of Tibet.

India controls the Arunachal Pradesh region as per the McMahon Line border. During 1962 war, though China crossed the McMahon Line border and came southwards, soon Chinese troops were withdrawn to positions north of the disputed McMahon border line.

4.2.3.3 Possible Options of Solution to Border Problems – Till 2014, there could be only two options of solution to border problem vis-à-vis Pakistan and China. Best option entailed that all three countries meet in a conference in presence of UNO, discuss heart-to-heart and make adjustments with each other’s standpoint, and legalise the current line of actual control (LAC) with minor adjustment/accommodation as the de facto and de jure border demarcation. The other alternate option was that India or any country which felt aggrieved, would mobilise massive military forces to capture as much land as it wish and unilaterally try to redefine the border, in case the country wins the war against the adversary – but there would have been a gigantic cost to achieve such ‘success’ and sustain it, because all three countries developed strong conventional military power as well as semi-advanced capabilities of nuclear war.

4.2.3.4 After dissolution of Soviet Union, in order to adjust foreign policy to the unipolar world order dominated by USA, in 1992 the-then Prime Minister Narasimha Rao upgraded India’s diplomatic relations with Israel to ambassador level. Trade and investment were given a higher priority while building relations with USA, EU, ASEAN and China. Though relation with USA government temporarily went south after Vajpayee government conducted a series of underground nuclear tests in 1998, soon Vajpayee visited the USA and proclaimed that India and USA are ‘natural allies’. Manmohan Singh government pushed through the India-USA Civil Nuclear Agreement in 2006. In a major policy shift, India started rapidly moving away from Russian armaments and military technology and bring in USA and Israel as key suppliers for military hardware.

The Quadrilateral Security Dialogue (also known as the Quad) forum was initiated in 2007 by Shinzo Abe of Japan, Dick Cheney of USA, John Howard of Australia and Manmohan Singh of India. Quad maintains summits, and military drills among member countries. India government also signed defence cooperation agreement with USA.

4.3  People and Society: 1947 to 2014

4.3.1 Indian society is highly diverse with hundreds (or thousands) of ethnic, linguistic, and caste groups as well as dozens of religious, and regional groups. On top of that, the differences on the basis of urban-rural and gender play crucial role. However, amid such differences and complexities of Indian society, there exist few socio-cultural themes that unify the social order even if that fail to bring social harmony. Across different ethnicities-religions-languages in India, a ‘male-dominated family’ is common basic building block of the society. In rural areas and semi-urban areas resources like land, building, or business are generally controlled by male members (even if legislation allows all Indian women to inherit real estate property). Traditionally women have control over precious stone and jewellery. However, as modern education has been making inroads into the society, male-dominated society is fading away slowly.

The other socio-cultural theme that ‘unite’ Indian society was/is ‘hierarchy of Caste’ – the people were/are grouped by birth, named and brought-up within caste based ‘entitlements’, forced into endogamous (in-marrying) groups, and employed within caste based ‘occupations’. As per old Hindu caste system, there were/are thousands of castes and sub-castes in India, where hierarchy-wise Brahmans are top ranking, Kshatriya-Vaishya-Kayastha groups are second tier, Shudra groups are third tier, while tribes (forest dwellers) are social outcasts. Indian Constitution identified 1,108 scheduled castes (SC, the Shudra) and 744 scheduled tribes (ST, the Forest dweller), and provided special reservation for higher education and government services which brought new hope for those marginal people (however, those benefits were/are more often than not cornered by a tiny section of SC and ST communities; in many crucial areas like medicine and scientific research such reservations had/has detrimental effects as well). With modern (western) education and government policies, in urban areas, the caste system is less divisive than 50 years ago. Rural India still has not only hierarchical caste system among Hindu population, but Muslim and Christian societies are also infected by the disease of caste system.

4.3.2 The key statistics related to total population, rural-urban divide, backward castes (scheduled castes and scheduled tribes), literacy, linguistic groups, religious groups as per census are given below (figures in million):

Data Element 1971 census 1991 census 2011 census
Total Population (million) 548.159 838.584 1210.854
Rural (as percentage of total) 80.09% 74.27% 68.86%
Urban (as percentage of total) 19.91% 25.73% 31.14%
Literate population (million) 161.415 359.324 763.638
Average Life Expectancy at Birth (Years) 45.6 58.7 67.0
Scheduled Castes population (million)

[as percentage of total population]

 79.092

[14.43%]

 138.223

[16.50%]

 201.378

[16.63%]
Scheduled Tribes population (million)

[as percentage of total population]

 36.408

[6.64%]

 67.758

[8.08%]

 104.545

[8.63%]
Literate – informal and below primary 9.63% 10.80% 15.03%
Literate – primary and middle schooling 15.84% 21.27% 26.26%
Literate – matriculate 3.23% 5.65% 8.75%
Literate – intermediate and diploma Less than 0.1% 2.40% 6.53%
Literate – technical diploma Less than 0.1% 0.26% 0.60%
Literate – graduate and above 0.60% 2.46% 5.64%
Illiterate 70.55% 57.15% 36.93%
Population by religion – Hindu 82.72% 82.00% 79.80%
Population by religion – Muslim 11.20% 12.11% 14.23%
Population by religion – Christian 2.59% 2.34% 2.30%
Population by religion – Sikh 1.89% 1.94% 1.72%
Population by religion – Others 1.60% 1.61% 1.73%
Population by language – Hindi 36.99% 39.29% 43.63%
Population by language – Bengali 8.17% 8.30% 8.03%
Population by language – Marathi 7.62% 7.45% 6.86%
Population by language – Telugu 8.16% 7.87% 6.70%
Population by language – Tamil 6.88% 6.32% 5.70%
Population by language – Others 32.18% 30.77% 29.08%

The significant inferences that can be drawn from the above statistics are:

  • Population of India (361.088 million in 1951) grew unrestrained over the decades to reach 1210.854 million in 2011. In 2011, Total Households 249.454 million and Average Population per Household was 4.85. Yearly growth rate of population peaked during 1973 to 1983 period when it hovered around 2.31% to 2.36%. Since then the rate has been slowly declining to 1.04% in 2018 (when population reached 1350 million). However, unevenness exist – on the basis of language, ‘Hindi’-speaking population in north, central, and east India show rise in share of total population, on the basis of religion, ‘Muslim’ community across India show rise in share of total population, on the basis of caste, SC and ST communities demonstrate marginal rise in share of total population.

Vast population was/is one of the key factors behind a multitude of socio-economic problems that has been afflicting the country since independence (because India has limited arable land and face scarcity of resources). However, massive population is not the only problem in India – institutionalised exploitation is even bigger problem.

  • Urbanisation has been increasing, but not as rapidly as government expected after policy changes in 1991. Also, in most of the tier-2 and tier-3 urban areas, management of basic civil amenities remain poor.
  • Life expectancy at birth has steadily increased over the decades, but standard of healthcare facilities vary widely across regions – while south and west regions are better than average north and east regions have below average healthcare facilities.
  • Indian government registered appalling performance in promoting literacy. Not only 37% of the population remained illiterate in 2011, but also less than 22% of the population were ‘employable’ who have academic qualification of matriculate and above. That signifies a whopping 41% of the population were ‘converted’ into literates by the over-zealous government officials of Education ministry (through luring the children into primary schools by arranging mid-day meals, who would drop out as soon as they become teenager to search any unskilled employment opportunity as a ‘child labour’).

Unless the children complete at least 10 years of formal education and clear matriculate, meaningful employment was/is not possible in a 21st century economy – overall productivity of labour as a crucial component of national economy remains a pipe dream.

5.  India From 1947 To 2014 – Economic Landscape

At the time of independence, Indian economy was mainly dependent on agricultural. Prime Minister Nehru’s development model envisaged a dominant role of the state, Industrial Policy Resolution of 1948 proposed a mixed economy of private-owned and state-owned enterprises. Narasimha Rao initiated the process of economic liberalisation and reform in 1991 which opened the Indian economy to global capitalist world order.

5.1  Economic Planning during Social Democracy: 1947 to 1991

Prime Minister Nehru and Professor Mahalanobis were the chief architects of planned economy in post-independence India. INC set the objective of Indian development strategy as to establish a society with self-reliance and socio-economic justice for all citizens as given in the constitution. Government set up the Planning Commission in 1950 to coordinate the entire economic planning, resource allocation, implementation and appraisal of five-year plans (basically modelled after Soviet planning system). The industrial policy reserved 17 industrial sub-sectors like Atomic Energy, Defence, Iron and Steel, Heavy Machinery, Coal, Petroleum, Electricity, Railways, Airlines, and Telecommunication etc. for the state-owned enterprises.

India’s first five-year plan (1951 – 1956) was focused on development of primary sector of the economy – agriculture and allied areas, power. The total planned budget of Rupees 23.78 billion was allocated as: irrigation and power generation (27.2%), agriculture and community development (17.4%), transport (24%), industry (8.4%), social services (16.6%), rehabilitation of landless farmers (4.1%), and for other sectors and services (2.5%). The target growth rate was 2.1% annual GDP growth; achieved growth rate was 3.6%.

India’s second five-year plan (1956 – 1961) was focused on development of industrial sector of the economy – primarily through state-owned industries especially in heavy industries and capital goods. The total budget was Rupees 48 billion was allocated to two broad sectors: industry and agriculture. Applying statistical models of Professor P C Mahalanobis the plan attempted to allocate investment between productive sectors in order to maximise long-run economic growth. The target growth rate was 4.5% and 4.27% was achieved.

The third five-year plan (1961 – 1966) put focus back on agriculture. But the conflicts with China in 1962 and with Pakistan in 1965 shifted the focus towards defence industry and military. On top of that there was severe drought in 1965. State electricity boards, State road transportation corporations, and State education boards were formed in provinces. The target growth rate was 5.6%, but overall failure resulted in 2.4% growth rate.

The fourth five-year plan (1969 – 1974) emphasised growth rate of agriculture as enabler of other sectors to grow. Family Planning programmes were amongst major targets of the Plan. Major Indian banks in private sector were nationalised. But a chunk of fourth plan resources were diverted towards war with Pakistan in 1971 along with refugee problem related to Bangladesh. The plan achieved 3.3% growth against target rate of 5.6%.

The fifth five-year plan (1974 – 1979) proposed to remove poverty (Garibi Hatao) and attain self-reliance particularly in agricultural production and defence. The plan promoted high rate of GDP growth, growth in the domestic rate of savings, and more equitable distribution of income. The central government entered into electricity generation and transmission. When Emergency was declared, Prime Ministers 20 Point Programme became the focal point. Even though in 1978 a new government rejected the plan, it was successful in achieving 4.8% growth rate against 4.4% target.

The sixth five-year plan (1980 – 1985) focussed on increase in national income, development of skill to reduce unemployment and poverty, modernization of technology, and providing slack season employment. Price controls were eliminated to a large extent resulting in increased cost of living. This plan onwards, the Military five-year plans became coterminous with national five-year plans by Planning Commission. Largely successful plan witnessed actual growth rate of 5.7% against 5.2% target.

The seventh five-year plan (1985 – 1990) strived towards social justice through anti-poverty programmes, agricultural development through increasing productivity of small and big farmers, ‘food, work & productivity’, and achieving independent economy through increased energy production. The plan targeted labour force to grow by 39 million people while employment was expected to grow 4% per year. The plan was quite successful with 6% growth rate of the economy against targeted 5%.

Industrial production index registered annual compound growth of 5.7% during 1951 – 1955, 7.2% during 1955 – 1960, 9.0% during 1960 – 1965 riding on quite high growth of basic goods and capital goods. The scale of investment in heavy industries were beyond the capital-raising capacity of the private-owned enterprises. A sort of complementary relationship grew between state-owned and private-owned business that resulted in good industrial growth during the period when overall prices remained stable in the country. Deceleration in industrial growth experienced during the period 1966 to 1980. The annual compound growth rate during 1965 – 1974 period was only 4.1% while 6.1% during 1974 – 1979 period. Finally, 1979-80 even recorded a negative rate of growth of Industrial production (-) 1.6%. Total factor productivity also registered negative growth of (-) 0.2 to (-) 0.3% per year during 1966-67 to 1979-80. The government put the blame on factors like wars in 1965 and 1971, Oil crisis of 1973, etc. However, a crucial factor was also present – low growth in agriculture sector created less demand of industrial goods. Industrial recovery during the period 1981 to 1991 witnessed much improved environment. Rate of industrial growth during 1981 – 1985 period was 6.4% per year and 8.5% during 1985 – 1990 period. The high growth rates were possible because of very robust growth in capital goods as well as consumer goods-durables. This growth was not associated with acceleration in growth of the factor inputs, but on higher factor productivity, which registered 3.4% per year growth during 1981 to 1985. Many commentators opine that liberal fiscal policies, and increased demand from agriculture and infrastructure sectors were key reasons for such recovery.

A close look at the planned economy and the overall parameters of performance reveal three key problems:

(a) Continuously rising population in India that negated the economic gains substantially, had never been tackled with due seriousness and resolve by INC leadership

(b) Even though five-year plans strived to achieve a lot on economic and social front, endemic corruption, faulty implementation, and lack of political resolve didn’t allow the period of planned economy to achieve greater efficiency

(c) Instead of long-term vision of a country free from all types of exploitation and poverty, INC leadership mostly used the planning process for scoring points for mid-term electoral success.

5.2  ‘Open’ Economy during Neoliberal Oligarchy: 1991 to 2014

The main objective of ‘new economic policy’ were liberalisation-privatisation-globalisation, as it used to be fondly called as LPG by the professionals in the 1990’s. The new policy wanted to convert the Indian economy into a full-fledged capitalist market economy by removing all kinds of government regulations and restrictions. It aimed at permitting unfettered international flow of goods and services as well as capital and technology. Another primary objective was to increase participation of private businessmen in all sectors of economy by withdrawing reserved government sector status from all sectors barring atomic energy and railways. Also, another compelling issue was stabilization of macro-economy through reduction of fiscal deficits (that was 5.4% of nominal GDP during 1991-92).

Some of the key economic reforms were:

(i) Removal of industrial licensing and restrictions

(ii) Abolition of restrictive trade practices through replacement of Monopolies and Restrictive Trade Practices act by other benign act

(iii) Freedom for expansion of Industrial production facility

(iv) Import of capital goods without restriction

(v) Increase in the investment limit for small scale industries

(vi) Free determination of interest rate by commercial Banks (within overall framework of central bank)

(vii) Transfer of ownership of state owned enterprises (in India it is called as ‘public sector unit’) to private businessmen at heavily discounted price

(viii) Reduction in import duty and tariffs

(ix) 100% FDI for high priority industries, increase in Equity limit of foreign investment in other sectors

(x) Partial Convertibility of Indian currency.

During this period, the existing process of five-year plan went on unhindered – eighth, ninth, tenth, eleventh, and twelfth five-year plans were drawn up, budgets approved, and implemented. But with capitalist market economy progressing full swing under watchful eyes of successive governments, the five-year plans made little sense for the socio-economic parameters – common Indians soon learnt what is jobless growth, and uneducated literacy.

The new economic policy had a positive impact on foreign investments which rose to more than 5 billion USD in 1995-96 from a paltry 130 million USD in 1991-92. Nominal GDP increased from 14405 billion Indian Rupees in 1992-93 to 54821 billion Indian Rupees in 2012-13.

There was marked increase in inter-regional imbalance and inter-class imbalance in economic growth, upward movement of unemployment, poverty, and wealth gap in rural and urban areas. Crime rates increased across India. No mainstream politician would think about a balanced society any more.

5.3  Discussion on Economic Parameters: 1947 to 2014

5.3.1 Information of key parameters of Indian economic performance have been noted below (Data Source: Economic Survey 2019-20, Ministry of Finance – Government of India; Data-book for Planning Commission – Government of India; Handbook of Statistics on Indian Economy – Reserve Bank of India):

(a) Data on GDP at factor cost at constant 2004-05 prices and share of sectors within GDP reveals that the share of the primary sector in GDP declined from 54% in 1950-51 to 33% in 1990-91 and further to 14.5% in 2010-11, while share of the secondary sector increased from 16% in 1950-51 to 27% in 1990-91 and further to 28% in 2010-11. Statistics for GDP at factor cost has been officially withdrawn from 2012 onwards, instead of which Gross Value Added (GVA) at basic price has been brought in, that too with constant 2011-12 prices.

Year GDP at factor cost at constant 2004-05 prices

(Billion Indian Rupee)

 Percentage share of sector in GDP at factor cost at constant 2004-05 price
Agriculture,

forestry &

fishing

 Mining & quarrying Manufacturing,

construction,

electricity & utility supply

 Trade, hotels,

transport &

communication

 FIRE, social & personal

services, other misc. services
1950-51 2796.18 51.88 1.84 16.19 11.01 18.51
1960-61 4102.79 47.65 2.16 20.09 12.64 17.55
1970-71 5897.87 41.66 2.20 23.62 14.28 18.98
1980-81 7985.06 35.69 2.62 25.65 16.77 20.88
1990-91 13478.89 29.52 3.48 26.70 17.63 24.90
2000-01 23484.81 22.26 2.96 27.25 21.64 28.84
2010-11 49185.33 14.59 2.25 27.92 27.32 30.16

FIRE stands for Finance, Insurance, and Real Estate.

Data on GDP at market price at constant 2004-05 prices, and share of expenditures within GDP shows that economic growth was primarily fuelled by private consumption expenditure share of which came down from 83% in 1950-51 to 67% in 1990-91 and further to 56% in 2017-18 while contribution of gross fixed capital formation went up from a paltry 14% in 1950-51 to 23% in 1990-91 and further to 31% in 2017-18.

(b) Data on Per Capita Net National Income (Per Capita NNI) at market price and Per Capita Private Final Consumption Expenditure (Per Capita PFCE) at market price both at constant 2004-05 prices reveal overall dismal picture of Indian economy if average income and average expenses are estimated for a citizen:

Year Population

(Million)

 NNI at market price at constant 2004-05 price (Billion Indian Rupee) Per Capita NNI at market price at constant 2004-05 price (Indian Rupee) Per Capita PFCE at market price at constant 2004-05 prices (Indian Rupee) Average Life Expectancy at Birth (in Years)
1950-51 361.1 2697.24 7513 6782 32.1
1960-61 439.2 4115.19 9482 8147 41.3
1970-71 548.2 5964.70 11025 8714 45.6
1980-81 683.3 7951.93 11711 9682 50.4
1990-91 846.4 13420.31 15996 11825 58.7
2000-01 1028.7 22917.95 22491 15351 62.5
2010-11 1186.0 46574.38 39270 26074 67.0
2017-18 1316.0 73050.96 55510 35566 —

5.3.2 Information on industrial productions of few significant goods and electricity have been noted below (Data Source: Economic Survey 2019-20, Ministry of Finance – Government of India; Ministry of Textiles – Government of India; Data-book for Planning Commission – Government of India; Handbook of Statistics on Indian Economy – Reserve Bank of India):

(a) Data on basic industrial products and electricity reveals that even with increased production, pace of industrialisation was certainly inadequate for a country like India with vast population. Considering 1350 million population in 2018, per capita consumption of industrial products like finished steel, cement, and cloth was only 76 kg, 220 kg, and 49 sq. metre respectively, in case of finished steel and cement not even half of world average. Consumer price index shows unceasing inflation of food items.

Year Index of industrial production

(Base:

2004-05 as 100)

 Consumer price index for industrial worker – food

(Base: 1982

as 100)

 Cotton & Manmade cloth

(million sq. metre)

 Finished Steel (million tonnes) Cement

(million tonnes)

 Coal and lignite

(million tonnes)

 Crude oil

(million tonnes)

 Electricity generated – utility & nonutility

(billion KWH)
1950-51 7.9 17.0 — 1.0 2.7 32.3 0.3 06.6
1960-61 15.6 21.0 — 2.4 8.0 55.2 0.5 20.1
1970-71 28.1 38.0 — 4.6 14.3 76.3 6.8 61.2
1980-81 43.1 81.0 8988 6.8 18.6 119.0 10.5 129.2
1990-91 91.6 199.0 22928 13.5 48.8 225.5 33.0 289.4
2000-01 — 453.0 40233 32.3 99.2 332.6 32.4 554.5
2010-11 — 888.5 61730 76.3 216.7 570.4 37.7 965.7
2017-18 — 1419.8 66845 103.1 297.7 722.7 35.6 1483.2

(b) Data (computed by S V R Murthy from National Accounts Statistics, 2019, Government of India on the basis of GVA) on organised and unorganised sectors of shows that, Indian unorganised sector still contribute more than 52% of GVA and activities like agriculture and allied, construction, trade-repair-accommodation-food services are highly dependent on unorganised sector:

Economic Activity Percent Share of GVA in 2011-12 by Percent Share of GVA in 2016-17 by
Organised sector Unorganised sector Organised sector Unorganised sector
Agriculture, Forestry, and Fishing 3.2 96.8 2.8 97.2
Mining and quarrying 77.4 22.6 77.4 22.6
Manufacturing 74.5 25.5 76.4 23.6
Electricity, gas, water & other utility services 95.7 4.3 95.0 5.0
Construction 23.6 76.4 26.6 73.4
Trade, repair, accommodation & food services 13.4 86.6 13.4 86.6
Transport, storage, communication & services related to broadcasting 53.0 47.0 53.7 46.3
Financial services 90.7 9.3 88.1 11.9
Real estate, ownership of dwelling & professional service 36.9 63.1 46.8 53.2
Public administration and defence 100.0 0.0 100.0 0.0
Other services 58.8 41.2 52.7 47.3
Total GVA at basic prices 46.1 53.9 47.3 52.7

5.4  Agriculture in Independent India

At the time of Independence, agriculture was the main source of national income and occupation. Even though agriculture sector’s contribution in GDP steadily declined from about 52% in 1950-51 to 14.5% in 2010-11, agriculture sector employed disproportionately high 54.5% of country’s workforce in 2011.

5.4.1 From 1948 to 1965 agrarian reforms were undertaken through which, substantial land titles were transferred to the actual cultivators, major dams and irrigation projects were constructed, and cooperative credit institutions were strengthened. Still, India remained dependent upon imports and food aid to feed the rising population.

During 1966 to 1990 period, New Agricultural Strategy or Green Revolution was formulated by government to apply science and technology for increasing yield. The strategy included (a) increased use of chemical fertilizers and pesticides, (b) increased use of high yielding varieties of grains, (c) crop rotation and multiple cropping programme, (d) increased area under cultivation, and irrigation. Thus application of agriculture technology was the main driver. Along with that, diversification into related areas like vegetables, fruits, fishery, poultry, dairy etc. helped increasing amount of produce (hence, GDP) as well as employment and income.

The third phase of agricultural policy was a fallout of economic reforms initiated in 1991. Opening up of domestic market due to international trade and WTO affected agriculture. To address new scenario formally a new agricultural policy was launched in July 2000. It set an objective of 4% growth in output per year. Sustainable and efficient utilisation of resources was stressed. With inherent constraints, Indian agriculture, indeed, continue to perform much better as a sector of economy compared to industrial sector.

It is worthwhile to note that the modern applications in agriculture gave rise to unsustainable agricultural practices which deteriorated soil nutrients, reduced ground water table, and reduced biodiversity.

5.4.2 Information of key parameters of Indian agriculture sector performance have been noted below (Data source: Agricultural Census Division, Ministry of Agriculture; Agricultural Statistics at a Glance 2018, Registrar General of India; Directorate of Economics and Statistics, Department of Agriculture and Cooperation – Government of India)

(a) There were 48900 million operational holding in 1960-61 with covered area of 131400 million hectares. The number of holdings increased to 115580 million in 2000-01 with covered area of 163357 million hectares which imply that average plot size reduced. Number of marginal (avg. size – 0.39 hectare) and small (avg. size – 1.43 hectare) holdings and area under such holdings have increased while number of semi-medium (avg. size – 2.76 hectare), medium (avg. size – 5.90 hectare), and large (avg. size – 17.33 hectare) holdings and area under such holding have reduced. Thus, number of uneconomical holdings are increasing regularly with increase in marginal and small plot holdings which means that (a) more and more cultivators are joining the ranks of agricultural labourers average income, (b) growth rate in average real income is poor, may be negative.

Plot size Percent share in 1960-61 1970-71 1980-81 1990-91 2000-01
Marginal number of holding 40.69 50.60 56.40 59.40 63.00
operated area 6.60 9.00 12.00 15.10 18.82
Small number of holding 22.29 19.10 18.10 18.80 18.80
operated area 12.17 11.90 14.10 17.40 20.18
Semi-medium number of holding 18.80 15.20 14.00 13.10 11.70
operated area 19.93 18.40 21.20 23.20 23.96
Medium number of holding 13.40 11.30 9.10 7.10 5.40
operated area 30.51 29.80 29.60 27.00 23.84
Large number of holding 4.90 3.90 2.40 1.60 1.02
operated area 30.74 30.90 23.00 17.30 13.21

(b) As the rural population increased along with rising population of India, the ratio of Cultivators and Agricultural Labourer became skewed in favour of Agricultural Labourer – it signified that number of landless labourers steadily increased with rising population in rural areas along with rising level of poverty. Till 2011, only 45% of net area under cultivation has been brought under irrigation.

Year Rural population

(Million)

 Net Area Sown (million hectares) Net Irrigated

Area (million hectares)

 Rural Agriculture workers Food-grains produced

(million tonne)
Cultivators Agricultural Labourers Total (Million)
1950-51 298.6 118.75 20.85 69.9 27.3 97.2 50.8
1960-61 360.3 133.20 24.66 99.6 31.5 131.1 82.0
1970-71 439.0 140.86 31.10 78.2 47.5 125.7 108.4
1980-81 525.6 140.29 38.72 92.5 55.5 148.0 129.6
1990-91 630.6 142.87 48.02 110.7 74.6 185.3 176.4
2000-01 742.6 141.34 55.20 127.3 106.8 234.1 196.8
2010-11 833.7 141.56 63.67 118.8 144.3 263.1 244.5
2017-18 890.6 — — — — — 285.0

(c) Rice and Wheat productivity and production increased steadily while per capita availability of coarse cereals and pulses steadily declined over the decades. 429.8 gram (Rice 178.1, Wheat 65.9, Other Cereals 119.4, and Total Pulses 66.4 gram) average availability of total food-grains per capita per day during the decade of 1951-60 increased to only 464.2 gram (Rice 198.1, Wheat 143.3, Other Cereals 83.2, and Total Pulses 39.6 gram) during decade of 1981-90. Main reason for such marginal level of food security was lack of robust improvement in productivity of coarse cereal and pulses, and ever-increasing population.

Year Rice Cultivation Wheat Cultivation Total Pulses Cultivation
Area (million Hectare) Yield (Kg/Hectare Area (million Hectare) Yield (Kg/Hectare Area (million Hectare) Yield (Kg/Hectare
1950-51 30.81 668 9.75 663 19.09 441
1960-61 34.13 1013 12.93 851 23.56 539
1970-71 37.59 1123 18.24 1307 22.54 524
1980-81 40.15 1336 22.28 1630 22.46 473
1990-91 42.69 1740 24.17 2281 24.66 578
2000-01 44.71 1901 25.73 2708 20.35 544
2010-11 42.86 2239 29.07 2988 26.40 691
2016-17 43.99 2494 30.79 3200 29.45 786

5.5  Occupation, Income & Poverty in Independent India

5.5.1 The key statistics related to population, rural-urban divide, and employment status in 1951, 1971, and 1991 census are given below (Data Source: Census, Government of India). The term ‘main worker’ is defined as those who work for 183 days or more in a year, ‘marginal workers’ are those who work for less than 183 days in a year.

Data Element 1971 census 1991 census 2011 census
Total Population (million) 548.159 838.568 1210.854
Population of 0-19 age (million) 277.803 391.400 492.970
Population of 20-64 age (million) 251.916 408.540 647.209
Population of 65 & above age (million) 18.324 33.932 66.185
Population of unknown age (million) 0.116 4.695 4.489
Total Workers (million) 180.583 314.131 481.888
Main Workers (million)

[of which workers of 20-64 age]

 180.583 285.932

[238.672]

 362.565

[318.642]
Cultivators 78.176 110.656 95.84
Agricultural labourers 47.489 74.628 86.16
Household industry workers 6.353 6.862 12.33
Other workers 48.355 93.785 168.10
Marginal Workers (million)

[of which workers of 20-64 age]

 No concept 28.199

[21.572]

 119.323

[93.831]
Cultivators — 13.987 22.85
Agricultural labourers — 11.392 58.16
Household industry workers — 0.761 6.00
Other workers — 2.058 32.27
Non-Workers (million) 367.576 524.436 728.966

A close look at the above mentioned data shows the unemployment and underemployment in India has been rising over the decades (obviously because of the known problem of employment opportunity lagging behind the rise in population):

(a) the proportion of total workers to total population increased from 33% in 1971 to 39.8% in 2011; but the lack of employment among working people of age-group 20–64 years was very high at about 36% in 1991 and 2011 census (official definition-jargon-statistics split off a smaller component as ‘unemployment’, but larger part remained a ‘disguised unemployment’).

(b) the proportion of marginal workers to total workers increased, which mean underemployment increased frighteningly from 9% in 1991 to 25% in 2011 census; within marginal workers, not only agricultural labourers, but workers in industrial and service sectors have also increased substantially.

(c) More than 13% of the (self) cultivators left the occupation between 1991 and 2011, a pointer to the fact that cultivation has become uneconomical for most of the small plot-holders; between 1991 and 2011 number of agricultural labourers increased by 5 times showing that landless labours and small plot holders increased leaps and bounds.

(d) As per report 568 of NSS round 68 carried out by the National Sample Survey Office (NSSO) of Government of India, in 2012 the worker population ratio for age 15 years and above is 54.7% which was uneven for males with 78.1% and females with 30.5%. So, the lack of employment among working people of age-group 15 years and above was astonishingly high at more than 45% in 2012 NSSO survey.

5.5.2 There exist another segregation so far as employment is concerned in India, apart from being organised or unorganised – the formal and informal category of employment. Informal workers don’t have any written contract with their employers, they have neither paid leave nor health benefits, and they don’t have any social security. The key statistics (Data Source: NSS 68th unit level data on employment unemployment, 2011-12 and Periodic Labour Force Survey, 2017-18) reveal that even in organised sector there exist substantial number of informal workers, besides the fact that unorganised sector is almost entirely comprised of informal workers. Even very recently in 2017-18 unorganised sector provided close to 87% of employment in India.

Worker Category Percent Share of Employment in 2011-12 Percent Share of Employment in 2017-18
Organised sector Unorganised sector Organised sector Unorganised sector
Informal 9.8 82.6 5.2 85.5
Formal 7.2 0.4 7.9 1.3
Total 17.0 83.0 13.2 86.8

5.5.3 Income distribution:

In India, there was/is no government initiative to document income of individual earning citizens except income tax filing procedure carried out by central government every year. However, out of 481.9 million working citizens in 2011, a paltry 37.9 million (i.e. roughly 7.8% of all working citizens) filed income tax return papers during 2013-14, which later went up to 68.4 million in 2017-18.

Indian Ministry of Statistics and Program Implementation conducts all-India Household Consumer Expenditure Survey through National Sample Survey Office (NSSO). The data gathered during this exercise reveals the average expenditure on goods (food and non-food) and services which gets collated to estimate the household Monthly Per Capita Consumer Expenditure as well as the distribution of households over the MPCE. While expenditure and poverty can be estimated with high accuracy through NSSO reports, income distribution remained a grey area in India.

The Inter University Consortium for Applied Political and Social Sciences Research (ICPSR), based at University of Michigan, provides easy access to India Human Development Survey, which was conducted in 2004-05 and 2011-12 among more than 40 000 households from rural and urban areas. The survey attempted to provide detail information on both household income and consumption. ‘Consumption’ related questionnaire matched NSSO questionnaire (expenditure item categories and referencing periods) while ‘Income’ related queries included all sources of income: labour income (wage, salary, pension), capital income (rent, interest, dividend) as well as business incomes. Government benefits were excluded from the analysis for consistency with tax tabulations. Thomas Picketty and Lucas Chancel in their paper “Indian income inequality, 1922-2015: From British Raj to Billionaire Raj?” estimated a detail pre-tax income distribution combining ICPSR survey data with Indian national accounts data and NSSO survey data. Key data is given below:

Income Group Pre-tax Income Distribution in 2015 Approx. Share of National Income in 1990 Approx. Average Annual Income Growth
Number of Adult (million) Share of National Income Average Annual Income (Indian Rupee) 1970 to 1979 1980 to 1989 1990 to 1999 2000 to 2015
Bottom 50% 397.15 14.7 % 40,671 22.3% 1.25% 1.65% 1.15% 2.20%
Middle 40% 317.72 29.2 % 101,084 44.0% 1.55% 1.85% 0.80% 2.40%
Top 10% 79.43 56.1 % 776,567 33.5% (-) 0.8% 3.80% 3.80% 7.20%
Incl. top 1% 7.94 21.3 % 2954,386 10.7% (-) 4.6% 7.20% 6.00% 7.20%

[ Link: https://wid.world/document/chancelpiketty2017widworld/ ]

The above data can be used logically to categorise Indian population into income groups as given below:

(a) The POOR class in India covers largest part of the working and nonworking adults – 50%.

(b) The LOWER MIDDLE class in India covers 20% of the adult population – rural lower middle may own less than 1.5 hectare cultivation land, urban lower middle may own a dilapidated small flat, but all of them are devoid of access to credit and meaningful deployment of capital to increase their income.

(c) The MIDDLE class in India covers 20% of the adult population who has some amount of money for spending in semi-luxurious items – rural middle class may own more than 3 hectare cultivation land, urban middle class may own a small shop, with access to limited credit from banks.

(d) The UPPER MIDDLE class in India covers 9% of the adult population who has high level of regular income from either job or business and splurge large sums of money on luxury goods – rural affluent class may own more than 10 hectare cultivation land, while urban upper middle class may be senior ranking officers in private and state-owned enterprises, owners of small industry, trading, and service providing companies, with access to very substantial credit from banks.

(e) The OPULENT class in India really owns capital in all forms – 1% of the adult population.

5.5.4 Consumer Expenditure and Poverty:

(a) The key statistics related to percentage of population below poverty line calculated as per Tendulkar method on Mixed Reference Period (Data Source: Handbook of Statistics on Indian Economy – Reserve Bank of India):

Poverty Data 1993-94 2004-05 2011-12
Rural MPCE at current prices (Indian Rupee) 281.40 579.2 1,287.17
Rural Poverty Line (Indian Rupees) — 446.68 816.00
Rural population below poverty line 50.1% 41.8% 25.7%
Urban MPCE at current prices (Indian Rupee) 458.04 1104.60 2,477.02
Urban Poverty Line (Indian Rupees) — 578.80 1000.00
Urban population below poverty line 31.8% 25.7% 13.7%
Total Poverty Ratio 45.3% 37.2% 21.9%

The above data substantiates that the criticism against the basis of “poverty live” calculated by officials of government of India was/is too mild compared to the devilish act of intellectual skulduggery they engage in. The officials since 1950s had/have been artificially constructing “poverty line” which was/is at least 40% – 50% underestimated. If it is accepted by the current neoliberal politicians-bureaucrats-intellectuals-businessmen that an urban family of 4 belonging to the ‘poor’ class has a natural right to eat a breakfast and two square meals every day, then in 2012 the family would have spent at least 5000 Indian Rupees for purchasing food items and for cooking. Assuming a ‘poor’ would have very little money to spend for non-food items apart from electricity/cooking fuel and transport, the total expenditure per month would be 6000 Rupees for the 4-member family. Hence in 2012 the ‘poverty line’ of monthly per capita expenditure should have been 1500 Rupees instead of 1000 Rupees published by government.

(b) NSSO gather data during sampling rounds on two categories: food and non-food expenditures by Indian households. Food is further sub-categorised into cereals, milk and milk products, egg-fish-meat, vegetables, other food items, while non-food is further sub-categorised as betel-tobacco-intoxicants, fuel and light, clothing and bedding, education, medical, conveyance, other consumer services, other non-food items. The key statistics related to social group/caste wise percentage break-up of Average Monthly Per Capita Consumer Expenditure (MPCE) in 2011-12 (Data Source: NSS round 68, report 562, Government of India):

Expenditure Item & MPCE in 2011-12 Social Groups
Scheduled Caste (SC) Scheduled Tribe (ST) Other Backward Caste (OBC) Other Community All
Rural
MPCE (Indian Rupee) 1252 1122 1439 1719 1430
Food: Total 55% 56% 53% 51% 53%
Non-Food: Total 45% 44% 47% 49% 47%
Urban
MPCE (Indian Rupee) 2028 2193 2275 3242 2630
Food: Total 47% 44% 45% 40% 43%
Non-Food: Total 53% 56% 55% 60% 57%

The above data indicates the following:

(i) In terms of the regular monthly expenditures, all backward castes (SC, ST, and OBC) were found to be lagging behind the other castes and communities – the gap is more in urban areas compared to rural areas. This is obviously because of lower income in backward caste households. It would be fair to state that more than 90% of the population from three categories of backward castes are in the ‘poor’ and ‘lower middle’ class, while less than 10% of backward caste people are in the ‘middle’ and ‘upper middle’ class.

It is obvious that ‘poor’ and ‘lower middle’ classes who made up 70% of the population, also contain huge army of school drop-out and educated but unemployed people from upper castes.

(ii) Even after two decades (1991 to 2011) of ‘LPG’ economic reforms, household consumption has not increased substantially – average MPCE of Indian Rupees 1430 in rural area and Rupees 2630 in urban area. The fact which non-Marxist politicians, wealthy businessmen, bureaucrats, and professionals continue to hide is that the revenue share of growth during 1991 to 2011 never ‘trickled down’ to the ‘poor’ and ‘lower middle’ classes who jointly made up 70% of the population

(iii) Top 10% of population consisting of ‘upper middle’ and ‘opulent’ classes extracted most of the revenue and asset generated during the period of economic reforms – interestingly more than 90% of top 10% are from the upper caste Hindu community.

5.6  Significant observations on Independent India

5.6.1 INC has been transformed from being a party of elites representing all nook and corner of India (during British period there were indomitable INC leaders even in Pashtun-dominated regions of the present Pakistan-Afghanistan border) into a fiefdom of Nehru-Gandhi family after independence. As long as astute politicians like Jawaharlal Nehru or Indira Gandhi came from the family, there was no major impact of this despicable transition on the party. But after Rajiv Gandhi was assassinated, the weakness of INC as a political outfit became too apparent to be ignored. The wife and son of Rajiv Gandhi kept the control with the family, but lack of political acumen resulted in slow demise of INC, which in turn helped immensely opening up of the political opportunity for RSS-BJP to come to limelight and fill the political vacuum.

5.6.2 INC leaders from Nehru-Gandhi family were mainly populists with leaning towards non-Marxist socialist and social democrat ideas. To broaden mass appeal during general election during prime ministership of Indira Gandhi, during 1970s INC took a decisive turn against the wealthy class of people that resulted in negative rate of growth in income of ‘upper middle’ and ‘opulent’ classes. Notwithstanding such ‘peronist’ policies, after death of Rajiv Gandhi, the party was hijacked by the neoliberal politicians-intellectuals-businessmen who formed coterie around remaining members of Gandhi family, and worked tirelessly to create an oligarchy where national capitalists was supreme in setting policy. Thus INC became unabashedly pro-businessmen and pro-capitalists during the Narasimha Rao and Manmohan Singh premiership.

5.6.3 India till 1991 failed to attain many parameters, but heavily concentrated wealth was surely not one of those parameters. Since INC ruled for most of the time, it was the INC’s monumental failure that even in 2012 exactly 64 years after independence, 37% of population failed to read and write, or 36% of 20–64 years age-group didn’t have employment – no amount of argument can justify this hopeless scenario! Well known economists Amartya Sen and Jean Dreze made so pertinent observations in their book ‘India: Economic Development and Social Opportunity’ as “ While the case for economic reforms may take good note of the diagnosis that India has too much government interference in some fields, it ignores the fact that India also has insufficient and ineffective government activity in many other fields, including basic education, health care, social security, land reforms and the promotion of social change. This inertia too contributes to the persistence of wide spread deprivation, economic stagnation and social inequality.”

5.6.4 Massive military conflict at northern and north-eastern borders was/is the recipe for socio-economic doom for India and Pakistan, hence none of the leaders in Pakistan or India since 1947 had/has been interested in conflicts beyond limited manoeuvre. Even if Bangladesh got partitioned from Pakistan in 1971, for Pakistani leaders, the solace was India didn’t grab its land (practically correct). China with its vast economy can afford massive military mobilisation in a tad more effectively than India. But experience shows that, China wasn’t interested to increase its landmass by getting back few thousand square kilometres into Tibet autonomous region from Indian control – otherwise, Chinese troops wouldn’t withdraw to north of McMahon line in 1962 in north-east.

The above mentioned status and obvious facts were/are known by all senior politicians and bureaucrats in India-Pakistan-China all through these decades. Chinese government can take any decision to legally accept/modify their boundary vis-à-vis other countries – China demonstrated it through signing of a series of border pacts with most of their neighbours. India and Pakistan governments can’t take such decision to make agreement to accept LAC as legal border (and ignore the ‘ideal’ border line soaked in ‘nationalism’ and claimed by government and public from both sides, existence of which has been taught since the school days of every generation) because the political opponents will misuse such wise action by the governing party, through cheap politicking of ‘surrender and sale out to a foreign power’. On the contrary, with a tough stand on border dispute, the politicians in India and Pakistan earn extra mileage for campaigning during periodic elections. As a result, the border problems have been lingering on for decades with no end at sight.

6.  India Since 2014: Reappearance of Corporate-State

Since 1950, while formulating policies, the political and bureaucratic institutions of independent India tried to uphold the directive principles of ‘welfare state’ policy enshrined in the Indian constitution. However, while implementing the policies within unavoidable limitations, all mainstream political parties and their leaders surreptitiously represented businessmen-landlords-elites -– end result of such duplicity has been noted previously in section 5.

6.1 The Protagonists

Let’s briefly discuss how the protagonists stack up in the political economy of India during 2010s:

a) The main difference among the dozens of non-Marxist political parties (two of them national, rest regional) which have been controlling the government at centre and the provinces for past 73 years relates to form rather than substance. Fundamentally, almost every senior and junior leader of all non-Marxist political parties across wide spectrum of professed ideologies, treat their association with the party as profession to ‘make money’ if and when the party comes to power at centre or province. Such ‘professional‘ type of politicians join the mainstream national and regional political parties as a professional engagement to create accounted/unaccounted wealth using political and administrative power (a) by entering into business dealings in informal/unorganised sector as well as formal/organised sectors of economy, and (b) by swaying government/bureaucratic decision-making process in favour of their favourite oligarchs/businessmen.

All other activities like spending time and efforts for the sake of the political party (in the role of a party official) and/or for the sake of governance (in the role of managing public administration, when voted to power) become instrument of achieving the primordial target of making wealth. Hence shifting from one political party to another became a sort of professional move for all non-Marxist politicians. While shifting from one party to another, the leader is expected to carry his/her team of unemployed goons who would make required arrangements for winning the election (through booth capturing, false voting, electronic voting machine hacking etc.) – the team of muscleman would be provided protection from police force. These musclemen generate another type of regular revenue for their leaders if and when the party comes to power in any province – (a) ‘protection money’ from unorganised/informal sector of economy involving small manufacturers, small real estate companies, small traders, retail shopkeepers, roadside hawkers, and (b) ‘extortion money’ from organised/formal sector of economy consisting of real estate companies, construction companies, medium sized manufacturers, entertainment sector, etc. Such team, popularly known as ‘social worker’ may comprise of a couple of hundred local rowdies plus couple of petty criminals in case of leaders at provincial Assembly level, while leaders at national Parliament level commands up to thousand rowdies plus up to a dozen of hard-core criminals.

Some of the key information of 543 elected representatives at India’s Loksabha called as Member of Parliament (MP) who are the law-makers of the country:

Data related to MP In 2009 general election In 2014 general election In 2019 general election
Elected on INC ticket (no.) 222 44 52
Elected on BJP ticket (no.) 112 282 303
Elected from other Non-Marxist parties (no.) 185 206 182
Elected from Marxist parties (no.) 24 11 06
Elected with Declared Criminal cases (no.) 162 185 233
– Out of which…Serious Criminal cases (no.) 76 112 159
MP with education qualification intermediate and below (no.) — 127 130
MP with asset valuation more than 10 million Indian Rupee (no.) 315 443 475
Average asset per MP (million Indian Rupee) 53.5 147.0 209.3

[ Link: https://adrindia.org/content/lok-sabha-elections-2019 ]

‘Serious Criminal cases’ as per Indian penal code include rape, crimes against women, murder, attempt to murder, kidnapping etc. It is obvious from the above data that, not only Indian Parliament have been steadily turning into a den of criminals (in 2019, as many as 43% of MPs have criminal cases against them), but law-makers’ declared assets increased leaps and bounds (between 2009 and 2019, average asset of MPs increased by 4 times). The situation of assembly members in the provinces follow similar logic. In his book “Hind Swaraj or Indian Home Rule” M K Gandhi wrote in 1933 about British Parliament, “That which you consider to be the Mother of Parliaments is like a sterile woman and a prostitute. Both these are harsh terms, but exactly fit the case. That Parliament has not yet, of its own accord, done a single good thing. Hence I have compared it to a sterile woman. The natural condition of that Parliament is such that, without outside pressure, it can do nothing. It is like a prostitute because it is under the control of ministers who change from time to time.” Isn’t it right time to slightly modify M K Gandhi’s legendary statement to describe Indian Parliament as “…a prostitute who is at the centre of brawl among wealthy gangsters…”?

b) There was/is a limited group of educated people across the country who would join some Marxist party (since 1960’s it has become difficult to track the exact number of fragments of the old Communist Party of India, but at least 5 Marxist political parties significantly have small but committed activists and followers) believing they will fight the unjust system to further socialist cause. These ‘amateur’ type of politicians would be dedicated intellectuals throughout their life, instead of being dedicated revolutionaries. Hence, most of the leaders assigned more importance to debating over the theory than to mobilizing millions of hungry unemployed people in their own region. They lack unity and cohesion among themselves, lack robust socio-political action plan, lack resources, and most importantly they lack enthusiasm to change the social-political-economic realities in India. Very few leaders who assigned supreme importance to mass mobilisation, were actually voted into power in some significant provinces like Kerala and West Bengal through existing electoral democratic process.

The conduct of Marxist party functionaries during the period when they run the provincial governments were sometimes became controversial and the governance was not always efficient due to resource crunch. They couldn’t fight concerted campaigns against them conducted by the top 10% who owned all mainstream parties and media. A significant distortion in operational aspects of few Marxist parties can be noted during past two decades – they started believing that election campaign is the supreme task. Another development can be noted – economic reforms did create ‘reformist’ leaders many of whom are imitating professional politicians to leave their Marxist party to join other mainstream political party for, may be, gaining stature.

c) The third, arguably the most significant protagonist is wealthy oligarch families, the 1% OPULENT class, more than 95% of whom belong to the upper caste Hindu namely Brahman-Vaishya-Kshatriya Aryan and Vaishya-Kshatriya Dravidian ethno-genetic people (just like USA, another ‘great’ democracy, where oligarchy mostly comprises of Jewish, Anglo-Saxon ethno-genetic people). Similarly, the 9% UPPER MIDDLE class has more than 90% of the people belonging to upper caste Hindu community. Control of the space of banking-financial service-industry-trading-service business-large cultivation farm-politics-bureaucracy-judiciary-technology-medicine-professional services etc. by these two classes would put the 20th century British colonialists to shame! Regularly and almost religiously, the media and academia who are part of the top 10% have been shedding tears for progress or lack of progress (depending on which mainstream non-Marxist party they prefer) of the Indian society and economy, and pontificate about how the country should be or should not be governed – as a matter of fact, these are essentially an attempt to create a semblance of existence of difference of opinion in a ‘vibrant democracy’ of India while maintaining deafening silence over increasing exploitation of 90% population and atrocities against women, and minority communities (exactly similar to the hue and cry in mainstream media in USA over mistakes of Democrats party and Republican party, but never touching the real issue of endless exploitation by the zionist-capitalist oligarchy that controls both banks, businesses, political parties, media, academia, entertainment, and what not!).

Related data shows how effective the small oligarchic coterie (1%) has been for past 10 years in India to amass wealth while a larger group of elites (9%) applauded about ‘democracy’ and ‘rule of law’ in India:

Data related to Indian Oligarchy 2010 2014 2019
Total Adult population (million) 719.062 775.767 865.783
Median wealth in US Dollar (current) 1300 1006 3042
Adults with wealth < median wealth 50% 50.0% 50.0%
Adults with wealth [median – 10,000] US Dollar 42.9% 44.5% 28.2%
Adults with wealth [10,000 – 100,000] US Dollar 6.6% 5.1% 20.0%
Adults with wealth [100,000 – 1000,000] US Dollar 0.4% 0.3% 1.7%

Adults with wealth above 1 million US Dollar

number of Adult with 1 – 5 million US Dollar

number of Adult with 5 – 10 million US Dollar

number of Adult with 10 – 50 million US Dollar

number of Adult with more than 50 million US Dollar

 —

0.02%

154,933

15,203

10,130

1,772

0.09%

666,926

54,781

32,441

4,460
Gini wealth coefficient 77.8% 81.4% 83.2%

[ Link- https://www.credit-suisse.com/about-us/en/reports-research/global-wealth-report.html ]

In the report ‘Time to Care’ published in January’2020, Oxfam India mentions “India’s top 10% of the population holds 74.3% of the total national wealth. The contrast is even sharper for the top 1%. India’s top 1% of population holds 42.5% of national wealth while the bottom 50%, the majority of the population, owns a mere 2.8% of the national wealth. In other words, the top 1% hold more than 4 times the amount of wealth held by the bottom 70% of the population. The bottom 90 percent holds 25.7 percent of national wealth.”

d) Finally, coming to the much maligned and slandered among all protagonists – the poor and lower middle class, the working and unemployed proletariat who are generally termed as ‘lazy-bones’ by intelligent elite managers/professionals in the corporate world. Truth be told. During past 30 years, whether central government or provincial governments which have been run by the mainstream national/regional ‘professional’ political parties (except few cases when Marxist parties formed government in province) campaigned invariably projecting the ‘interest of poor and downtrodden’ as the topmost agenda if they come to power. But barring few rare instances, across India the mainstream political parties ONLY GREASED THE OLIGARCHY – hypocrisy, thy name is politician! In 2015, World Bank estimated that a whopping 50.4% of Indians live below WB poverty line of $3.2 (2011 PPP) per day which was equivalent to 50 Indian Rupees per day. Previously while discussing consumer expenditure and poverty in sub-section 5.5.3, I have mentioned my opinion as “Hence in 2012 the ‘poverty line’ of monthly per capita expenditure should have been 1500 Rupees instead of 1000 Rupees published by government”. I will add that, World Bank officials at least were more ingenuous compared to India government officials.

[ Link: https://databank.worldbank.org/data/download/poverty/33EF03BB-9722-4AE2-ABC7-AA2972D68AFE/Global_POVEQ_IND.pdf ]

The 70% population (poor and lower middle class) at bottom of income and expenditure pyramid earn so insignificantly small amount to live a hand-to-mouth daily life that they can never build bare minimum asset like a 600 square feet house/flat. They just slog on day-after-day to buy daily daal-roti or daal-rice while directly and indirectly supporting the top 10% amass wealth and power. The inflation has been rising so stubbornly that, during 2019 and 2020 it would be a cruel joke to discuss about $3.2 (even in terms of nominal current exchange rate i.e. 224 Indian Rupees) per day expenditure as poverty line. Whether it is a village or town in India, apart from two meals a day what would be left for the poor fellow to meet other daily requirements like breakfast, snacks, medicine, and toiletries? How a poor man would arrange for local conveyance and mobile communication? How monthly requirements like cooking gas, electricity, house rent, clothing, education of kids would be met? In the words of a commentator, “the worker is becoming impoverished absolutely, i.e. he is actually becoming poorer than before; he is compelled to live worse, to eat worse, to suffer hunger more, and to live in basements and attics.” Has the world witnessed similar travesty of natural justice anywhere in the world in 21st century?

6.2 Reincarnation of Corporate-State under Modi’s BJP

Even before the year 2000, most of the successful billionaire capitalists of India belonged to Maharashtra, Gujarat, Delhi, and Tamil Nadu provinces who collectively steered industrial economy of India– during two decades of 1980s and 1990s, based on industrial sector, Gujarat’s economy registered a remarkable growth rate of over 14% against the country’s around 5.5%.

6.2.1 Between 2002 and 2014, Gujarat province became the experimental laboratory of BJP for developing the concept of pseudo-religious authoritarian corporatist system of governance under Narendra Modi which was termed as ‘Gujarat Model’ – mainstream media owned by businessmen did the tomtoming of the model across India. Briefly the three characteristics of that experiment can be described as:

a) Pseudo-religious – section 4.1.2 lists down the essence of RSS-BJP campaign on how and why Hinduism has been the supreme ‘religious philosophy’ and Hindus were/are the ultimate ‘religious community’. However, as it happened with any other pseudo-religious groups, none of the propaganda has anything to do with God and spiritualism which remained the central theme of all religions in humankind. Every propaganda point relates to political objectives of (a) bringing the diverse sects of Hindus under BJP’s political umbrella, (b) implanting a belief among all disparate sects of Hindus that south Asian subcontinent belongs to ONLY them, (c) regimenting the Hindus to follow a hierarchical caste system with Brahmans as de facto leader of Indian society as written in book Manusmriti in Sanskrit, (d) inculcating supremacist ethos among Hindu children and youth about past history and civilization (some truth mixed with mostly fabricated narratives). Thus, the pseudo-religious characteristic turned the entire academic discourses of Indian archaeology-history-anthropology-sociology upside-down, and the academic arena had been converted into a ‘battle’ to uphold ‘India’s/Hindu’s glorious past stretching back to 15000 BCE’.

b) Authoritarian – section 4.2.1 lists down the political messages propagated by RSS-BJP that slowly but surely vitiated the social bonding between communities and the stage was set for further manipulation of the entire political environment. Within few months of Narendra Modi’s swearing in as Chief Minister of Gujarat in 2002, Godhra train-burning incident took place, Modi and BJP used that incident to create terror and carnage of mainly Muslim people. Though Pakistan’s involvement in Islamic terrorism in India was decades old history, there was no robust proof within few days of Godhra train-burning. But Modi’s BJP utilised that event to build a fabricated narrative: (a) demographic growth of Muslim community is far more than Hindu community, unless Hindus ‘resist’ socially and politically, Muslims would once again initiate partition of the country, (b) Hindu community should continue to teach Muslim community unforgettable lessons, and, on behalf of Hindu community BJP will do the needful, (c) BJP is the only political party in India that fights for the larger interest of majority Hindu community, (d) Declaring India as ‘Hindu nation’ discarding the secular constitution, and cornering the minorities are the only solution for ‘bringing back the old glory’ of Hindu civilization, and only BJP can transform India into a Hindu nation. It goes without saying that such propaganda based on false narratives using lies and half-truths helped building an aura of authoritarian Modi that transformed BJP into authoritarian entity.

Voice of opposition parties, trade union leaders, farmers, social activists, and academicians, especially those who represent religious and caste minorities was suppressed by using police and revenue department officials – slapping of criminal cases against dissenting voice was the standard procedure. The mainstream media became an instrument of public campaign in Gujarat province under Modi’s BJP. The sessions of the legislative Assembly were squeezed so that elected representatives from opposition parties don’t get enough time to raise questions/clarifications on various bills and reports.

c) Corporatist – While Oligarchy has been controlling all levers of power at the centre and at the provinces, by and large the corporate honchos preferred to stay at the backstage of governance. Since 2003 the corporate honchos in Gujarat were sucked into part of governance through a fusion of government and corporate interest. The roles and responsibilities that Gujarat government should have played were curtailed and corporates were offered to fill in the vacuum. Among the beneficiary class were/are the Gujarati-Marwari corporate honchos like the Ambanis, Adanis, Ruias, Sanghvis, Mehtas and other big industrialists, and dozens of contractors who got their share of the pudding of various projects of infrastructure development. The new industrial policy of 2003 permitted dilution of laws of labour relations to the extent permissible at the province level. Industries were exempted from getting ‘no objection certificate’ from the pollution control board. Quick possession of farm land by industrialists and businessmen were facilitated. The cronies of Modi’s BJP were rewarded with lower than market price of land in most of the cases. The politicians belonging to BJP and government bureaucracy worked extra time and walked extra mile for the benefit of private capitalists – the whole programme was packaged as ‘Vibrant Gujarat’ and non-stop campaign was undertaken in media for public consumption.

The 2009 industrial policy was designed for transforming Gujarat province as world’s most attractive investment destination – megaprojects with investments more than Indian Rupees 10 billion were mainly targeted. Gujarat government’s industrial nodal agency acquired 21,308 hectares of land between 2001 and 2011 (starting with 4,620 hectares in 2001). Modi had become the favourite chief ministers of Indian capitalists especially Gujarati and Marwari businessmen who would attend the Vibrant Gujarat investors’ meetings and would shower praise on him and fill the coffers of BJP party fund. During these investors’ summits held between 2003 and 2011, Memorandums of Understanding were signed for investment totalling more than 4 trillion Indian Rupees – only 8% of promised investment, amounting to just over 300 billion actually came through. Another analysis showed from 2000 to 2012 Modi’s Gujarat could not attract many foreign investors (4.5% of FDI went to Gujarat, as against 32.8% in Maharashtra, 19% in Delhi, 5.6% in Karnataka, 5.2% in Tamil Nadu). By focusing on capital-intensive megaprojects, ‘Gujarat model’ benefited the big companies balance sheets and industrial growth rate, but job creation remained chimera – after all, the corporatist policies were indeed aimed at (jobless) growth of corporates!

6.2.2 The 16th national general election, held in early 2014, resulted in a huge victory of the BJP, the party gained an absolute majority and formed a government under the premiership of Narendra Modi, till then BJP Chief Minister of Gujarat province. Indian bankers-industrialists-merchants-big landowners who formed 1% opulent class wanted a stable government which would safeguard their long-term interest of endless accumulation of capital. For that, they needed a commercialised political party which has authoritarian background. BJP was best fit – hence, this class spent billions of Indian Rupees in donation to BJP election fund and provided 100% support in all types of media owned by them for 2014 election campaign. As the Modi government settled down at centre, the ‘Gujarat Model’ was quickly being redesigned keeping entire India in view.

67 years after the partitioned independence, in 2014, the hen has come home to roost! To fulfil political ambitions of few south Asian leaders, the Indian subcontinent was bifurcated. But (truncated) India never publicly or constitutionally accepted that fact that Muslim elites separated in 1947 to safeguard and multiply their wealth and power (not to keep the Muslim population in the newly created country hale and hearty), hence Indian constitution declared secular multi-religious multi-ethnic country. As we look into the break-up of capital-holding 1% opulent class) we note that, 95% belong to upper caste Hindu community. People with personal experience of staying and knowing different regions and provinces of India opine that, this opulent class wanted a sort of ‘official declaration’ that would perpetuate their hold on political POWER and WEALTH. Since 1947 INC or any non-Marxist political party at centre or at provinces could never think anything near to this ‘wish’ of the brute majority of Indian opulent class EXCEPT NARENDRA MODI’S BJP IN GUJARAT. Not even BJP government at centre led by Vajpayee could read the pulse of most of the Indian capitalists. The Indian corporates and the opulent class elites got their messiah in Narendra Modi. Thus, Corporate-state returned to India. Henceforth, the government of India would live for the corporates, work for the corporates and, more importantly, die for the corporates.

And what happened to the 9% upper middle class when their role-model, the 1% opulent class has been busy for manipulating the Indian democratic architecture for perpetuation of their not-so-indirect rule? They merrily chugged along with the 1% – with western education, high-paying salary, decent homes, and motor vehicles the prosperous upper middle class seized the opportunity to increasingly dictate the country’s political economy. Large number of this upwardly mobile and consumerist class of people have close ties with their relatives living abroad, mainly in 5-Eyes countries – this resulted in a notion that English language and western capitalism combination is the way for salvation to achieve prosperity. No wonder that the upper middle class also understood the underlying foundation of the western zionist-capitalist economic system that exploited world-wide colonies for sourcing materials and labour at (almost) no cost for five centuries – Indian opulent class and upper middle class applied same logic in India whereby the 90% population would be sucked dry in order to build the wealth of 10%. Only complete seizure of ‘state institutions’ can provide the power required to achieve such ‘economic miracle’. So the upper middle class was on board for the new journey towards ‘prosperity’.

What has been different in the second coming of corporate-state? So far as the ‘substance’ is concerned, there is no difference at all between English EIC corporate-state and BJP Hindu corporate-state. The dynamics of corporate-state clearly works in a fashion so that all government wings – legislature, executive, and judiciary – work in tandem towards maximisation of benefits of corporate interest and limitless accumulation of profit, and in turn the corporates extend illegitimate benefits to the decision-making persons/entities of government wings. Among many differences of ‘form’ most important ones are:

a) In case of the first appearance of corporate-state in 1769, governance of newly acquired Indian ‘state’ got added as an outer layer of function to the existing core function of corporate business; during the second appearance in 2014, governance of existing Indian ‘state’ acted as the body onto which the corporate business was injected as new blood

b) In case of the first appearance of corporate-state in 1769, foreign capitalists (specifically Anglo-Saxon and Jewish ethnic businessmen) were the most significant gainers while Indian capitalists played the role of lackeys; during the second appearance in 2014, Indian capitalists (specifically Gujarati and Marwari ethnic businessmen) are the most significant gainers while foreign capitalists (specifically Anglo-Saxons and Jewish ethnic businessmen in USA-UK) have been playing supportive role till now

6.2.3 Policy Vectors of Current Corporate-State

This sub-section lists few observations about key stated and unstated policies of BJP, as one could notice during past 6 years.

a) Creation of a virtual reality through print media (newspapers), broadcast media (television), digital media (social networking) which would ‘manufacture’ fake news, fake history, fake glory of fake entities, fake socio-economic parameters, in other words, a forged reality gets created on 24×7 basis by a specially created BJP IT Cell (employing thousands of IT professionals) that manufactures the messages to conform to the RSS-BJP’s social-political-economic-cultural propaganda. This virtual reality is transported to the poor, lower middle, and middle class of population i.e. 90% of population through Indian-owned media as well as USA-based Zionist-capitalist media especially social networking behemoths. Majority of Indians have very little education, who easily fell prey to these deceitful propaganda.

b) Creation of a virtual identity through broadcast media (television), digital media (social networking) through which the people who would come forward to raise voice against misrule and corruption, would be identified as anti-national as against the patriots meaning who would remain silent. BJP IT Cell members using thousands of real and fake accounts in social media would abuse and intimidate any dissident until he/she become silent. Thus, even the leaders of the opposition political parties are silenced by the pro-BJP media houses.

c) Exercise direct control over all key government institutions like bureaucracy, judiciary, and defence by installing RSS-BJP sympathiser at all key positions. Thus, for the first time in independent India, the Supreme Court judgements are being questioned among educated people, or Defence Force issues statements that are overtly political. All checks and balances (there were many, including some which were unnecessary) within governance system has been upturned. Many basic tenet of Indian constitution (‘democratic’, ‘secular’, ‘welfare’, ‘socialist’, ‘justice’ etc.) are being challenged and violated by BJP agenda.

d) Redefine citizenship criterion through a series of self-contradictory bills and amendments whereby all Indian citizens would have to prove through official documents that either their parents took birth and lived in India or they migrated to India due to religious persecution. While it is undeniable fact that illegal immigrants exist in India in large numbers, the same should have been dealt through administrative checking and controlling measures. However BJP utilised the problem of illegal immigrants to redefine the citizenship, which would result in a situation where most of the ST and SC population and many Muslim people won’t be able to furnish required official documents (living under abject poverty they spend all efforts and time to earn livelihood). Suffice to say that ST, SC, and Muslim communities fundamentally remain outcast in the RSS ideological frame of Hindutwa supremacy.

e) Modi government has been systematically using the very large Indian diaspora. The high-profile outreach of Modi himself in Anglo-American countries were/are to achieve certain objectives like – (a) proselytising the ‘hindutwa’ ideology in Hindu community who were/are well established in profession and business, (b) making inroads into top level executives of top Information Technology companies to enlist their committed support to BJP IT Cell, (c) entice the Hindu businessmen for FDI in India either by their business entity or by their Anglo-American associates, (d) donations from wealthy Hindus for BJP party fund.

f) Ostensibly to bring in digital economy by promoting use of digital monetary transactions and by suspending counterfeit currency notes, BJP government suddenly delegitimised use of notes 1000 and 500 denominations by 30 December 2016. To double down BJP government implemented Goods and Service Tax (GST) from 1 July 2017 without appropriate preparedness of infrastructure and training. Result of the ‘pincer movement’ on economy was spectacular – slowly but surely the cash-flow dried up in the unorganised sector of economy which used to provide 87% of employment among working population contributing 52% of value addition in the economy. Indian economy moved backstage instead of marching into digital economy.

A section of small-marginal businessmen is inclined to think that through ‘demonetisation’ and ‘GST implementation’ Modi’s government wanted to marginalise the unorganised sector of economy so that the wealthy businessmen can move into the hitherto uncharted territory of such sectors traditionally cornered by unorganised business – they point out to consumer retail stores, trading of agricultural produces, textile and garments etc. as the proof, where unorganised business took a beating even if sectorial turnover was/is huge, and organised big business stepped in with huge investments. Interestingly, big businesses were present in such sectors even earlier, but they were unable to compete with agile small businesses.

g) Gigantic scale of privatisation of state-owned enterprises (SOE) which couldn’t be even imagined during the era of economic reforms 1991 – 2014. While in the earlier days there would be privatisation of the sick and non-profitable SOEs after carrying out due diligence of assets, 2015 onwards the BJP government targeted handover of even the highly profitable SOEs (in sectors like mining, oil and gas, defence machinery, logistics etc.) and Nation-wide service networks of government (like railways, airlines, telecommunication) to private industrialists at a throw-away price. Being a corporate-state the primary objective is to support the crony capitalists in building their business turnover and profits. Slowly the government would retire into a small shell where taxpayers’ money would be used to run the three wings of governance, and government would have no responsibility or commitment towards welfare of common people of India. This conforms to the more subtle agenda of corporate-state – corporates would provide every possible goods and services that are required to live a daily life in India, and people who can’t afford to pay, will perish.

h) In March 2019, large borrowers accounted for 53% of the total loan portfolio in the banking system, they also represented 82% of the share of gross non-performing assets (GNPA) almost 90% of which is in state owned banks. India’s central bank, Reserve Bank of India has been alarmed that if the top three stressed borrowers failed to repay, the impact will be severe for eight banks in the country. State owned banks found their GNPA at 10.7% of total credit as of March 2020.

A close scrutiny shows a very diabolical game is being played by the corporates. While it was/is normal for businesses to make losses and close down (particularly electricity generation and infrastructure construction sectors performed poorly in India), it is abnormal for businesses to declare bankruptcy en masse when a particular political party is governing at centre. Bad loans written-off in state owned banks:

    • During the period 2004 to 2013 (both inclusive) Indian Rupees 1.238 trillion were written-off
    • During the period 2014 to 2019 (both inclusive) Indian Rupees 5.487 trillion were written-off

Bad debt which was still in the books of public sector bank before April 2020 (when additionally covid-19 impacted the economy) would surely be written off within next 2 – 3 years, amount of that future write-off is estimated as more than Indian Rupees 8 trillion. Thus the 1% Indian oligarchs (that includes mainly industrialists and businessmen, ruling party politicians, a section of bureaucrats, a section of professionals in banking and finance) have been siphoning off the public money through systematic collusion after formation of the new corporate-state. No business anywhere on earth can convert loan (a liability amount) directly into cash profit, as it has been happening in corporate-state of India. It reminds us of the loot of the fabulous treasury of Bengal provinces in 1757 by English EIC.

[ Link: https://indianexpress.com/article/india/india-news-india/k-c-chakrabarty-bad-loan-rti-write-offs-a-scam-small-loans-rarely-in-it-says-former-rbi-deputy-governor/ ]

[ Link: https://www.moneylife.in/article/51st-anniversary-of-bank-nationalisation-has-all-stakeholders-edgy-and-unhappy-time-for-government-to-rebuild-confidence/60935.html ]

i) Modi government significantly invested in the Asian NATO programme of the zionist-capitalist Deep State led by successive governments of USA-UK-Australia-NZ-Canada. Defence cooperation continue to expand with signing of Logistics Exchange Memorandum of Agreement (LEMOA), Communications, Compatibility and Security Agreement (COMCASA), and Industrial Security Agreement (ISA). The Anglo-American military industrial complex views India as a promising area for their business growth.

The corporate-state of India under Modi’s BJP would utilize the burgeoning relationship with world order Deep State for – (a) short-term objectives like creating a bargaining power vis-à-vis China for border dispute and vis-à-vis Sri Lanka for autonomy of Tamil population, (b) mid-term objectives like becoming a permanent member of Asian NATO which would propel India to become de facto naval power in the Indian ocean, (c) long-term objectives like becoming a part of extended supply chain for MNCs belonging to primarily, Anglo-American ownership. The long-term objective is the most significant wish of the Indian capitalists for decades – they hardly understand that western societies got saturated in terms of consumerism, it is Asia and Africa where consumption will continue to increase for decades. Indian capitalists could have clocked more robust business benefits by joining the 3+ trillion US Dollar BRI programme of China.

[ Link: http://bharatshakti.in/wp-content/uploads/2017/06/Indo-US-Foundational-Agreements-CNA.pdf ]

[ Link: https://www.orfonline.org/research/strategic-convergence-the-united-states-and-india-as-major-defence-partners-52364/ ]

j) The seven decade old border problems with Pakistan (related to erstwhile Jammu & Kashmir province of India) and with China (related to erstwhile Jammu & Kashmir province, and Arunachal Pradesh province of India) acquired a new dimension when Modi government bifurcated Jammu & Kashmir province into two parts – Jammu & Kashmir, Ladakh, and withdrew special autonomy enjoyed by the erstwhile province. Apparently BJP government wanted to integrate the region with other provinces for free movement of people and capital. There exist another view which suggest that, India wants to strengthen its military posture vis-à-vis Pakistan and China, and the new move on Jammu & Kashmir would facilitate the same.

As I have noted earlier in sub-section 4.2.3, all border problems were creation of British imperialist power, and three Asian countries may either resolve through dialogue or try to resolve by force (which would be too costly for any of these countries). Notwithstanding the USA oligarchy’s pompous statements, there won’t be any tangible support to India if it chooses to fight, USA would be happy to sell the dated military machinery at hefty prices though!

None of the policy trajectories mentioned above address the economic downturn that has been troubling the Corporate-State of India in the wake of demonetisation and GST implementation. It seems nobody in RSS-BJP is bothered about the worst nightmare in India in seven decades with immediate burning concerns like (1) slowing quarterly GDP growth rate 2017 onwards, (2) total debt increase by 38 trillion Indian Rupees in past 6 years while total debt was 53 trillion Indian Rupees as on March’2014, (3) no significant growth in finished goods exports, and (4) highest rate of unemployment in last 45 years among job-seekers of age 15 years and above.

Welcome to BJP’s Hindutwa Corporate-State of India!

7. Conclusion

As I have noted in the ‘introduction’ chapter, South Asian landmass has been very diverse in terms of people and society, as well as much decentralised in terms of political processes. And the discerning readers of ‘The Saker’ website who all are reading this article, must have concluded that even the political entity of ‘partitioned India’ would be very similar to its parent, the Indian subcontinent. Over and above that, widespread and tacit acceptance among the educated Indians about proliferation of (a) corrupt (b) criminal (c) uneducated ‘leaders’ across all non-Marxist political parties, resulted in such an impasse, that it is herculean task for any mainstream political party to steer present India away from being a ‘corporate-state’ into a ‘welfare state’. Only a Marxist political party that TRULY represent the downtrodden 90% of population which has been under repression by the class-caste combined institution for at least one millennium, can lead future India where everyone gets full security of food, education, and employment, and neither ‘developmental’ projects of the oligarchy trample human rights of poor citizens nor the citizens block economically beneficial environment-friendly large projects.

I would like to share couple of distinctly personal thoughts about Indian subcontinent:

  • Apart from the ruling oligarchy and their policy implementation team in all 3 countries – India, Pakistan, Bangladesh – nobody among 90% common people were benefitted in the long run from the partition of Indian subcontinent. Primarily, small group of 1% oligarch families consisting of bankers-merchants-industrialists-big landlords-politicians-bureaucrats that managed the politics plus economy, by and large, reaped all sorts of benefits during past 73 years from old class-caste institutions;
  • 90% common people in all 3 countries are kept busy with all sorts of divisive issues that were/are created by and sustained by the ruling oligarchy. Fissures along the lines of caste-clan-religion-region-language-education etc. were/are continuously created and publicised to maintain the division among common people so that, they never unite across the country on common economic and political agenda. During past 73 years, time and again real possibilities of mass movement got defeated due to the confusion generated among common people (by the ruling elites cutting across political party lines) using such divisive issues;
  • More often than not it has been found that after winning an election the political party that come to power don’t bother about the pre-election promises on different aspects; could there be amendment in constitution in the way of inclusion of article/clause whereby the performance of the political party that comes to power would be judged vis-à-vis their election manifesto?

As on date, India is firmly moving on the path of Indonesia model – as it happened in post-Sukarno Indonesia, the 90% population disowned by the State but owned by the Clergy, don’t have opportunity for getting ‘education’ (different from concept of ‘literacy’), and hence don’t go through the pain of realisation that they are being thoroughly screwed from-cradle-to-grave by vote-seeking politician, profit-seeking businessmen, and attendance-seeking clergy (more often than not, these three wings of oligarchy are rolled into one within an elite family where different family members establish themselves in a particular wing – family uses all those wings to accumulate ‘wealth’ and ‘power’ for generations). Only difference in BJP’s India is ‘clergy’ belongs to RSS and not to Muslim fundamentalists as in Indonesia.

Socio-economic as well as socio-political future is uncertain in India, possibilities galore. Future is wide open for the oppressed masses in India to even create revolutionary history, may be through a path that blends Russian revolution and Chinese revolution or may be through an altogether different path that directly leads towards a community-ownership of all means of production. But that would be only possible if a revolutionary Marxist party crystallises with coming together of Communist splinter groups who still have ideological existence, and all of them relinquish their inhibitions about others, publish a single manifesto based on current realities of India, make a long-term strategy and formulate mid-term plan, educate and unite the oppressed masses without sidestepping the class-caste conundrum. The Marxists have a long way to go. And, for the sake of 90% Indians, they need to embark on the journey afresh.

I would welcome any criticism from readers that is backed by facts and appropriate and correct data analysis. Though I have taken utmost care to present statistics directly from publications by government of India and globally acclaimed institutions, there could still be inadvertent mistakes.

Finally, before ending, I must acknowledge that in many aspects of this lengthy article – the basic hypothesis, and analysis of social-political-economic aspects – my father’s inputs were freely used that he imparted to me during 2006 – 2010 when I used to be informally part of his study-circle.

Reference:

  1. The Cambridge Economic History of India Volume 2
  2. The Corporation that Changed the World by Nick Robins
  3. Class Structure and Economic Growth: India & Pakistan since the Mughals by A. Maddison

Short profile:

By profession I’m an Engineer and Consultant, but my first love was and is History and Political Science. In retired life, I’m pursuing higher study in Economics.

I’m one of the few decade-old members of The Saker blog-site. Hope that this website will continue to focus on truth and justice in public life and will support the struggle of common people across the world.

A nature-lover since childhood, I’m an Indian by nationality with firm belief in humanity.